UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 20, 2016

 

 

ELEVEN BIOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-36296   26-2025616

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

215 First Street, Suite 400

Cambridge, MA

  02142
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (617) 871-9911

None

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

Share Purchase Agreement

On September 20, 2016, Eleven Biotherapeutics, Inc. (“Eleven” or the “Company”) entered into a Share Purchase Agreement with Viventia Bio Inc., a corporation incorporated under the laws of the Province of Ontario, Canada (“Viventia”), the shareholders of Viventia named therein (the “Selling Shareholders”) and, solely in its capacity as seller representative, Clairmark Investments Ltd., a corporation incorporated under the laws of the Province of Ontario, Canada (“Clairmark”) (the “Share Purchase Agreement”), pursuant to which Eleven agreed to and simultaneously completed the acquisition of all of the outstanding capital stock of Viventia from the Selling Shareholders (the “Acquisition”). In connection with the closing of the Acquisition, Eleven issued 4,013,431 shares of its common stock to the Selling Shareholders, which represented approximately 19.9% of the voting power of Eleven as of immediately prior to the issuance of such shares of Eleven common stock.

In addition, under the Share Purchase Agreement, Eleven will be obligated to pay to the Selling Shareholders certain post-closing contingent cash payments upon the achievement of specified milestones and based upon net sales, in each case subject to the terms and conditions set forth in the Share Purchase Agreement, including: (i) a one-time milestone payment of $12.5 million payable upon the first sale of Vicinium TM or any variant or derivative thereof, other than Proxinium TM (the “Purchased Product”), in the United States; (ii) a one-time milestone payment of $7.0 million payable upon the first sale of the Purchased Product in any one of certain specified European countries; (iii) a one-time milestone payment of $3.0 million payable upon the first sale of the Purchased Product in Japan; and (iv) and quarterly earn-out payments equal to two percent (2%) of net sales of the Purchased Product during specified earn-out periods. Such earn-out payments are payable with respect to net sales in a country beginning on the date of the first sale in such country and ending on the earlier of (i) December 31, 2033 and (ii) fifteen years after the date of such sale, subject to early termination in certain circumstances if a biosimilar product is on the market in the applicable country. Under the Share Purchase Agreement, Eleven, its affiliates, licensees and subcontractors are required to use commercially reasonable efforts, for first seven years following the closing of the Acquisition, to achieve marketing authorizations throughout the world and, during the applicable earn-out period, to commercialize the Purchased Product in the United States, France, Germany, Italy, Spain, United Kingdom, Japan, China and Canada.

In connection with the closing of the Acquisition and pursuant to the Share Purchase Agreement, the Board of Directors of Eleven (the “Board”) elected Stephen A. Hurly and Leslie L. Dan to serve as members of the Board. The Board of Eleven also appointed Mr. Hurly as the Company’s President and Chief Executive Officer to succeed Abbie C. Celniker, with Dr. Celniker continuing to serve as a member of the Board. Also in connection with the Acquisition, Arthur P. DeCillis, M.D., Viventia’s Chief Medical Officer, was appointed as Chief Medical Officer of Eleven, and Karen L. Tubridy, Eleven’s Chief Development Officer, resigned from Eleven. In addition, Gregory Adams, Ph.D., Viventia’s Chief Development Officer and Glen MacDonald, Ph.D., Viventia’s Chief Scientific Officer, will join Eleven’s management team. John J. McCabe, will continue to serve as Chief Financial Officer of Eleven.


Each of Eleven, Viventia and the Selling Shareholders has agreed to customary representations, warranties and covenants in the Share Purchase Agreement. The Share Purchase Agreement also includes indemnification obligations in favor of Eleven from the Selling Shareholders, including for breaches of representations, warranties, covenants and agreements made by Viventia and the Selling Shareholders in the Share Purchase Agreement. In connection with the closing of the Acquisition, Eleven deposited 401,343 shares of its common stock (representing approximately 10% of the Eleven common stock portion of the aggregate closing consideration owed to the Selling Shareholders pursuant to the Share Purchase Agreement) into an escrow fund for the purposes of securing the indemnification obligations of the Selling Shareholders to Eleven for any and all losses for which Eleven is entitled to indemnification pursuant to the Share Purchase Agreement. The Share Purchase Agreement also includes indemnification obligations in favor of the Selling Shareholders from Eleven, including for breaches of representations, warranties, covenants and agreements made by Eleven in the Share Purchase Agreement.

The closing of the Acquisition was not subject to approval by any applicable governmental entity or the approval of the stockholders of Eleven. The NASDAQ Stock Market, LLC has approved the listing of additional shares of Eleven’s common stock in connection with the Acquisition.

As a result of the Acquisition, Viventia became a wholly owned subsidiary of Eleven and the business conducted by Eleven includes the business conducted by Viventia immediately prior to the Acquisition.

As of September 19, 2016, there were 20,167,997 shares of Eleven common stock outstanding. As of immediately after the closing of the Acquisition, the Selling Shareholders beneficially owned approximately 16.6% of the outstanding shares of common stock of Eleven. The Share Purchase Agreement provides that the Selling Shareholders may not, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, shares of Eleven’s common stock, including shares received in connection with the Acquisition, for a period of 180 days following the closing of the Acquisition. The shares of Eleven’s common stock issued to the Selling Shareholders were issued in reliance upon the exemptions from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation S and/or Rule 506 of Regulation D promulgated thereunder. Each Selling Shareholder represented that it was either an accredited investor or not a U.S. person and was acquiring the shares for its own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the shares for an indefinite period of time.

The foregoing description of the Share Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 2.1, which is incorporated herein by reference.

The Share Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Eleven, Viventia, the Selling Shareholders or their respective subsidiaries and affiliates. The Share Purchase Agreement contains representations and warranties by Viventia


and the Selling Shareholders, on the one hand, and by Eleven, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules delivered by each party in connection with the signing of the Share Purchase Agreement, certain representations and warranties in the Share Purchase Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the Selling Shareholders and Eleven. Accordingly, the representations and warranties in the Share Purchase Agreement should not be relied on by any persons as characterizations of the actual state of facts about the Company at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Share Purchase Agreement, which subsequent information may or may not be fully reflected in Eleven’s public disclosures.

Registration Rights Agreement

In connection with the Acquisition, the Company entered into a registration rights agreement dated September 20, 2016 (the “Registration Rights Agreement”), with certain of the Selling Shareholders. Under the Registration Rights Agreement, holders of a total of 3,582,328 shares of the Company’s common stock (the “registrable securities”) will have the right to require the Company to register these shares under the Securities Act under specified circumstances. After registration pursuant to these rights, these shares will become freely tradable without restriction under the Securities Act. If not otherwise exercised, the rights under the Registration Rights Agreement described below will expire on September 20, 2021.

Demand and Form S-3 Registration Rights

Beginning 90 days after the date of the Registration Rights Agreement, subject to specified limitations set forth therein, at any time, the holders of at least 50% of the then outstanding registrable securities may demand that the Company register at least 50% of the registrable securities then outstanding under the Securities Act for purposes of a public offering having an aggregate offering price to the public of not less than $5,000,000. The Company is not obligated to file a registration statement pursuant to this provision on more than two occasions, and is not obligated to request that any registration statement filed pursuant to this provision be declared effective prior to the date that is 180 days after the date of the Registration Rights Agreement.

“Piggyback” Registration Rights

If, at any time the Company proposes to register for its own account any of its securities under the Securities Act, the holders of registrable securities will be entitled to notice of the registration and, subject to specified exceptions, have the right to require the Company to use its best efforts to register all or a portion of the registrable securities then held by them in that registration.

In the event that any registration in which the holders of registrable securities participate pursuant to the Registration Rights Agreement, the Company has agreed to enter into an


underwriting agreement containing customary representations and warranties and covenants, including without limitation customary provisions with respect to indemnification of the underwriters of such offering.

In the event that any registration in which the holders of registrable securities participate pursuant to the Registration Rights Agreement, the Company will use its best efforts to include the requested securities, but such inclusions may be limited by market conditions to the extent set forth in the Registration Rights Agreement.

Expenses

Pursuant to the Registration Rights Agreement, the Company is required to pay all registration expenses, including the fees and expenses of one counsel to represent the selling stockholders, other than any underwriting discounts, selling commissions and fees and expenses of a selling stockholder’s own counsel related to any demand or incidental registration. The Company is not required to pay registration expenses if the registration request under the Registration Rights Agreement is withdrawn at the request of holders initiating such registration request, unless the withdrawal is due to discovery of a materially adverse change in the Company’s business after the initiation of such registration request.

The Registration Rights Agreement contains customary cross-indemnification provisions, pursuant to which the Company is obligated to indemnify the stockholders party thereto in the event of material misstatements or omissions in the registration statement attributable to the Company or any violation or alleged violation whether by action or inaction by the Company under the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any state securities or Blue Sky law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities or Blue Sky law in connection with such registration statement or the qualification or compliance of the offering, and they are obligated to indemnify the Company for material misstatements or omissions in the registration statement attributable to them.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 4.1, which is incorporated herein by reference.

Material Viventia Agreements

As a result of the Acquisition, the following Viventia agreements and arrangements effectively became agreements and arrangements of Eleven.

Unless the context otherwise requires, all references in this Current Report on Form 8-K to “Eleven,” “we,” “our” and “us” refer to Eleven Biotherapeutics Inc. and its wholly owned subsidiaries after the effective time of the Acquisition, and all references to Viventia refer to Viventia Bio Inc. and its wholly owned subsidiaries and predecessor entities prior to the effective time of the Acquisition.


License Agreement with the University of Zurich

On January 9, 2003, Viventia entered into a license agreement with the University of Zurich (“Zurich”), as amended and restated on October 14, 2015 (the “Zurich Agreement”).

Overview and exclusivity . The Zurich Agreement grants Viventia exclusive rights, with the right to sublicense, to make, have made, use, sell, offer for sale, and import under certain patents primarily directed to Viventia’s targeting agent, including epithelial cell adhesion molecule, or EpCAM, chimera, and related immunoconjugates and methods of use and manufacture of the same. These patents cover some key aspects of Viventia’s product candidates Vicinium and Proxinium. Under the terms of the agreement, Viventia may in the future be obligated to pay an additional $750,000 in milestone payments, for the first product candidate that achieves applicable clinical development milestones. Based on current clinical status, Viventia anticipates that these milestones may be triggered by Vicinium’s clinical development pathway. As part of the consideration, Viventia will also be obligated to pay a 4% royalty, subject to downward adjustment in certain instances, on the net product sales for products covered by or manufactured using a method covered by a valid claim in the Zurich patent rights. There is no obligation to pay royalties in a country if there is no valid claim that covers the product or a method of manufacturing the product. As of the date of the Acquisition, aggregate license fees of $250,000 have been paid to Zurich.

Patent rights . Viventia is responsible for the patent filing, prosecution and maintenance activities pertaining to the patent rights, at its sole expense, while Zurich is afforded reasonable opportunities to review and comment on such activities. If appropriate, Viventia shall apply for an extension of the term of any licensed patent where available in at least the United States, Europe and Japan. In the event of any substantial infringement of the patent rights, Viventia may request Zurich to take action to enforce the licensed patents against third parties. If the infringing activity is not abated within 90 days and Zurich has elected not to take legal action, Viventia may take legal action (in Zurich’s name, if necessary). Such action will be at Viventia’s own expense and Zurich will have the opportunity to join at its own expense. Recoveries from any action shall generally belong to the party bringing the suit, but (a) in the event that Viventia brings the action and an acceptable settlement or monetary damages are awarded, then Zurich will be reimbursed for any amount that would have been due to Zurich if the products sold by the infringer actually had been sold by Viventia and (b) in the event a joint legal action is brought, then the parties shall share the expense and recoveries shall be shared in proportion to the share of expense paid by the respective party. Each party is required to cooperate with the other in litigation proceedings at the expense of the party bringing the action.

Term and termination . The term of the agreement expires as of the expiration date of the last patent to expire within the Zurich patent rights. Viventia is currently projecting an expiration date for the U.S. licensed patents in 2024, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. Zurich has the right to terminate the agreement if Viventia breaches any obligation of the agreement and fails to cure such breach within the applicable cure periods. Viventia has the right to terminate the agreement at any time and for any reason by giving 90 days written notice to Zurich.

The foregoing description of the Zurich Agreement is not complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 10.1, which is incorporated herein by reference.


License Agreement with Merck KGaA

On March 8, 2004, Viventia entered into a license agreement with Biovation Limited, subsequently acquired by Merck KGaA (“Merck”), which was amended and restated on October 14, 2015 (the “Merck Agreement”).

Overview and exclusivity . Pursuant to the Merck Agreement, Viventia was granted an exclusive license, with the right to sublicense, under certain patents and technology relating to the de-immunization of its cytotoxin Bouganin for therapeutic and in vivo diagnostic purposes in humans. The de-immunized cytotoxin is known as deBouganin, and has been incorporated into Viventia’s product candidates, VB6-845d and VB7-756. Viventia has the worldwide exclusive right, with the right to sublicense, under the licensed patents and technology to, among other things, make, have made, use or sell products incorporating deBouganin.

As of the date of the Acquisition, aggregate license fees of $225,000 have been paid to Merck. Under the Merck Agreement, Viventia may be obligated to pay the following clinical development and regulatory milestones for each “licensed product”: (a) $2,000,000 upon the start of the first Phase 3 clinical trial for a licensed product; (b) $2,000,000 upon submission of the first Biologics License Application (“BLA”) or similar application submitted to the FDA or a foreign equivalent of the U.S. Food and Drug Administration (“FDA”) for a licensed product; (c) $2,000,000 upon the approval of the first BLA in certain countries for a licensed product and $1,000,000 upon each of the second and third approvals of a BLA in certain additional countries for the same licensed product (total of $4,000,000); and (d) $2,000,000 upon the approval of the second BLA in certain countries for a licensed product and $1,000,000 upon each of the second and third approvals of the second BLA in certain additional countries for the same licensed product (total of $4,000,000). As part of the consideration, Viventia is obligated to pay a 1.5% royalty on the net product sales up to $150,000,000 and a 2% royalty on the net product sales above such amount.

Patent rights . Viventia has the first right to file, prosecute and maintain licensed patents relating to de-immunized plasmids and proteins and Merck has the first right to file, prosecute and maintain any other licensed patents. Viventia has the first right, but not the obligation, to enforce the licensed patents against third parties for suspected infringement, and, after repayment of costs and expenses, any recoveries under such suit will be treated as net product sales and it shall pay a royalty on the same. Viventia may not settle such patent infringement suit without the prior written consent of Merck, such consent not to be unreasonably delayed or withheld. If Viventia declines to enforce the licensed patents against third parties for suspected infringement, Merck may bring such a patent infringement suit and any recoveries will be retained by Merck.

Term and termination . The Merck Agreement expires on a country-by-country and product-by-product basis upon the later of (i) the expiration of the last to expire patent within the licensed patent rights that covers a licensed product and (ii) 10 years from the first commercial sale of a licensed product in such country; provided that no royalty is payable for more than 15 years from the first commercial launch of a licensed product anywhere in the world. Either party has the right to terminate the agreement for breach of the agreement if the other party fails to cure such breach within the applicable cure period. Viventia has the right to terminate the agreement by giving Merck six months prior written notice.


The foregoing description of the Merck Agreement is not complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 10.2, which is incorporated herein by reference.

License Agreement with Protoden

On October 17, 2014, Viventia entered into an amended and restated exclusive license agreement with Clairmark (as successor in interest to Protoden Technologies Inc.) (the “Protoden Agreement”). Clairmark is controlled by Mr. Dan, who became a director of Eleven in connection with the closing of the Acquisition.

Overview and exclusivity . Pursuant to the Protoden Agreement, Viventia was granted an exclusive, perpetual, irrevocable and non-royalty bearing license, with the right to sublicense, under certain patents and technology relating to bouganin, the precursor to deBouganin. As of the date of the Acquisition, aggregate license fees of $875,000 have been paid to Protoden. Viventia is obligated to pay an on-going licensing fee of $100,000 per year during the term of the agreement. Viventia is also obligated to pay Protoden a $50,000 sublicensing fee if it enters into a sublicense agreement for the patents with a third party between January 1, 2015 and December 31, 2024, up to a maximum of two such payments per calendar year. No royalties for the sale of any product are due to Protoden pursuant to the Protoden Agreement.

Patent rights . Protoden is responsible for the patent prosecution and maintenance activities pertaining to the licensed patents at Viventia’s sole expense. Viventia has the sole right, but not the obligation, to enforce the licensed patents against third parties for suspected infringement, and it will retain any recoveries from such suit.

Term and termination . The term of the Protoden Agreement expires on January 1, 2025, and upon expiration of the term, the licenses granted to Viventia shall become fully paid-up and no further payments to Protoden are required.

This license agreement is not currently significant to the development and commercialization, if approved, of Viventia’s product candidates.

The foregoing description of the Protoden Agreement is not complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 10.3, which is incorporated herein by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets

The information set forth in Item 1.01 regarding the Acquisition is incorporated by reference into this Item 2.01.

Following the Acquisition, we will continue to retain rights to our early stage product candidates in our pipeline existing prior to the Acquisition, rights to our AMP-Rx proprietary protein engineering platform that we have used to discover and develop innovative protein therapeutics to treat diseases of the eye and rights under our License Agreement, dated as of June 10, 2016, with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. relating to EBI-031 or any other IL-6 antagonist anti-IL-6 monoclonal antibody. However, we expect that our primary business following the Acquisition will consist of the business conducted by Viventia immediately prior to the Acquisition.


Description of Viventia’s Business

Following the Acquisition, we will be a biologics oncology company primarily focused on designing, engineering and developing targeted protein therapeutics, or TPTs. Our TPTs are single-protein therapeutics composed of targeting moieties genetically fused via linker domains to cytotoxic protein payloads that are produced through our proprietary one-step manufacturing process. We target tumor cell surface antigens that allow for rapid internalization into the targeted cancer cell and have limited expression in normal cells. We have designed our TPTs to overcome the fundamental efficacy and safety challenges inherent in existing antibody drug conjugates, or ADCs, where a payload is chemically attached to a targeting antibody.

Our most advanced product candidate is Vicinium TM , which is a locally-administered TPT. In the third quarter of 2015, Viventia commenced in the United States and Canada a Phase 3 clinical trial of Vicinium intended for the treatment of subjects with high-grade non-muscle invasive bladder cancer, or NMIBC. Our second most advanced product candidate is Proxinium TM , a locally administered TPT intended for the treatment of squamous cell carcinoma of the head and neck, or SCCHN. We intend to enter into discussions with the FDA relating to our proposed Phase 2 clinical trial design. This Phase 2 clinical trial will explore the potential of Proxinium as a monotherapy and, due to its potential immunogenic effect, in combination with a checkpoint inhibitor for the treatment of SCCHN and is planned to commence enrollment in early 2017. We are also developing cancer therapies for systemic administration utilizing our TPT platform and we may explore additional therapeutic indications for Vicinium and Proxinium.

Our locally-administered TPTs contain a targeting moiety that is designed to bind to EpCAM, which is a surface protein over-expressed in many cancers. This targeting moiety is genetically fused to a truncated form of exotoxin A, or ETA, which is an immunogenic cytotoxic protein payload that is produced by the bacterial species, Pseudomonas. The TPT-EpCAM complex is subsequently internalized into the cell and, once inside the cell, the TPT is cleaved by a cellular enzyme to release the cytotoxic protein payload, thus enabling cancer cell-killing. We believe that our TPTs designed for local administration may not only directly kill cancer cells through targeted delivery of a cytotoxic protein payload, but also potentiate an anti-cancer therapeutic immune response. This immune response is from the release of tumor antigens and the immunologically active setting created by the nature of the cytotoxic protein payloads.

Our early pipeline product candidate, VB6-845d, is being developed for systemic administration as a treatment for multiple types of EpCAM-positive solid tumors. VB6-845d is a TPT consisting of an EpCAM targeting Fab genetically linked to deBouganin a novel plant derived cytotoxic payload that we have optimized for minimal immunogenic potential.

Our Differentiated Approach to Targeted Therapies

Our TPTs are designed to overcome the fundamental efficacy and safety challenges inherent to existing ADCs. We believe they differ in multiple ways. First, our TPTs are designed to deliver a


greater amount of drug to and through the tumor bed. In addition, due to their mechanism of action, our TPTs are designed to kill a broader array of cancer cells with potential activity against both rapidly dividing and quiescent, or cancer stem cells. Also, we believe that our TPTs enhance the immune environment following local administration of the TPT, potentially stimulating greater immune based killing of the tumor cells and establishing a setting where combinations with checkpoint inhibitors and other immuno-oncology drugs may be synergistic. Additionally, we believe that our TPTs can provide improved safety and minimization of off-target toxicity compared to ADCs because our products are stable single fusion proteins and not chemically conjugated antibodies where the payload can come off before the conjugate enters the cell. And lastly, as compared to the complex chemistry involved in making traditional ADCs, we utilize a much simpler and more efficient single-step manufacturing process which we believe improves the cost of goods.

Pipeline

Our most advanced product candidates, Vicinium and Proxinium, use our TPT platform to target EpCAM, which is highly expressed on a variety of cancers, including NMIBC and SCCHN.

 

    Our most advanced locally-administered product candidate, Vicinium, is being developed for the treatment of high-grade NMIBC in subjects who have previously failed two treatments of Bacillus Calmette-Guérin, or BCG, which we refer to as BCG refractory high-grade NMIBC. Vicinium is currently enrolling NMIBC patients in a Phase 3 clincal trial for which we expect to have topline data in the first half of 2018. Vicinium is administered by intravesical injection directly into the bladder. In a completed Phase 2 clinical trial, subjects treated with Vicinium showed evidence of dose dependent clinical efficacy. In this Phase 2 clinical trial, of the 45 evaluable subjects, 44% achieved an overall complete response, or CR, or no evidence of disease, while 16% remained disease-free for at least 18 months. Median time to disease recurrence was 274 days for subjects achieving a CR following a six-week induction phase, and this was extended to 408 days for subjects achieving a CR following a longer 12-week induction phase. Subjects who remain disease-free are able to avoid the surgical removal of their bladder, or a radical cystectomy, which is an important goal in the treatment of bladder cancer. Vicinium was generally well-tolerated with no subjects discontinuing treatment in our Phase 1 and Phase 2 clinical trials.

 

   

Our second most advanced locally-administered product candidate, Proxinium, is being developed as a treatment for patients with late-stage SCCHN. Proxinium is administered via injection directly into the targeted tumors, or intratumoral injection. Proxinium has received Orphan Drug Designation from the FDA and the European Medicines Agency, or the EMA, and Fast Track designation from the FDA. In Viventia’s two Phase 1 clinical trials, subjects whose tumors were either EpCAM positive or EpCAM negative were treated with Proxinium and demonstrated a 53% response rate, which consisted of the subjects that had a complete clinical resolution of a tumor (targeted or non-targeted) or subjects who had clinically and radiologically documented reduction in the size of the target tumor. Additionally, in one subject


 

treated with Proxinium during these clinical trials, the targeted tumor became resectable following treatment, and, subsequently, the tumor was surgically removed. In Viventia’s second Phase 1 clinical trial, 14 of the 16 evaluable EpCAM-positive subjects (87.5%) had either a “complete response,” “response” or “stable” disease following Proxinium treatment, with 25% of subjects achieving a “complete response” of a tumor. In a Phase 2 clinical trial, we observed tumor shrinkage in 10 of the 14 evaluable subjects (71.4%). In addition, based on criteria established by the Eastern Cooperative Oncology Group, eight of the 12 evaluable subjects (66.7%) remained stable or showed improvement by the end of the treatment time point, which averaged approximately two months. In a Phase 3 trial that was initiated but terminated due to operational issues, an early assessment of efficacy demonstrated median survival of approximately 40% over six weeks.

 

    Our lead systemically-administered product candidate, VB6-845d, is being developed for the treatment of multiple types of EpCAM-positive solid tumors. VB6-845d is administered by intravenous infusion. A Phase 1 clinical trial conducted with VB6-845, the prior version of VB6-845d, revealed no clinically relevant immune response to the deBouganin payload. We submitted an Investigational New Drug Application, or IND, to the FDA and expect to respond to feedback requiring additional preclinical and chemistry, manufacturing and controls, or CMC, information prior to planning to start another Phase 1 trial sometime in 2017.

The following table summarizes our product candidate pipeline:

 

LOGO


Our Strategy

We are committed to designing, engineering, developing and commercializing TPTs to identify and address oncology indications that suffer from a high unmet medical need. The key elements of our strategy are as follows:

 

    Rapidly advance Vicinium through clinical development and obtain regulatory approval . Based upon Viventia’s September 2014 end of Phase 2 meeting with the FDA, in the third quarter of 2015, Viventia commenced an open-label, non-randomized Phase 3 clinical trial of Vicinium in subjects with BCG refractory high-grade NMIBC, and for whom the current standard of care is radical cystectomy, in the United States and Canada. Based on safety and efficacy data observed at the highest dose exposures in Viventia’s Phase 2 clinical trial, the FDA has agreed to our plan to employ a greater dose exposure in our Phase 3 clinical trial, which has similar end points to our Phase 2 clinical trial. Additionally, the FDA has provided guidance regarding appropriate clinical trial design for new therapies for NMIBC, including the use of single-arm studies, and, based on our communications with the FDA, we believe that our Phase 3 clinical trial design is consistent with the FDA’s guidance. We expect to report 12-month data from this Phase 3 clinical trial in the first half of 2018. If this Phase 3 clinical trial is successful, we intend to pursue regulatory approval initially in the United States and Canada. Assuming that we receive positive data in our Phase 3 clinical trial, we intend to initiate discussions with the EMA regarding a regulatory pathway for European Union approval. We also are in negotiations to conduct a Phase 1/2 clinical trial of Vicinium in combination with a checkpoint inhibitor for the treatment of NMIBC.

 

    Rapidly advance Proxinium through clinical development and obtain regulatory approval . We intend to enter into discussions with the FDA relating to our proposed Phase 2 clinical trial design. The trial will be designed to test Proxinium as a single agent versus Proxinium in combination with a checkpoint inhibitor and is planned to commence in early 2017.

 

    Advance our systemically-administered product candidates, VB6-845d and VB7-756 . We submitted an IND to the FDA for VB6-845d and in preparation of initiating a Phase 1/2 clinical trial in subjects with EpCAM-positive solid tumors and we are responding to the FDA’s request for additional information prior to initiating a trial.

 

    Explore opportunities in combination therapies .  We plan to continue discussions with potential partners that utilize technologies whose mechanism of action could be complementary to our TPT platform. These technologies include, but are not limited to, checkpoint inhibitors, immune modulators and other immuno-oncology agents.

 

    Expand on the value of selected product candidates through strategic partnerships. We may decide to selectively partner with pharmaceutical and biopharmaceutical companies when we believe that a partner could bring additional resources and expertise to maximize the value of one or more of our product candidates.

 

    Leverage our TPT platform to develop additional product candidates. We intend to develop additional product candidates based on our TPT platform. Depending on the strategic and financial merits, we may enter into partnerships and collaborations to support these development efforts.

 

    Maximize the commercial value of our product candidates .  We maintain global development, marketing and commercialization rights for all of our product candidates. If we obtain regulatory approval for Vicinium in BCG refractory high-grade NMIBC, we may build a North American specialty urology sales force to market the product or seek commercialization partners. Outside North America, we expect to seek commercialization partners with urology expertise. If we obtain regulatory approval for our other product candidates, including Proxinium, we may seek partners with oncology expertise in order to maximize the commercial value of each asset or a portfolio of assets.


Intellectual property

Viventia currently owns or exclusively licenses approximately 23 families of patents and applications, which generally relate to its product candidates and evolving our platform of targeting agents, cytotoxins (such as deBouganin) and linker technologies. As our product candidates evolve through clinical development, we continue to monitor advancements and bolster patent coverage with the goal of attaining durable patent protection for at least 15 years from product launch. In addition, we have filed and are in the process of filing a number of additional applications around our platform technology, including our various targeting agents, cytotoxins, and linkers that, if issued, would expire in 2036.

Product Candidates—Vicinium and Proxinium

We exclusively license two families (48 patents and four applications) licensed from the University of Zurich, or Zurich, which, among other things, include composition of matter claims directed to EpCAM antibody chimeras, EpCAM antibody chimera-cytotoxin conjugates, and their potential use in treating bladder and head and neck cancer. These families claim all or portions of Vicinium and Proxinium, as well as certain of their respective indications under clinical development. The first family includes composition of matter claims directed to the EpCAM antibody chimeras that are used in Vicinium and Proxinium. The first family consists of 21 patents in the United States, Canada, Europe and Japan, which expire in April 2020, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. The second family includes claims directed to the use of Vicinium and Proxinium in the treatment of bladder and head and neck cancer, respectively, and consists of 27 issued patents in the United States, Canada, China, Israel and Japan and pending applications in the United States, Hong Kong and Europe. The expiry date of the patents in this family is April 2024, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis.

In addition to the Zurich portfolio, we own one issued U.S. patent with composition of matter claims directed to modified nucleic acid sequences that encode Vicinium and Proxinium and are potentially useful for high expression yield of Vicinium and Proxinium. The expiry date of this patent is in September 2028, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. In addition, we have filed and are in the process of


filing a number of additional patent applications with claims around composition of matter, medical applications, and various uses of its various product candidates that, if issued, would expire in 2036.

Bouganin and deBouganin family

We exclusively license a family of patents and applications licensed from Merck KGaA, or Merck, which include claims directed to, among other things, modified de-immunized bouganin protein, EpCAM antibody-bouganin conjugates, and use claims directed to, among other things, methods of using the same to treat various diseases, including cancer. Claims in this family may cover, among other things, both the immunoconjugate, VB6-845d, and the de-immunized bouganin cytotoxins used in our product candidates. Currently the family consists of three issued patents in the United States, as well as 33 issued patents in Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan, South Korea, Mexico, New Zealand, Russia and South Africa and one pending application in each of the United States, Brazil and Norway. The expiry date of this family is in March 2025, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. We also exclusively license from Merck three additional families of patents and applications with, among other things, use claims directed to various de-immunization methodologies, which expire in May 2018, December 2018 and February 2022, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. In addition, we have filed and are in the process of filing a number of additional patent applications with, among other things, composition of matter and use claims around our various product candidates that, if issued, would expire in 2036 and beyond.

We also exclusively license a family of patents directed to the unmodified bouganin cytotoxin from Protoden Technologies Inc., or Protoden, a company owned by Clairmark. The seven patents are in the United States, Canada and Europe and expire in June 2018, subject to any applicable patent term adjustment or extension that may be available on a jurisdictional basis. We do not currently view these patents and applications as significant to the development and commercialization, if approved, of our product candidates.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 regarding the Acquisition is incorporated by reference into this Item 2.03.

Lease Agreement with 131 -149 Hamelin Street Leaseholds Limited

Viventia’s predecessor company, Viventia Biotech Inc., entered into an indenture (the “Lease Agreement”), dated as of March 31, 2000, with an entity owned by Mr. Dan, Almad Investments Limited, for the lease of Viventia’s manufacturing facility in Winnipeg, Manitoba, Canada. The subject property was subsequently transferred to another entity owned by Mr. Dan, 131 - 149 Hamelin Street Leaseholds Limited, and Viventia entered into lease amending agreements, dated as of June 26, 2003, January 26, 2004 and June 25, 2008. The minimum annual base rent for the Facility Lease is currently C$204,300 per annum, plus additional rent


and applicable taxes. On September 16, 2015, Viventia entered into an amendment to the lease extending the term through September 2020, and granting it a right to renew the lease for one subsequent five year term.

The foregoing description of the Lease Agreement is not complete and is qualified in its entirety by reference to the document attached hereto as Exhibit 10.4, which is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities

The information set forth in Item 1.01 regarding the Acquisition and the issuances of shares of common stock of Eleven as consideration for the Acquisition is incorporated by reference into this Item 3.02.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

In connection with the Acquisition, Cary G. Pfeffer, M.D. resigned from the Board of Eleven and the nominating and corporate governance committee thereof, and Messrs. Dan and Hurly were appointed to the Board of Eleven. Each of Messrs. Dan and Hurly was designated as a Class I member of the Board to serve until the 2018 annual meeting of the stockholders of the Company and, in each case, thereafter until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. Messrs. Dan and Hurly served as directors of Viventia prior to the Acquisition. Each of Mr. Dan, through his controlled affiliate Clairmark, and Mr. Hurly are Selling Shareholders under the Share Purchase Agreement, and Mr. Dan’s controlled affiliate Clairmark is a party to the Registration Rights Agreement. In connection with the closing of the Acquisition, Messrs. Dan and Hurly received their proportional share of the shares of Eleven common stock issued as consideration and will each be entitled, as Selling Shareholders, to receive certain contingent cash payments from Eleven, in each case on the terms and subject to the conditions set forth in the Share Purchase Agreement.

In connection with the Acquisition, each of Dr. Celniker and Ms. Tubridy resigned from her position as an executive officer of the Company, and the Board of Eleven appointed each of the following to serve, as of the effective time of the Acquisition, as executive officers of Eleven:

 

Name

  

Position with Eleven Following the Acquisition

Stephen A. Hurly    President and Chief Executive Officer
Arthur P. DeCillis, M.D.    Chief Medical Officer


Separation Agreements

In connection with their terminations of employment, on September 20, 2016, each of Dr. Celniker and Ms. Tubridy entered into a Separation and Release of Claims Agreement with the Company (together, the “Separation Agreements”). The Separation Agreements set forth the terms of each officer’s resignation, effective as of September 20, 2016, including a general release of claims against the Company arising out of her employment with or resignation from the Company.

Under the Separation Agreement with Dr. Celniker, the Company has agreed to pay Dr. Celniker $450,000, which is an amount equal to her base salary for 12 months, paid in a lump sum pursuant to our regular payroll practices, to pay Dr. Celniker $225,000, which is an amount equal to her target bonus payment for 2016, to accelerate in full the vesting of all of Dr. Celniker’s outstanding equity awards (other than certain equity awards forfeited by Dr. Celniker to the extent necessary to eliminate any “excess parachute payments” within the meaning of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended), to provide that all stock options granted to Dr. Celniker under Eleven’s Amended and Restated 2009 Stock Incentive Plan shall continue to be exercisable based on her continued service as a non-employee member of the Board and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Dr. Celniker and certain of her dependents with group health and dental insurance for a period of one month.

Under the Separation Agreement with Ms. Tubridy, the Company has agreed to pay Ms. Tubridy $323,710, which is an amount equal to her base salary for 12 months, paid in a lump sum pursuant to our regular payroll practices, to accelerate in full the vesting of all of Ms. Tubridy’s outstanding equity awards and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Ms. Tubridy and certain of her dependents with group health and dental insurance for a period of 12 months.

The foregoing descriptions of the terms of the Separation Agreements included in this Item 5.02 are not complete and are qualified in their entirety by reference to the Separation Agreements of Dr. Celniker and Ms. Tubridy attached hereto as Exhibits 10.5 and 10.6, which are incorporated herein by reference.

McCabe Retention Agreement

In connection with the Acquisition, we also entered into a retention letter agreement with Mr. McCabe, who will continue to serve as our Chief Financial Officer following the closing of the Acquisition. The retention letter agreement provides that Mr. McCabe: (i) would receive a $75,000 bonus at the closing of the Acquisition, (ii) is eligible for an additional $75,000 retention bonus payable in six months or earlier if his employment is terminated without cause or for good reason (each as defined in his employment agreement); (iii) may voluntarily resign without good reason (as defined in his employment agreement) within the six-month period following the closing of the Acquisition and receive the post-change in control severance benefits under his employment agreement, provided however, in such case, Mr. McCabe would forego the above described retention bonus, and (iv) would receive options to purchase 100,000 shares of the Company’s common stock at an exercise price of $3.37 per share.


The foregoing description of the terms of the document included in this Item 5.02 is not complete and is qualified in its entirety by reference to the retention letter agreement of Mr. McCabe attached hereto as Exhibit 10.7, which is incorporated herein by reference.

New Executive Officer Employment Agreements

On September 20, 2016, in connection with the Acquisition, we entered into employment agreements with each of Mr. Hurly and Dr. DeCillis. Each of these agreements provides that their employment will continue until either the Company or such executive officer provides notice of termination in accordance with the terms of the applicable employment agreement. In addition, the Company has entered into non-competition, non-solicitation, confidentiality and assignment agreements with each of Mr. Hurly and Dr. DeCillis which prohibit them from competing with Eleven, soliciting the Company’s employees and customers and disclosing confidential information during the term of their employment and for a specified time thereafter.

Pursuant to their respective employment agreements, each of the Company’s new executive officers is entitled to receive an annual base salary as follows: Mr. Hurly: $425,000; and Dr. DeCillis: $417,011.

Pursuant to their respective employment agreements, in connection with their appointment, the Company granted Mr. Hurly options to purchase 350,000 shares of the Company’s common stock and Dr. DeCillis options to purchase 100,000 shares of the Company’s common stock, in each case at an exercise price of $3.37 per share.

In addition, each of the Company’s executive officers is eligible to receive an annual cash bonus, which is based on the achievement of individual and corporate performance objectives, calculated as a percentage of the executive’s annual base salary, and which will be determined by the Company’s Board, in its sole discretion. Mr. Hurly’s target annual bonus is 50% of his annual base salary and Dr. DeCillis’s target bonus is 30% of his annual base salary.

Potential Payments Upon Termination or Change in Control Transaction

Upon execution and effectiveness of a release of claims, each of Mr. Hurly and Dr. DeCillis will be entitled to severance payments if his employment is terminated under specified circumstances.

Mr. Hurly . If the Company terminates Mr. Hurly’s employment without cause, as defined in his employment agreement, or if Mr. Hurly terminates his employment with the Company for good reason, as defined in his employment agreement, absent a change in control transaction, as defined in his employment agreement, the Company is obligated to pay Mr. Hurly’s base salary for a period of 12 months, paid in accordance with the Company’s then-current payroll practices, to pay Mr. Hurly an amount equal to his target bonus payment for the year in which the termination of employment occurs, prorated for the portion of the year in which he was employed, and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Mr. Hurly and certain of his dependents with group health and dental insurance for a period of 12 months.


If the Company terminates Mr. Hurly’s employment without cause or if Mr. Hurly terminates his employment with the Company for good reason, in each case within 18 months following a change in control transaction, the Company is obligated to pay Mr. Hurly an amount equal to his base salary for 12 months, paid in accordance with the Company’s then-current payroll practices, to pay Mr. Hurly an amount equal to his target bonus payment for the year in which the termination of employment occurs, to accelerate in full the vesting of all of Mr. Hurly’s outstanding equity awards and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Mr. Hurly and certain of his dependents with group health and dental insurance for a period of 12 months.

Dr. DeCillis . If the Company terminates Dr. DeCillis’s employment without cause, as defined in Dr. DeCillis’s employment agreement, or if Dr. DeCillis terminates his employment with the Company for good reason, as defined in his employment agreement, absent a change in control transaction, as defined in his employment agreement, the Company is obligated to pay Dr. DeCillis’s base salary for a period of 12 months, paid in accordance with the Company’s then-current payroll practices, and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Dr. DeCillis and certain of his dependents with group health and dental insurance for a period of 12 months.

If the Company terminates Dr. DeCillis’s employment without cause or if Dr. DeCillis terminates his employment with the Company for good reason, in each case within 12 months following a change of control transaction, the Company is obligated to pay Dr. DeCillis’s base salary for a period of 12 months, paid in accordance with the Company’s then-current payroll practices, to accelerate in full the vesting of all outstanding equity awards held by Dr. DeCillis and, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Dr. DeCillis and certain of his dependents with group health and dental insurance for a period of 12 months.

Taxation . To the extent that any severance or other compensation payment to Mr. Hurly or Dr. DeCillis pursuant to his employment agreement or any other agreement constitutes an “excess parachute payment” within the meaning of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, then such executive officer will receive the full amount of such severance and other payments, or a reduced amount intended to avoid the application of Sections 280G and 4999, whichever provides the executive with the highest amount on an after-tax basis.

The foregoing descriptions of the employment agreements of Mr. Hurly and Dr. DeCillis are not complete and are qualified in their entirety by reference to employment agreements attached hereto as Exhibit 10.8 and 10.9, which are incorporated herein by reference.

New Executive Officer Biographies

Stephen Hurly

Stephen A. Hurly has served as Viventia’s president since September 2015, Viventia’s chief executive officer since March 2014 and as a member of Viventia’s board of directors since January 2015. Prior to joining Viventia, Mr. Hurly was the chief executive officer of Burrill &


Co.’s Merchant Banking Division, a finance business for life science companies, from June 2011 to October 2014. Prior to that, Mr. Hurly was the head of the Life Sciences Investment Banking Practice at Boenning & Scattergood, a securities, asset management and investment banking firm, from June 2008 to May 2011. Mr. Hurly has more than 15 years of experience in the investment banking business. Mr. Hurly has served on the board of directors of PHusis Therapeutics Inc., a targeted small molecule therapeutics company, since May 2011. He graduated from Swarthmore College with a B.A. degree in Engineering in 1990 and earned an M.B.A. from the University of Chicago in 1997.

Arthur DeCillis

Arthur DeCillis, M.D., joined Viventia as its chief medical officer in September 2015. Prior to joining Viventia, Dr. DeCillis was the Vice President of Medical Affairs at Exelixis, Inc., a biotechnology company which discovers, develops and commercializes small molecules for the treatment of cancer, from July 2011 to September 2015. Prior to that position, Dr. DeCillis served as Exelixis, Inc.’s Vice President of Clinical Research from May 2007 to July 2011. Prior to that, Dr. DeCillis served as a Senior Director and Executive Director at Novartis Pharmaceutical Corp. from 2005 to 2007. Previously, he held positions of increasing responsibility in Oncology Global Clinical Research at Bristol-Myers Squibb Company, culminating as group director. He graduated from Lehigh University with a Bachelor’s degree in Mathematics in 1978, received his Doctor of Medicine degree from the University of Rochester School of Medicine and Dentistry in 1984 and received a M.S. degree in Intelligent Systems from the University of Pittsburgh in 1994. He completed his internship and residency in Internal Medicine at the Medical College of Virginia and a Fellowship in Medical Informatics at the University of Pittsburgh. He is Board Certified in Internal Medicine.

Director Compensation

Mr. Dan will be compensated in the same manner as the Company’s other non-employee directors. Information concerning the current compensation of the Company’s directors is set forth in the Company’s definitive proxy statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 29, 2016. Accordingly, Mr. Dan received, upon his election to the Board, an option to purchase 16,143 shares of common stock of the Company at an exercise price of $3.37 per share.

As our President and Chief Executive Officer, Mr. Hurly will not receive any additional compensation for his service as a Director.

Director and Executive Officer Indemnification Agreements

On September 20, 2016, in connection with their election to our Board and/or appointment as an executive officer of the Company, each of Mr. Dan, Mr. Hurly and Dr. DeCillis entered into the Company’s standard form of Indemnification Agreement, a copy of which was filed as Exhibit 10.12 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-193131) filed with the SEC on January 23, 2014. Pursuant to the terms of this agreement, the Company may be required, among other things, to indemnify each director and executive officer for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by each of them in any action or proceeding arising out of each of their service as the Company’s directors.


Item 7.01 Regulation FD Disclosure

The Acquisition represents the completion of the Company’s previously disclosed review of strategic alternatives. Although the Company does not currently anticipate any future imminent transactions in connection with this process, it cannot provide any commitment regarding whether the Company will engage in any future sale, strategic partnership, business combination or other arrangement.

On September 21, 2016, Eleven will host a conference call to provide supplemental information regarding the Acquisition to analysts and investors at 8:30 a.m. Eastern time. To listen to the conference call via the Internet, please visit the investor relations section of Eleven’s website. To access the conference call, please dial (844) 831-3025 (domestic) or (315) 625-6887 (international), conference ID: 85062695.

The information in this Item 7.01 of this Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 8.01 Other Events

On September 21, 2016, the Company issued a press release with respect to the Acquisition. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The Company is filing herewith as Exhibit 99.2 certain risk factors related to the Viventia business that are relevant to the Company after giving effect to the Acquisition.

 

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired.

The consolidated financial statements of Viventia, including the report of its independent registered public accounting firm, PricewaterhouseCoopers LLP, required by this item have not been filed on this initial Current Report on Form 8-K but will be filed by amendment on or before December 6, 2016.

The unaudited consolidated financial statements of Viventia required by this item have not been filed on this initial Current Report on Form 8-K but will be filed by amendment on or before December 6, 2016.

(b) Pro Forma Financial Information.

The pro forma financial information required by this item has not been filed on this initial Current Report on Form 8-K but will be filed by amendment on or before December 6, 2016.


(d) Exhibits.

 

Exhibit
No.

  

Description

  2.1*    Share Purchase Agreement, effective as of September 20, 2016, by and between Eleven Biotherapeutics, Inc., Viventia Bio Inc. (“Viventia”) and Clairmark Investments Ltd., as representative of the selling shareholders (the Company hereby agrees to furnish supplementally a copy of any omitted schedules to the SEC upon request).
  4.1*    Registration Rights Agreement, dated as of September 20, 2016 by and among Eleven Biotherapeutics, Inc. and the shareholders named therein.
10.1*†    License Agreement, effective January 13, 2003, as amended and restated on October 14, 2015, by and between The University of Zurich and Viventia Bio Inc.
10.2*†    Amended & Restated Exclusive License Agreement, dated October 14, 2015, by and between Merck KGaA and Viventia Bio Inc.
10.3*    Amended and Restated License Agreement, dated October 17, 2014, by and between Clairmark Investments Ltd. (successor in interest of Protoden Technologies Inc.) and Viventia Bio Inc.
10.4*    Indenture, dated March 31, 2000, between 131-149 Hamelin Street Leaseholds Limited (successor in interest of Almad Investments Limited) and Viventia Bio Inc. (successor in interest of Viventia Biotech Inc.), as amended by Lease Amending Agreement, dated June 26, 2003, as further amended by Lease Amending Agreement, dated January 26, 2004, and as further amended by Letter Agreement, dated June 25, 2008, and as further amended by Lease Amending Agreement, September 16, 2015.
10.5*    Separation Agreement dated September 20, 2016 between the Registrant and Abbie C. Celniker
10.6*    Separation Agreement dated September 20, 2016 between the Registrant and Karen L. Tubridy
10.7*    Retention Letter Agreement dated September 20, 2016 between the Registrant and John J. McCabe.
10.8*    Employment Agreement dated September 20, 2016 between the Registrant and Stephen A. Hurly
10.9*    Employment Agreement dated September 20, 2016 between the Registrant and Arthur P. DeCillis
99.1*    Press Release, dated September 21, 2016, announcing Eleven’s acquisition of Viventia
99.2*    Risk Factors of Viventia’s Business

 

* Filed herewith.
Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission.


Cautionary Note on Forward-Looking Statements

Any statements in this Current Report on Form 8-K about future expectations, plans and prospects for the Company, including statements about benefits of the Acquisition, future management of the Company, Viventia’s business, the Company’s strategy and future operations and other statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the Company’s ability to integrate Viventia’s business, turnover resulting from changes in the Company’s management, the uncertainties inherent in the initiation and conduct of clinical trials, availability and timing of data from clinical trials, whether results of early clinical trials or preclinical studies will be indicative of the results of future trials, the adequacy of any clinical models, uncertainties associated with regulatory review of clinical trials and applications for marketing approvals and other factors discussed in the “Risk Factors of Viventia’s Business” attached hereto as Exhibit 99.2 and in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this Current Report on Form 8-K represent the Company’s views as of the date hereof. The Company anticipates that subsequent events and developments will cause the Company’s views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ELEVEN BIOTHERAPEUTICS, INC.
Date: September 21, 2016     By:  

/s/ John J. McCabe

      Chief Financial Officer


EXHIBIT INDEX

 

Exhibit
No.

  

Description

  2.1*    Share Purchase Agreement, effective as of September 20, 2016, by and between Eleven Biotherapeutics, Inc., Viventia Bio Inc. (“Viventia”) and Clairmark Investments Ltd., as representative of the selling shareholders (the Company hereby agrees to furnish supplementally a copy of any omitted schedules to the SEC upon request).
  4.1*    Registration Rights Agreement, dated as of September 20, 2016 by and among Eleven Biotherapeutics, Inc. and the shareholders named therein.
10.1*†    License Agreement, effective January 13, 2003, as amended and restated on October 14, 2015, by and between The University of Zurich and Viventia Bio Inc.
10.2*†    Amended & Restated Exclusive License Agreement, dated October 14, 2015, by and between Merck KGaA and Viventia Bio Inc.
10.3*    Amended and Restated License Agreement, dated October 17, 2014, by and between Clairmark Investments Ltd. (successor in interest of Protoden Technologies Inc.) and Viventia Bio Inc.
10.4*    Indenture, dated March 31, 2000, between 131-149 Hamelin Street Leaseholds Limited (successor in interest of Almad Investments Limited) and Viventia Bio Inc. (successor in interest of Viventia Biotech Inc.), as amended by Lease Amending Agreement, dated June 26, 2003, as further amended by Lease Amending Agreement, dated January 26, 2004, and as further amended by Letter Agreement, dated June 25, 2008, and as further amended by Lease Amending Agreement, September 16, 2015.
10.5*    Separation Agreement dated September 20, 2016 between the Registrant and Abbie C. Celniker
10.6*    Separation Agreement dated September 20, 2016 between the Registrant and Karen L. Tubridy
10.7*    Retention Letter Agreement dated September 20, 2016 between the Registrant and John J. McCabe.
10.8*    Employment Agreement dated September 20, 2016 between the Registrant and Stephen A. Hurly
10.9*    Employment Agreement dated September 20, 2016 between the Registrant and Arthur P. DeCillis
99.1*    Press Release, dated September 21, 2016, announcing Eleven’s acquisition of Viventia
99.2*    Risk Factors of Viventia’s Business

 

* Filed herewith.
Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission.

Exhibit 2.1

SHARE PURCHASE AGREEMENT

by and among

ELEVEN BIOTHERAPEUTICS, INC.,

VIVENTIA BIO INC.,

THE SHAREHOLDERS OF VIVENTIA BIO INC.

(NAMED HEREIN)

AND

SOLELY IN ITS CAPACITY AS SELLER REPRESENTATIVE,

CLAIRMARK INVESTMENTS LTD.

Dated as of September 20, 2016

THIS DOCUMENT IS NOT INTENDED TO CREATE NOR WILL IT BE DEEMED TO CREATE A LEGALLY BINDING OR ENFORCEABLE OFFER, ACCEPTANCE OF AN OFFER OR AGREEMENT OF ANY TYPE OR NATURE, UNLESS AND UNTIL AGREED TO AND EXECUTED BY ALL PARTIES.


TABLE OF CONTENTS

 

         Page  

ARTICLE I PURCHASE AND SALE

     1   

1.1

 

Purchase and Sale

     1   

1.2

 

Closing; Actions at the Closing

     1   

1.3

 

Closing Payment Certificate; Closing Date Payments

     3   

1.4

 

Escrow

     4   

1.5

 

Exchange Procedures

     4   

1.6

 

Seller Representative

     5   

1.7

 

Company Equity Awards; Convertible Securities

     7   

1.8

 

Allocation Schedules; Payments of Escrow Shares

     8   

1.9

 

Contingent Payments

     8   

1.10

 

Withholding Rights

     17   

1.11

 

Further Assurances

     17   

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     17   

2.1

 

Organization, Standing and Corporate Power

     17   

2.2

 

Authority; No Conflict; Required Filings and Consents

     18   

2.3

 

Ownership of Stock

     19   

2.4

 

Litigation

     19   

2.5

 

Purchase for Own Account; Sophistication

     19   

2.6

 

Access to Information

     19   

2.7

 

Restricted Securities; Legends

     20   

2.8

 

Accredited Investor; Regulation S

     20   

2.9

 

Brokers

     20   

2.10

 

Convertible Securities; Indebtedness

     20   

2.11

 

Residency

     21   

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     21   

3.1

 

Organization, Standing and Corporate Power

     21   

3.2

 

Capitalization

     21   

3.3

 

Subsidiaries

     23   

3.4

 

Authority; No Conflict; Required Filings and Consents

     24   

3.5

 

Financial Statements

     25   

3.6

 

Absence of Certain Changes

     26   

3.7

 

Undisclosed Liabilities

     28   

3.8

 

Books and Records

     28   

3.9

 

Tax Matters

     28   

3.10

 

Assets

     32   

3.11

 

Owned and Leased Real Property

     32   

3.12

 

Intellectual Property

     34   

 

-i-


3.13

 

Contracts

     34   

3.14

 

Litigation

     37   

3.15

 

Environmental Matters

     37   

3.16

 

Labor and Employment

     38   

3.17

 

Employee Benefit Plans

     40   

3.18

 

Compliance with Laws

     44   

3.19

 

Permits and Regulatory Matters

     44   

3.20

 

Insurance

     45   

3.21

 

Certain Business Relationships With Affiliates

     45   

3.22

 

Brokers; Schedule of Fees and Expenses

     46   

3.23

 

Powers of Attorney

     46   

3.24

 

Convertible Securities; Indebtedness

     46   

3.25

 

Privacy

     46   

3.26

 

Competition Act (Canada)

     46   

3.27

 

Investment Canada Act (Canada)

     46   

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER

     47   

4.1

 

Organization, Standing and Power

     47   

4.2

 

Authority; No Conflict; Required Filings and Consents

     47   

4.3

 

Capitalization

     48   

4.4

 

Buyer Stock

     49   

4.5

 

SEC Filings; Financial Statements; Information Provided

     49   

4.6

 

Listing; Investment Company

     50   

4.7

 

Contracts

     50   

4.8

 

Absence of Certain Changes

     50   

4.9

 

License Agreement

     51   

4.10

 

Brokers

     51   

4.11

 

Litigation

     51   

4.12

 

Employee Benefit Plans

     51   

4.13

 

WTO Investor

     51   

ARTICLE V INDEMNIFICATION

     52   

5.1

 

Indemnification

     52   

5.2

 

Indemnification Claims

     53   

5.3

 

Survival of Representations and Warranties

     56   

5.4

 

Limitations

     56   

ARTICLE VI OTHER POST-CLOSING AGREEMENTS

     58   

6.1

 

No Claims

     58   

6.2

 

Succession

     58   

6.3

 

Board of Directors of Buyer

     58   

6.4

 

Lock-Up; Regulation S

     59   

6.5

 

Tax Agreements

     59   

 

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ARTICLE VII DEFINITIONS

     60   

ARTICLE VIII MISCELLANEOUS

     72   

8.1

 

Notices

     72   

8.2

 

Entire Agreement

     73   

8.3

 

Fees and Expenses

     73   

8.4

 

Amendment

     73   

8.5

 

Third-Party Beneficiaries

     73   

8.6

 

Assignment

     73   

8.7

 

Severability

     74   

8.8

 

Counterparts and Signature

     74   

8.9

 

Interpretation

     74   

8.10

 

Governing Law

     75   

8.11

 

Remedies

     75   

8.12

 

Submission to Jurisdiction

     76   

8.13

 

Disclosure Schedules

     76   

Exhibits:

 

Exhibit A

 

Form of Registration Rights Agreement

Exhibit B

 

Form of Escrow Agreement

Exhibit C

 

Closing Date Allocation Schedule

Exhibit D

 

Form of Seller Representative Confidentiality Agreement

Exhibit E

 

Form of Executive Employment Agreement

 

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Schedules:

Buyer Disclosure Schedule

Company Disclosure Schedule

 

-iv-


SHARE PURCHASE AGREEMENT

THIS SHARE PURCHASE AGREEMENT (the “ Agreement ”) is entered into as of September 20, 2016, by and among Eleven Biotherapeutics, Inc., a Delaware corporation (the “ Buyer ”); Viventia Bio Inc., a corporation existing under the laws of the Province of Ontario (the “ Company ”); the shareholders of the Company named on the signature pages hereto (each, a “ Seller ” and collectively the “ Sellers ”); and, solely for purposes of being bound by Section 1.6 , Section 1.9 , Article V , Article VII and Article VIII and solely in such Person’s capacity as the Seller Representative, Clairmark Investments Ltd., a corporation incorporated under the laws of the Province of Ontario (the “ Seller Representative ”).

RECITALS

WHEREAS, the Sellers own all of the issued and outstanding Shares; and

WHEREAS, the parties desire to enter into this Agreement pursuant to which each Seller agrees to sell to the Buyer and the Buyer agrees to purchase from each Seller all of the Shares owned by such Seller, on and subject to the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Buyer, the Company, the Sellers and, solely for purposes of being bound by Section 1.6 , Section 1.9 , Article V , Article VII and Article VIII and solely in such Person’s capacity as the Seller Representative, the Seller Representative agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 Purchase and Sale . At the Closing, upon the terms and subject to the conditions set forth herein, the Buyer shall purchase from each Seller, and each Seller shall, severally and not jointly, sell, convey, assign, transfer, and deliver to the Buyer, all of the Shares owned by such Seller, as set forth opposite such Seller’s name on the Closing Date Allocation Schedule, free and clear of all Liens (other than restrictions on transfer imposed hereunder and under applicable securities Laws), in exchange for the applicable portion of the Aggregate Consideration as set forth in this Agreement.

1.2 Closing; Actions at the Closing .

(a) The Closing shall take place at 10:00 a.m., Eastern time, simultaneous with the execution and delivery of this Agreement, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007,


unless another date, place or time is agreed to in writing by the Buyer and the Company. Upon the agreement of the parties, the Closing may take place remotely, via electronic exchange of documents.

(b) At the Closing:

(i) the Company and the Sellers shall deliver to the Buyer the following certificates, instruments and documents:

(A) an executed counterpart of the Escrow Agreement executed by the Escrow Agent and the Seller Representative;

(B) an executed counterpart of the Registration Rights Agreement executed by the applicable Seller;

(C) an executed copy of the Executive Employment Agreement executed by Stephen Hurly;

(D) the Acquired Company Financials;

(E) evidence, in form and substance reasonably satisfactory to Buyer, that (i) the Company has submitted to a vote of its shareholders, in a manner that satisfies the shareholder approval requirements under Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder, the right of any “disqualified individual” (as defined in Section 280G(c) of the Code) to receive any and all payments (or other benefits) contingent on the consummation of the transactions contemplated by this Agreement (within the meaning of Section 280G(b)(2)(A)(i) of the Code) to the extent necessary so that no payment received by such “disqualified individual” shall be a “parachute payment” under Section 280G(b) of the Code (determined without regard to Section 280G(b)(4) of the Code), which such vote shall establish the disqualified individual’s right to the payment or other compensation if approved by the Sellers, and (ii) the Company has obtained any required waivers or consents from the disqualified individual prior to the vote;

(F) evidence, in form and substance reasonably satisfactory to Buyer, that the Company has, at its own expense, (i) obtained all of the waivers, Permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices, set forth on Section 1.2(b)(i) of the Company Disclosure Schedule, and (ii) obtained all other waivers, Permits, consents, approvals, authorizations, registrations, filings and notices which are necessary for the consummation of the transactions contemplated by this Agreement or that are material to the conduct of the Company’s business; and

(G) such other certificates and instruments (including certificates of good standing of the Company and the Subsidiaries in their jurisdictions of organization and the various foreign jurisdictions in which they are qualified, certified charter documents and certificates as to incumbency of officers and the adoption of authorization resolutions) as Buyer shall reasonably request in connection with the Closing;

 

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(ii) the Buyer shall deliver to the Seller Representative and the Company the following certificates, instruments and documents:

(A) an executed counterpart of the Escrow Agreement executed by the Buyer;

(B) an executed counterpart of the Registration Rights Agreement executed by the Buyer and the applicable stockholders of Buyer;

(C) an executed counterpart of the Executive Employment Agreement executed by the Buyer; and

(D) such other certificates and instruments (including certificates of good standing of the Company in its jurisdiction of organization and certificates as to incumbency of officers and the adoption of authorization resolutions) as the Company shall reasonably request in connection with the Closing;

(iii) the Buyer shall deliver to the Seller Representative, for distribution to the Sellers in accordance with the Closing Payment Certificate, either, at the Buyer’s option, (i) certificates representing a number of shares of Buyer Common Stock or (ii) shares of Buyer Common Stock issued in book entry, in each case equal to the Aggregate Closing Consideration, subject to Section 1.5 hereof; and

(iv) the Buyer shall deliver to the Escrow Agent a stock certificate representing the Escrow Amount.

1.3 Closing Payment Certificate; Closing Date Payments .

(a) The Company has delivered, prior to the date hereof: (i) the Closing Payment Certificate; (ii) a debt forgiveness agreement in form and substance reasonably satisfactory to the Buyer duly executed by each Person to whom any Indebtedness is (or at the Closing will be) owed by the Company or any Subsidiary, which shall include a complete release of the Company and each Subsidiary from all Liens, liabilities and other obligations with respect to such Indebtedness, effective upon the discharge of such Indebtedness at the Closing; and (iii) a certificate of the Secretary of the Company certifying resolutions duly adopted by the board of directors of the Company providing for the termination and cancellation of all outstanding Company Options, Company RSUs and Convertible Securities, in each case effective as of immediately prior to the Closing.

(b) Prior to the date hereof, the Seller Representative delivered to the Buyer a duly executed and effective confidentiality agreement in the form attached hereto as Exhibit D .

 

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1.4 Escrow .

(a) At Closing, the Buyer will deliver to the Escrow Agent the Escrow Amount to be held in escrow pursuant to the Escrow Agreement and to be distributed in accordance with the terms of this Agreement and the Escrow Agreement. The Escrow Account shall be held by the Escrow Agent and released by the Escrow Agent to the Buyer or the Seller Representative, as applicable, in accordance with the terms of this Agreement and the Escrow Agreement.

(b) Any Escrow Shares distributed pursuant to the Escrow Agreement for the benefit of the Sellers shall be distributed in accordance with the Escrow Agreement. A portion of such distributed amount equal to the Pro Rata Share that is represented by each Share shall be delivered by the Escrow Agent to the Seller Representative pursuant to the terms of the Escrow Agreement for distribution to the holder of such Share.

1.5 Exchange Procedures . The procedures for the purchase and sale of the Shares in connection with the transactions contemplated by this Agreement are as follows:

(a) Procedures . At or prior to the Closing, each Seller shall deliver, or the Company shall deliver on a Seller’s behalf, to the Buyer the Certificates evidencing the Shares owned by such Seller duly endorsed in blank or with stock powers duly executed by such Seller. The transfer of the Shares by the Sellers to the Buyer shall be deemed to occur as of the close of business on the Closing Date. Upon proper delivery of the Certificates to the Buyer, each Seller shall be entitled to receive in exchange therefor the applicable portion of the Aggregate Closing Consideration in respect of the Shares represented by such Certificate, as reflected on the Closing Date Allocation Schedule attached to the Closing Payment Certificate. If payment in respect of any Certificate is to be made to a Person other than the Person in whose name such Certificate is registered, it shall be a condition of payment that the Certificate so delivered shall be transferable and be properly endorsed or shall otherwise be in proper form for transfer, that the signatures on such Certificate or any related stock power shall be properly guaranteed and that the Person requesting such payment shall have established to the satisfaction of Buyer that any transfer and other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate have been paid or are not applicable. Until delivered as contemplated by this Section   1.5(a) , each Certificate shall be deemed at all times after the Closing to represent only the right to receive upon such delivery the applicable portion of the Aggregate Closing Consideration and the applicable portion of any Escrow Shares that become payable pursuant to this Agreement. Sellers shall not be entitled to receive any portion of the Aggregate Consideration to which they would otherwise be entitled until such Certificates are properly delivered.

(b) No Liability . To the extent permitted by applicable Law, none of the Buyer or the Company shall be liable to any Seller for any amount delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates shall not have been exchanged prior to the fourth (4 th ) anniversary of the Closing Date (or immediately prior to such earlier date on which the related consideration payable pursuant to this Article I would otherwise escheat to or become the property of any Governmental Entity), any such consideration in respect thereof shall, to the extent permitted by applicable Law, become the property of the Buyer, free and clear of all claims or interest of any Person previously entitled thereto.

 

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(c) Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact and a customary indemnification of the Company and the Buyer in a form reasonably satisfactory to the Buyer by the Person claiming such Certificate to be lost, stolen or destroyed, the Buyer shall pay in exchange for such lost, stolen or destroyed Certificate the portion of the Aggregate Consideration payable in respect thereof pursuant to this Agreement. The Buyer may, in its discretion and as a condition precedent to the payment thereof, require the owner of such lost, stolen or destroyed Certificate to give the Buyer a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Buyer with respect to the Certificate alleged to have been lost, stolen or destroyed.

(d) No Fractional Shares . All payments hereunder in the form of shares of Buyer Common Stock, including the portion of the Aggregate Closing Consideration and any Escrow Shares, shall be made only in whole shares, and any fractional shares shall be rounded down to the nearest whole share.

(e) Affiliate Legends Section 1.5(e) of the Company Disclosure Schedule sets forth a list of those Persons who are, in Company’s reasonable judgment, “affiliates” of Company within the meaning of Rule 145 promulgated under the Securities Act (“ Rule 145 Affiliates ”). The Buyer shall be entitled to place appropriate legends on the certificates evidencing any shares of Buyer Common Stock to be received by Rule 145 Affiliates of the Company in connection with the Closing reflecting the restrictions set forth in Rule 145 promulgated under the Securities Act and to issue appropriate stop transfer instructions to the transfer agent for Buyer Common Stock.

1.6 Seller Representative .

(a) By their execution of this Agreement and the transfer and delivery of their Certificates, and/or their acceptance of any consideration pursuant to this Agreement the Sellers hereby irrevocably (subject only to Section 1.6(d)) appoint the Seller Representative as the representative, attorney-in-fact and agent of the Sellers in connection with the transactions contemplated by this Agreement and the Escrow Agreement and in any litigation or arbitration involving this Agreement or the Escrow Agreement. In connection therewith, the Seller Representative is authorized to do or refrain from doing all further acts and things, and to execute all such documents as the Seller Representative shall deem necessary or appropriate, and shall have the power and authority to:

(i) act for some or all of the Sellers with regard to all matters pertaining to this Agreement or the Escrow Agreement;

(ii) act for the Sellers to transact matters of litigation with regard to all matters pertaining to this Agreement or the Escrow Agreement;

 

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(iii) execute and deliver all amendments, waivers, ancillary agreements, certificates and documents that the Seller Representative deems necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement or the Escrow Agreement, including delivering any update to or correction, amendment or modification of the Closing Date Allocation Schedule permitted by Section 1.8(a) ;

(iv) receive funds, make payments of funds, and give receipts for funds;

(v) do or refrain from doing, on behalf of the Sellers, any further act or deed that the Seller Representative deems necessary or appropriate in the Seller Representative’s discretion relating to the subject matter of this Agreement or the Escrow Agreement, in each case as fully and completely as the Sellers could do if personally present;

(vi) give and receive all notices required to be given or received by the Sellers under this Agreement or the Escrow Agreement;

(vii) give any written direction to the Escrow Agent on behalf of any Seller;

(viii) agree to, negotiate, enter into settlements and compromises and/or comply with arbitration awards and court orders with respect to claims for indemnification made by the Buyer under Article V ; and

(ix) receive service of process in connection with any claims under this Agreement and/or the Escrow Agreement.

(b) All decisions and actions of the Seller Representative on behalf of the Sellers shall be deemed to be facts ascertainable outside of this Agreement and shall be binding upon all Sellers, and no Seller shall have the right to object, dissent, protest or otherwise contest the same.

(c) The Seller Representative shall act for the Sellers on all of the matters set forth in this Agreement and the Escrow Agreement in the manner the Seller Representative believes to be in the best interest of the Sellers. The Seller Representative is authorized to act on behalf of the Sellers notwithstanding any dispute or disagreement among the Sellers. In taking any action as Seller Representative, the Seller Representative may rely conclusively, without any further inquiry or investigation, upon any certification or confirmation, oral or written, given by any Person whom the Seller Representative reasonably believes to be authorized thereunto. The Seller Representative may, in all questions arising hereunder, rely on the advice of counsel, and the Seller Representative shall not be liable to any Seller for anything done, omitted or suffered in good faith by the Seller Representative based on such advice. The Seller Representative undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Seller Representative. The Seller Representative shall not have any liability to any of the Sellers

 

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for any act done or omitted hereunder as Seller Representative while acting in good faith. The Seller Representative shall be indemnified by the Sellers from and against any loss, liability or expense incurred in good faith on the part of the Seller Representative and arising out of or in connection with the acceptance or administration of the Seller Representative’s duties hereunder.

(d) In the event the Seller Representative becomes unable to perform the Seller Representative’s responsibilities hereunder or resigns from such position, the Sellers (acting by a written instrument signed by Sellers who held, as of immediately prior to the Closing, a majority (by voting power) of the then outstanding Company Shares) shall select another representative to fill the vacancy of the Seller Representative, and such substituted representative shall be deemed to be the Seller Representative for all purposes of this Agreement. The Seller Representative may be removed only upon delivery of written notice to the Buyer signed by Sellers who, as of immediately prior to the Closing, held a majority (by voting power) of the then outstanding Company Shares; provided that no such removal shall be effective until such time as a successor Seller Representative shall have been validly appointed hereunder. Any substituted representative shall provide the Buyer prompt written notice of any such representative, including his, her or its identity and address.

(e) For all purposes of this Agreement:

(i) the Buyer shall be entitled to rely conclusively on the instructions and decisions of the Seller Representative as to the settlement of any disputes or claims under this Agreement or the Escrow Agreement, or any other actions required or permitted to be taken by the Seller Representative hereunder, and no party hereunder or any Seller shall have any cause of action against the Buyer for any action taken by the Buyer in reliance upon the instructions or decisions of the Seller Representative;

(ii) the provisions of this Section 1.6 are independent and severable, are irrevocable (subject only to Section 1.6(d)) and coupled with an interest and shall be enforceable notwithstanding any rights or remedies that any Seller may have in connection with the transactions contemplated by this Agreement; and

(iii) the provisions of this Section 1.6 shall be binding upon the executors, heirs, legal representatives, personal representatives, successor trustees and successors of each Seller, and any references in this Agreement to a Seller shall mean and include the successors to the rights of each applicable Seller hereunder, whether pursuant to testamentary disposition, the Laws of descent and distribution or otherwise.

1.7 Company Equity Awards; Convertible Securities . Prior to the Closing Date, the board of directors of the Company shall adopt the necessary resolutions, and the Company shall take all other actions, necessary to cause each unexercised, unconverted or unsettled, as the case may be, Company Option, Company RSU and Convertible Security outstanding as of immediately prior to the Closing to be terminated and cancelled without payment of any consideration.

 

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1.8 Allocation Schedules; Payments of Escrow Shares .

(a) The Closing Date Allocation Schedule sets forth a true, correct and complete summary of the allocation of the amounts payable to the Sellers pursuant to this Agreement. The Company has delivered to the Buyer, prior to the date hereof, the Closing Date Allocation Schedule (attached as an exhibit to the Closing Payment Certificate). The Buyer shall be entitled to rely conclusively on the Closing Date Allocation Schedule, and, as between the Sellers, on the one hand, and the Buyer, on the other hand, any amounts delivered by the Buyer to any Seller (or delivered by the Buyer for delivery) in accordance with the Closing Date Allocation Schedule shall be deemed for all purposes to have been delivered to the applicable Seller in full satisfaction of the obligations of the Buyer under this Article I .

(b) The portion of any Escrow Shares payable pursuant to this Agreement shall be paid by the Buyer to the Seller Representative for the benefit of the Sellers.

(c) The parties understand and agree that (i) the Sellers have no rights as a security holder of the Buyer as a result of their right to receive the Escrow Shares, (ii) without limiting the generality of Section 8.6 , no right to receive any Escrow Shares may be assigned or otherwise transferred without the prior written consent of the Buyer and any purported assignment or transfer in the absence of such consent shall be null and void ab initio , and (iii) no interest is payable as additional consideration with respect to any of the Escrow Shares.

1.9 Contingent Payments .

(a) Milestone Payments . Buyer shall notify Seller Representative within three (3) Business Days of Buyer becoming aware that a First Sale has been achieved. Buyer shall require each other member of the Buyer Rights Group to notify the Buyer promptly of the achievement of any First Sale. The Sellers shall be entitled to receive from Buyer payments of additional cash amounts based on the following:

(i) First European Sale Payment . Within twenty (20) Business Days following (A) the achievement of the First European Sale and (B) Buyer’s receipt of an invoice from the Seller Representative in respect thereof, Buyer shall pay to the Seller Representative, for the benefit of the Sellers, a one-time cash payment of an amount equal to $7,000,000.

(ii) First U.S. Sale Payment . Within twenty (20) Business Days following (A) the achievement of the First U.S. Sale and (B) Buyer’s receipt of an invoice from the Seller Representative in respect thereof, Buyer shall pay to the Seller Representative, for the benefit of the Sellers, a one-time cash payment of an amount equal to $12,500,000.

(iii) First JP Sale Payment . Within twenty (20) Business Days following (A) the achievement of the First JP Sale and (B) Buyer’s receipt of an invoice from the Seller Representative in respect thereof, Buyer shall pay to the Seller Representative, for the benefit of the Sellers, a one-time cash payment of an amount equal to $3,000,000.

(iv) For the avoidance of doubt, no payment under clause (i), (ii) or (iii) above shall be paid more than once and in no event shall the Buyer pay or otherwise owe any amounts in excess of $22,500,000 in the aggregate pursuant to this Section 1.9(a) .

 

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(b) Earn-Out Payments .

(i) Buyer shall pay to the Seller Representative, for the benefit of the Sellers, quarterly payments equal to two percent (2%) of Net Sales during the applicable Earn-Out Period(s) (each, an “ Earn-Out Payment ”). Each Earn-Out Payment, if due, shall be paid within ninety (90) calendar days after the end of the calendar quarter in which the applicable Net Sales occur.

(ii) Each Earn-Out Payment shall be accompanied by a written report from the Buyer to the Seller Representative supporting the amount of such Earn-Out Payment. Each such written report shall provide the following information (to the extent available to Buyer) with respect to the applicable quarterly period: (A) the total gross sales of the Product for such quarterly period by Selling Parties on a country-by-country basis, (B) the calculation of Net Sales for such quarterly period, including deductions therefrom (on a country-by-country basis) and any relevant currency conversion, and (C) a calculation of the amount of the Earn-Out Payment due with respect to such Net Sales for such quarterly period pursuant to this Section 1.9(b) .

(c) Methods of Payments; Foreign Currency . All Contingent Payments shall be paid in U.S. dollars by wire transfer to an account designated in writing by the Seller Representative. All Contingent Payments denominated in any currency other than U.S. dollars shall be converted into U.S. dollars in accordance with the Buyer’s or the applicable Selling Party’s then-current accounting practices consistently applied across its products in the applicable country, territory or region.

(d) Accounting .

(i) Buyer shall, and shall require the other Selling Parties to, keep full, clear and accurate records for a period that need not exceed three (3) years after the relevant Earn-Out Payment is owed pursuant to Section 1.9(b) , in each case in sufficient detail to enable the calculation of the applicable Earn-Out Payments. Buyer shall, and shall require the other Selling Parties to, upon not less than sixty (60) calendar days’ prior written notice from the Seller Representative, permit all such books and records relating to such three (3) year period to be examined by an independent accounting firm that (A) is selected by the Seller Representative, (B) is reasonably acceptable to Buyer and, if applicable, such Selling Party and (C) enters into a customary confidentiality agreement with Buyer and, if applicable, such Selling Party, for the purpose of verifying the reports provided by Buyer under Section 1.9(b)(ii) . Such audit shall not be performed more frequently than once per calendar year, shall not include an audit of any books and records that were previously audited pursuant to this Section 1.9(d) and shall be conducted under appropriate confidentiality provisions for the sole purpose of verifying the accuracy and completeness of the underlying data from which the Earn-Out Payments are calculated and the calculation of Earn-Out Payments.

 

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(ii) In the event that such audit concludes that any Earn-Out Payment was underpaid or overpaid, the Seller Representative or the Buyer, respectively, shall be entitled to deliver a written notice thereof (a “ Dispute Notice ”), in which case the Seller Representative and the Buyer shall, for a period of not less than thirty (30) days after delivery of the Dispute Notice, attempt in good faith to resolve the items in dispute. In the event no agreement can be reached by the Seller Representative and the Buyer as to the calculation of the applicable Earn-Out Payment within thirty (30) days after delivery of a Dispute Notice, then each of the Buyer and the Seller Representative, on behalf of the Sellers, shall have the right to pursue applicable legal remedies.

(iii) Any examination or audit pursuant to Section 1.9(d)(i) or Section 1.9(d)(ii) shall be at the expense of the Seller Representative, except in the event that the Seller Representative and the Buyer agree, or it is finally determined pursuant to the dispute resolution procedures set forth in this Section 1.9(d) , that there was an underpayment of the Earn-Out Payments of five percent (5%) or more over the period being audited, in which case the reasonable audit fees charged by the independent accounting firm for such examination shall be paid by Buyer. The amount of any underpayment in any Earn-Out Payment for any audited period shall be paid by Buyer to the Seller Representative (for distribution to the Sellers) within twenty (20) Business Days following the agreement by the Seller Representative and the Buyer to the amount of such underpayment, or the determination of such underpayment by such dispute resolution mechanism. The amount of any overpayment in any Earn-Out Payment for any audited period shall be paid to the Buyer by the Seller Representative within twenty (20) Business Days following the agreement by the Seller Representative and the Buyer to the amount of such overpayment, or the determination of such overpayment by such dispute resolution mechanism.

(e) Late Payments . All Contingent Payments that are not paid within the applicable time period set forth herein shall accrue interest at the rate of three percent (3%) above the then-applicable London Interbank Offered Rate as quoted in the Wall Street Journal, or, if lower, the highest rate permitted under applicable law.

(f) Diligence .

(i) During the Development Diligence Period, the Buyer shall, and shall cause the other members of the Buyer Rights Group to, use Commercially Reasonable Efforts to achieve Marketing Authorization in countries throughout the world.

(ii) During the applicable Earn-Out Period with respect to each Major Country, China or Canada, the Buyer shall, and shall cause the other members of the Buyer Rights Group to, use Commercially Reasonable Efforts to commercialize the Product in such Major Country, China or Canada, respectively.

 

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(iii) During the Development Diligence Period, the Buyer shall keep the Seller Representative informed of its progress through the annual provision of a written report summarizing the progress of the development of the Product in countries throughout the world, provided within thirty (30) days after the end of each calendar year.

(iv) During the applicable Earn-Out Period in each Major Country, China or Canada, as applicable, the Buyer shall keep the Seller Representative informed of its progress through the annual provision of a written report summarizing the progress of the development and commercialization of the Product in each Major Country, China and Canada, respectively, provided within thirty (30) days after the end of each calendar year.

(v) If the Seller Representative believes that Buyer is not devoting Commercially Reasonable Efforts for the Product in any country in accordance with Section 1.9(f)(i) or Section 1.9(f)(ii) , the Seller Representative will notify Buyer in writing detailing its specific concerns, and the Seller Representative and a representative of the Buyer with knowledge of the development or commercialization (as the case may be) of the Product will meet within twenty (20) Business Days of such written notice to discuss such concerns.

(g) Miscellaneous . The rights and obligations of each Seller under this Section 1.9 , including the right to receive payments, (i) are purely contractual rights and not a security for purposes of any federal or state securities Laws, (ii) will not be represented by any form of certificate or instrument, (iii) do not give Sellers any dividend rights, voting rights, liquidation rights, preemptive rights or other rights common to holders of the Buyer’s equity securities and (iv) are not transferrable, assignable or redeemable; provided that a Seller may transfer its rights and obligations under this Section 1.9 to a Permitted Transferee.

(h) Certain Definitions . As used in this Section 1.9 , the following terms shall have the meanings ascribed to them below:

API ” shall mean a single chain anti-EpCAM fragment fused with Pseudomonas exotoxin and based on the Company’s Targeted Protein Therapeutics platform.

Biosimilar Product ” shall mean, with respect to a country and a Product, a product that (a) is not produced, licensed or owned by the Buyer or any of its Affiliates, (b) is, according to the relevant Government Entity responsibility for Marketing Authorization for such country (a “ Regulatory Authority ”), highly similar with respect to such Product, notwithstanding minor differences in clinically inactive components, and with no meaningful differences between the Biosimilar Product and such Product in terms of the efficacy, safety, purity and potency of the product, (c) is approved through an abbreviated regulatory pathway and (d) has the same amino acid sequence as the API in the Product. For countries or jurisdictions where no explicit biosimilar regulations exist, a Biosimilar Product means any product that (i) has been deemed to be a biosimilar to such Product by a Governmental Entity with the relevant authority in another country or jurisdiction or (ii) has the same amino acid sequence as the API in the Product.

 

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Buyer Rights Group ” shall mean (a) the Buyer, (b) any Affiliate of the Buyer, (c) any Third Party with which the Buyer or any Affiliate of the Buyer has a contract or agreement granting such Third Party a license to develop, distribute or sell the Product (such Third Party, a “ Sublicensee ”, and such contract or agreement, a “ Sublicense Agreement ”), (d) any Third Party, other than a Sublicensee, with which the Buyer or any Affiliate of the Buyer has a contract or agreement granting such Third Party the right to develop, distribute or sell the Product (such Third Party, a “ Subcontractor” , and such contract or agreement, a “ Subcontract Agreement ”), and (e) any successor or assign of any Person described above with respect to such Person’s interest in the Product.

Combination Product ” shall mean any Product that contains the API and a therapeutically active biologic or chemical molecule that is not the API, either packaged together or in the same formulation, which are sold and labeled for use as a single unit.

Commercially Reasonable Efforts ” shall mean the level of efforts and resources which would be used by the Buyer with regard to the development of pharmaceutical products of similar market and profit potential at a similar stage in development or product lifecycle, taking into consideration the safety and efficacy of the product, anticipated or approved labeling for the product, the risks inherent in the development and commercialization of the product, the product’s competitiveness compared to alternative products in the marketplace, the proprietary position of the product (including scope and duration of relevant patents), the regulatory status of the product, whether the product is subject to a clinical hold, recall or market withdrawal, the likelihood of receipt of Marketing Authorization in a particular jurisdiction, the anticipated profitability of the product (including the amounts payable to licensors of patents or other intellectual property rights necessary to sell the product in the relevant market) and other relevant factors commonly considered by the Buyer and its Affiliates in connection with comparable products. Commercially Reasonable Efforts shall be determined on a market-by-market basis for a particular product and the level of effort may be different for different markets, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the product and the market involved. It is understood that a delay or cessation of efforts to develop or commercialize a product may be consistent with Commercially Reasonable Efforts.

Development Diligence Period ” shall mean the period following the Closing and continuing until the seventh anniversary of the Closing Date.

Earn-Out Period ” shall mean, with respect to a country (the “ Sales Country ”), the period beginning on the date of first sale by a member of the Buyer Rights Group of a Product in such Sales Country or its territories or possessions after the receipt of Marketing Authorization for such Product in such Sales Country or its territories or possessions and continuing until the earlier of (a) December 31, 2033 and (b) fifteen (15) years after the first sale in such Sales Country; provided, however, that if, at any time on after the tenth anniversary of the first occurrence of a First Sale in any of the Major Countries, there is a Biosimilar Product on the market in the applicable Sales Country, the Earn-Out Period with respect to such Sales Country (if then in effect) shall end.

 

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First European Sale ” means the first sale by a member of the Buyer Rights Group of a Product in any Major European Country or its territories or possessions after the receipt of Marketing Authorization for such Product in such country or its territories or possessions.

First JP Sale ” means the first sale by a member of the Buyer Rights Group of a Product in Japan or its territories or possessions after the receipt of Marketing Authorization for such Product in Japan or its territories or possessions.

First Sale ” means any of the First European Sale, the First JP Sale or the First U.S. Sale.

First U.S. Sale ” means the first sale by a member of the Buyer Rights Group of a Product in the United States or its territories or possessions after the receipt of Marketing Authorization for such Product in the United States or its territories or possessions.

Major Country ” means any of Japan, any Major European Country or the United States.

Major European Country ” means France, Germany, Italy, Spain or the United Kingdom.

Marketing Authorization ” means, with respect to a country, the regulatory authorization required to market and sell a biologic in such country.

Net Sales ” means, subject to clause (d) below, with respect to sales of a Product by a member of the Buyer Rights Group determined in accordance with clause (a), (b) or (c) below, as applicable:

(a) Sublicensee Net Sales Definition . For sales of Product by a Sublicensee to a Third Party that is not a member of the Buyer Rights Group where, pursuant to the applicable Sublicense Agreement, the Buyer (or its Affiliate) is receiving a percentage of “net sales” of such Product as compensation for such sales, then Net Sales for such sales means either (i) the definition of “net sales” of such Product as set forth in such Sublicense Agreement or (ii) the definition of Net Sales set forth in clause (c), whichever definition is expected to result in the higher “net sales” figure.

(b) Subcontractor Net Sales Definition . For sales of Product by a Subcontractor to a Third Party that is not a member of the Buyer Rights Group where, pursuant to the applicable Subcontractor Agreement, the Buyer (or its Affiliate) is receiving a percentage of “net sales” of such Product as compensation for such sales, then Net Sales for such sales means either (i) the definition of “net sales” of such Product as set forth in such Subcontractor Agreement or (ii) the definition of Net Sales set forth in clause (c), whichever definition is expected to result in the higher “net sales” figure.

 

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(c)  Direct Sales Net Sales Definition . For sales of Product (i) directly by the Buyer or any of its Affiliates to a Third Party that is not a member of the Buyer Rights Group, (ii) by a Sublicensee to a Third Party that is not a member of the Buyer Rights Group and where, pursuant to the applicable Sublicense Agreement, neither the Buyer nor any of its Affiliates is receiving a percentage of “net sales” of such Product as compensation for such sales, (iii) by a Subcontractor to a Third Party that is not a member of the Buyer Rights Group and where, pursuant to the applicable Subcontractor Agreement, neither the Buyer nor any of its Affiliates is receiving a percentage of “net sales” of such Product as compensation for such sales, or (iv) for purposes of determining Net Sales in accordance with clause (a)(ii) or (b)(ii) above, then Net Sales shall have the meaning set forth in this clause (c): the aggregate gross amount invoiced for the Product sold by the applicable Selling Party, in finished product form, packaged and labeled for sale, to a Third Party (other than any member of the Buyer Rights Group), less the following deductions allowed to such Third Party by the Selling Party (only to the extent invoiced and actually taken by such Third Party), or otherwise incurred or accrued but not reimbursed, on such sales for:

(A) trade, cash and/or quantity discounts actually allowed which are not already reflected in the amount invoiced;

(B) government mandated fees, rebates or discounts, including health care reform fees proportionally allocated to the Product (and Combination Products), on the one hand, and other products, on the other hand, of the Selling Party and its Affiliates;

(C) credits or allowances for returns, rejections or recalls (due to spoilage, damage, expiration of useful life or otherwise), retroactive price reductions, billing corrections or bad debts;

(D) rebates, returns, refunds, fees, credits, allowances and charge backs, including those granted to managed care organization, wholesaler, distributor, buying group, health care insurance carrier, chain pharmaceutical, mass merchandiser, staff model HMO, pharmacy benefit manager and hospital buying group/group purchasing organization administration fees, proportionally allocated to the Product (and Combination Products), on the one hand, and other products, on the other hand, of the Selling Party and its Affiliates;

(E) excise taxes, sales taxes, value-added taxes, other consumption taxes, any other similar taxes and custom duties to the extent such taxes are remitted to the applicable taxing authority and to the extent the Selling Party is not otherwise entitled to a credit or a refund for such taxes, duties or payments made; and

(F) freight, insurance and other transportation charges to the extent included in the invoice price and separately identified on the invoice or other documentation maintained in the ordinary course of business;

 

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each of the above, as determined in accordance with GAAP or International Financial Reporting Standards.

Any amounts deductible in connection with the calculation of Net Sales hereunder shall not be deducted more than once, even if such amounts may fall into more than one of the categories described in subsections (A) through (F) above.

In the event that non-monetary consideration is received for any Product, Net Sales will be calculated based on the average price charged for such Product during the preceding calendar year, or in the absence of such sales, the fair market value of the Product, as determined by the Selling Party in good faith.

(d) Clauses (a), (b) and (c) above are each subject to the provisions of this clause (d):

Sales between or among members of the Buyer Rights Group shall be excluded from the computation of Net Sales and no payments will be payable on such sales.

Notwithstanding the foregoing, any transfer of the Product for use in clinical trials or compassionate, indigent patient or similar uses where the Product is provided without charge or at or below cost (w) for a clinical trial, (x) for a patient assistance program, (y) to a not-for-profit foundation or (z) as samples, will not be included in Net Sales.

Notwithstanding the foregoing, in the event that a Product is sold as a Combination Product (a “ Combination Sale ”), the Net Sales amount for such Product sold in such a Combination Sale shall be determined as follows:

(I) Except as provided below, the Net Sales amount for a Combination Sale in a particular country in a particular quarter shall be calculated by multiplying the Net Sales of such Combination Product in such country in such quarter (the “ Combination Sale Amount ”) by the fraction A/(A+B), where “A” is the average Net Sales price of the API included in such Combination Product if sold separately by a Buyer Rights Group member in similar quantities in finished form as a separate product in such country in such quarter, and “B” is the average net sales price (determined in accordance with this Net Sales definition applicable to sales of Products which are not Combination Sales) of all other therapeutically active compounds (other than the API) included in such Combination Product if sold separately by a Buyer Rights Group member in similar quantities in finished form as a separate product(s) in such country in such quarter.

(II) In the event that a member of the Buyer Rights Group sells the API included in such Combination Sale in finished form as a separate product in such country in such quarter, but does not separately sell in finished form as a separate product all of the other therapeutically active compounds (other than the API) included in such Combination Product in such country in such quarter, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Combination Sale Amount by the fraction A/C where “A” is defined above, and “C” is the average Net Sales price of such Combination Product when sold by a Buyer Rights Group member in finished form as a separate product in such country in such quarter.

 

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(III) In the event that no member of the Buyer Rights Group sells the API included in a Combination Sale in finished form as a separate product in such country where such Combination Sale occurs in such quarter, but a member of the Buyer Rights Group does separately sell all of the other therapeutically active components included in the Combination Sale in finished form as a separate product(s) in such country in such quarter, the calculation of Net Sales resulting from such Combination Sale shall be determined by multiplying the Combination Sale Amount by the fraction (C-B)/C, where “C” is defined above, and “B” is defined above.

(IV) If the calculation of Net Sales resulting from a Combination Sale in a country in a quarter cannot be determined by any of the foregoing methods, the calculation of Net Sales for such Combination Sale shall be calculated in a manner determined by the Buyer or Selling Party in good faith based upon the relative value of the therapeutically active compounds (including the API) included in such Combination Product and the Buyer shall notify the Seller Representative of such determination and provide the Seller Representative with data to support such determination.

Permitted Transfer ” means, with respect to a Seller, (i) a transfer (upon the death of such Seller) by will or intestacy; (ii) a transfer by instrument to an inter vivos or testamentary trust in which such Seller and/or family members of such Seller are beneficiaries; (iii) a transfer made pursuant to a court order of a court of competent jurisdiction (such as in connection with divorce, bankruptcy or liquidation); (iv) if such Seller is a partnership or limited liability company, a distribution by the transferring partnership or limited liability company to its partners or members, as applicable; or (v) a transfer made by operation of law (including a consolidation or merger) or in connection with the dissolution, liquidation or termination of any corporation, limited liability company, partnership or other entity.

Permitted Transferee ” means a person to whom the rights and obligations of a Seller under this Section 1.9 are transferred pursuant to a Permitted Transfer and otherwise in accordance with this Agreement.

Product ” means the biologic product currently identified by the brand name “Vicinium”, or any variant or derivative thereof that contains the API, but not including the biologic product currently identified by the brand name “Proxinium”.

Selling Party ” means a member of the Buyer Rights Group making a particular sale of a Product.

Third Party ” means any entity other than Buyer or the Company or an Affiliate of Buyer or the Company.

 

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1.10 Withholding Rights . The Buyer, the Company and the Escrow Agent will be entitled to deduct and withhold from the amounts otherwise payable by it pursuant to this Agreement to any Person, including payments made under the Escrow Agreement, such amounts as it reasonably determines that it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law, and to collect any necessary Tax forms, including Forms W-8 or W-9, as applicable, or any similar information, from Sellers and any other recipients of payments hereunder. In the event that any amount is so deducted and withheld, and properly remitted, such amount will be treated for all purposes of this Agreement as having been paid to the Person to whom the payment from which such amount was withheld was made.

1.11 Further Assurances . At any time and from time to time after the Closing, at the Buyer’s request and without further consideration, each of the Sellers shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Buyer may reasonably request, more effectively to transfer, convey and assign to the Buyer, and to confirm the Buyer’s title to, all of the Shares owned by such Seller, to put the Buyer in actual possession and operating control of the assets, properties and business of the Company and the Subsidiaries, to assist the Buyer in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller, severally and not jointly, represents and warrants to the Buyer that, except as set forth in the Company Disclosure Schedule, the statements contained in this Article II are true and correct with respect to the applicable Seller as of the date of this Agreement and will be true and correct with respect to such Seller as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

2.1 Organization, Standing and Corporate Power . To the extent any Seller is an entity, (a) the Seller is a corporation or other entity duly organized, validly existing and is in good standing, including with respect to Tax Law, under the Laws of the jurisdiction of its formation, (b) the Seller is duly qualified to conduct business and is in good standing, including with respect to Tax Law, under the Laws of each jurisdiction in which the nature of the Seller’s businesses or the ownership or leasing of its properties requires such qualification, (c) the Seller has made available to the Buyer complete and accurate copies of its Organizational Documents, (d) the Seller is not in default under or in violation of any provision of its Organizational Documents, and (e) the Seller has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

 

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2.2 Authority; No Conflict; Required Filings and Consents .

(a) The Seller has all requisite power and authority (corporate and other) and capacity (in the case of individuals) to execute and deliver this Agreement and the Ancillary Agreements and to perform the Seller’s obligations hereunder and thereunder. The execution and delivery by the Seller of this Agreement and the Ancillary Agreements and the performance by the Seller of this Agreement and the consummation by the Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and other action on the part of the Seller. This Agreement and the Ancillary Agreements have been or will be as of the Closing Date duly and validly executed and delivered by the Seller and, assuming the due authorization, execution and delivery by the Buyer, the other Sellers, the Seller Representative and any other party thereto, constitutes or will constitute a valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity (the “ Bankruptcy and Equity Exception ”).

(b) Neither the execution and delivery by the Seller of this Agreement or the Ancillary Agreements, nor the performance by the Seller of its obligations hereunder or thereunder, nor the consummation by the Seller of the transactions contemplated hereby or thereby, will (i) conflict with or violate any provision of the Organizational Documents of the Seller, each as amended or restated to date, (ii) require on the part of the Seller any notice to or filing with, or any Permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any contract, lease, sublease, license, sublicense, franchise, Permit, indenture, agreement or mortgage for borrowed money, instrument of Indebtedness, Lien or other arrangement to which the Seller is a party or by which the Seller is bound or to which any of the assets of the Seller are subject, (iv) result in the imposition of any Lien upon any assets of the Seller or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Seller or any of its respective properties or assets, except in the case of the foregoing clauses (iii), (iv) and (v) for such notices, consents and waivers that, if not obtained or made, and such conflicts, breaches, defaults, accelerations, terminations, modifications, cancellations, Liens and violations that, individually or in the aggregate, have not been and would not reasonably be expected to prohibit or materially delay the ability of the Seller to consummate the transactions contemplated by this Agreement or to perform its obligations hereunder.

(c) No consent, approval, license, Permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Seller in connection with the execution and delivery of this Agreement by the Seller or the consummation by the Seller of the transactions contemplated by this Agreement.  Section 2.2(c) of the Company Disclosure Schedule sets forth a true, correct and complete list of all consents and approvals of third parties (including Governmental Entities), and all filings and notices, that are required in connection with the consummation by the Seller of the transactions contemplated by this Agreement.

 

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2.3 Ownership of Stock . The Seller holds legally, beneficially and of record all of the Seller’s Shares as set forth on Section 3.2(b) of the Company Disclosure Schedule, free and clear of any Liens (other than restrictions on transfer arising under applicable securities Laws). The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting or transfer of any Shares. Upon consummation of the purchase contemplated hereby, the Buyer will acquire from the Seller good and marketable title to all Shares owned by the Seller, free and clear of all Liens (other than restrictions on transfer arising under applicable securities Laws).

2.4 Litigation . There is no Legal Proceeding (excluding, for this purpose, inquiries and investigations from the definition of such term) pending and, to the knowledge of the Seller, there is no Legal Proceeding (including, for this purpose, investigations and inquiries in the definition of such term) threatened with respect to, against or affecting the Seller that questions the validity of this Agreement or any action taken or to be taken by the Seller in connection herewith or that could reasonably be expected to have a material adverse effect on the Seller’s ability to consummate the transactions contemplated by this Agreement or to perform his, her or its obligations hereunder.

2.5 Purchase for Own Account ; Sophistication . The Seller acknowledges and agrees that the shares of Buyer Common Stock to be acquired by the Seller pursuant to this Agreement will be acquired for investment for the Seller’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Seller has no present intention of selling, granting any participation in, or otherwise distributing the same. The Seller acknowledges and agrees that the Seller does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third party, with respect to any of the shares of Buyer Common Stock to be received by it pursuant to this Agreement. The Seller represents and warrants that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of owning the shares of Buyer Common Stock to be received by it pursuant to this Agreement. The Seller has the ability to bear the economic risk of the investment in shares of Buyer Common Stock, including complete loss of such investment.

2.6 Access to Information . The Seller acknowledges that (a) it has been afforded (i) access to information about each of the Company and the Buyer, respectively, and their respective financial conditions, results of operations, businesses, properties and prospects sufficient to enable the Seller to evaluate its investment in Buyer Common Stock; and (ii) the opportunity to obtain such additional information that the other party possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment in Buyer Common Stock and any such additional information has been provided to the Seller’s reasonable satisfaction, and (b) it has sought such professional advice as it has considered necessary to make an informed decision with respect to its acquisition of the Buyer Common Stock. Except to the extent expressly provided for in this Agreement, the Seller hereby agrees that neither Buyer nor any of its Affiliates will have or be subject to any liability or indemnification obligation to the Seller or to any other person resulting from the issuance of shares of Buyer Common Stock to the Sellers. For the avoidance of doubt, nothing in this Section 2.6 shall limit or restrict any Seller’s right to bring a claim for indemnification against the Buyer arising out of a breach of any representation or warranty of the Buyer contained in Article IV of this Agreement.

 

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2.7 Restricted Securities ; Legends .

(a) The Seller understands that the shares of Buyer Common Stock to be received by it in connection with the transactions contemplated by this Agreement have not been registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Seller’s representations and warranties as expressed herein. The Seller understands that such shares of Buyer Common Stock will be “restricted securities” under applicable securities Laws and that, pursuant to these Laws, the Seller must hold such shares indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

(b) The Seller understands that the shares of Buyer Common Stock to be received by it in connection with the transactions contemplated by this Agreement may be notated with one or more of the following legends:

(i) “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933”; and

(ii) any legend required by applicable securities Laws to the extent such Laws are applicable to the Shares represented by the certificate, instrument, or book entry so legended.

2.8 Accredited Investor; Regulation S . Except as set forth on Schedule 2.8 to this Agreement, each Seller either is (a) an “accredited investor” (as defined in Regulation D promulgated under the Securities Act) or (b) not a “U.S. person” within the meaning of Rule 902 of Regulation S of the Securities Act and is not acquiring Buyer Common Stock pursuant to this Agreement for the account or benefit of any U.S. Person within the meaning of Rule 902 of Regulation S of the Securities Act (each such Seller, a “ Regulation S Seller ”).

2.9 Brokers . The Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

2.10 Convertible Securities; Indebtedness . To the extent the Seller holds or held any Convertible Securities or any other Indebtedness of the Company prior to the Closing, such Seller has, on or prior to the date hereof, executed a debt forgiveness agreement with the Company with respect to such Convertible Securities and/or Indebtedness, which debt

 

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forgiveness agreement provides that (a) all such Convertible Securities and/or Indebtedness and related instruments have been terminated and cancelled, (b) all Liens (and guarantees), if any, in connection therewith relating to the assets, rights and/or properties of the Company securing such Convertible Securities and/or Indebtedness have been released and terminated and (c) all obligations of the Company in respect of such Convertible Securities and/or Indebtedness have been discharged in full.

2.11 Residency . The Seller is not a non-resident of Canada within the meaning of the Tax Act.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Buyer that, except as set forth in the Company Disclosure Schedule, the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

3.1 Organization, Standing and Corporate Power . The Company is a corporation duly organized, validly existing and in corporate and Tax good standing under the Laws of the jurisdiction of its incorporation. The Company is duly qualified to conduct business and is in corporate and Tax good standing under the Laws of each jurisdiction listed in Section 3.1 of the Company Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Company’s businesses or the ownership or leasing of its properties requires such qualification, except for such failures to be so qualified or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Company has made available to the Buyer complete and accurate copies of its Organizational Documents. The Company is not in default under or in violation of any provision of its Organizational Documents.

3.2 Capitalization .

(a) The authorized capital of the Company consists of an unlimited number of Company Common Shares and an unlimited number of Company Preferred Shares. As of the date of this Agreement, there are (i) 14,564,445 Company Common Shares and no Company Preferred Shares outstanding and (ii) no Company Shares held in treasury.

 

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(b) Section 3.2(b) of the Company Disclosure Schedule sets forth a complete and accurate list, as of the date of the Agreement, of the holders of the Company Shares, showing the number of Company Common Shares held by each shareholder. Section 3.2(b) of the Company Disclosure Schedule also indicates all outstanding Company Shares that constitute restricted stock or that are otherwise subject to a repurchase or redemption right, indicating the name of the applicable shareholder, the vesting schedule (including any acceleration provisions with respect thereto), and the repurchase price payable by the Company. All of the issued and outstanding Company Shares have been and on the Closing Date will be duly authorized, validly issued, fully paid, non-assessable and free of all preemptive rights and Liens. All of the issued and outstanding Company Shares have been offered, issued and sold by the Company in material compliance with all applicable Laws, including applicable securities Laws. The Company is a “private issuer” for purposes of National Instrument 45-106.

(c) Section 3.2(c) of the Company Disclosure Schedule sets forth a complete and accurate list, as of the date of this Agreement, of: (i) all Company Share Plans, indicating for each Company Share Plan the number of shares of Company Share issued to date under such Company Share Plan, the number of Company Shares subject to outstanding options under such Company Share Plan and the number of Company Shares reserved for future issuance under such Company Share Plan; (ii) all holders of outstanding Company Options, indicating with respect to each Company Option the Company Share Plan under which it was granted, the number of Company Shares subject to such Company Option, the exercise price, the date of grant, and the vesting schedule (including any acceleration provisions with respect thereto); and (iii) all holders of Company RSUs, indicating with respect to each Company RSU, the Company Share Plan under which it was granted, the number of shares in the capital of the Company, and the class or series of such shares, subject to such Company RSU, the date of issuance, the expiration date and any other material terms thereof. The Company has provided to the Buyer complete and accurate copies of all Company Share Plans, forms of all stock option agreements evidencing Company Options and all agreements evidencing Company RSUs. All of the shares in the capital of the Company subject to Company Options and Company RSUs will be, upon issuance pursuant to the exercise of such instruments, duly authorized, validly issued, fully paid, non-assessable and free of all preemptive rights and Liens.

(d) Except as set forth in Section 3.2(c) or Section 3.2(d) of the Company Disclosure Schedule, (i) there are no Equity Interests of any class of the Company, or any security exchangeable into or exercisable for such Equity Interests, issued, reserved for issuance or outstanding, (ii) there are no options, warrants, equity securities, calls, rights, commitments or agreements to which the Company is a party or by which the Company is bound obligating the Company to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other Equity Interests of the Company or any security or rights convertible into or exchangeable or exercisable for any such shares or other Equity Interests, or obligating the Company to grant, extend, otherwise modify or amend or enter into any such option, warrant, Equity Interest, call, right, commitment or agreement, (iii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right, or to issue or distribute to holders of any Equity Interests of the Company any evidences of Indebtedness or assets of the

 

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Company, and (iv) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any Equity Interests or to pay any dividend or to make any other distribution in respect thereof. Except as set forth in this Section 3.2 , as of the date of this Agreement, the Company does not have any outstanding equity compensation or equity-based compensation.

(e) There is no agreement, written or oral, between the Company and any holder of its securities, or, to the Company’s Knowledge, among any holders of its securities, relating to the sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag along” rights), registration under the Securities Act or the securities Laws of any other jurisdiction, or voting, of the shares in the capital of the Company.

(f) The Closing Date Allocation Schedule sets forth a true, correct and complete summary of the allocation of the amounts payable to the Sellers pursuant to this Agreement. The allocation of payments set forth on the Closing Date Allocation Schedule complies with the terms of the Company’s Organizational Documents, the Company Shares, the Company Options, the Company RSUs and the Company Share Plans.

3.3 Subsidiaries .

(a) Section   3.3 of the Company Disclosure Schedule sets forth: (i) the name of each Subsidiary; (ii) the number and type of outstanding equity securities of each Subsidiary and a list of the holders thereof; (iii) the jurisdiction of organization of each Subsidiary; (iv) the names of the officers and directors of each Subsidiary; and (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity.

(b) Each Subsidiary is a corporation duly organized, validly existing and in corporate and Tax good standing under the Laws of the jurisdiction of its incorporation. Each Subsidiary is duly qualified to conduct business and is in corporate and Tax good standing under the Laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification, except for such failures to be so qualified or in good standing that, individually or in the aggregate, have not had, and are not reasonably likely to result in, the loss of a material benefit to, or in the creation of any material liability for, the Company. Each Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Company has delivered to the Buyer complete and accurate copies of the Organizational Documents of each Subsidiary. No Subsidiary is in default under or in violation of any provision of its Organizational Documents. All of the issued and outstanding shares in the capital of each Subsidiary are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. All shares of each Subsidiary that are held of record or owned beneficially by either the Company or any Subsidiary are held or owned free and clear of any restrictions on transfer (other than restrictions under applicable securities Laws), claims, Liens, options, warrants, rights, contracts, calls, commitments, equities and demands. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which the Company or any Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or

 

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acquisition of any shares in the capital of any Subsidiary. There are no forms of equity or equity-based compensation or similar rights with respect to any Subsidiary. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any shares in the capital of any Subsidiary.

(c) The Company does not own or control directly or indirectly or have any direct or indirect equity participation or similar interest in, or any obligation to providing funding to, any corporation, partnership, limited liability company, joint venture, trust or other business association or entity that is not a Subsidiary.

3.4 Authority; No Conflict; Required Filings and Consents .

(a) The Company has all requisite power and authority (corporate and other) to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by the Company of this Agreement and the Ancillary Agreements and the performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and other action on the part of the Company and the Sellers. This Agreement and the Ancillary Agreements have been or will be as of the Closing Date duly and validly executed and delivered by the Company and assuming the due authorization, execution and delivery by the Buyer, constitutes or will constitute a valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception.

(b) Neither the execution and delivery by the Company or the Sellers of this Agreement or the Ancillary Agreements, nor the performance by the Company or the Sellers of their respective obligations hereunder or thereunder, nor the consummation by the Company or the Sellers of the transactions contemplated hereby or thereby, will (i) conflict with or violate any provision of the Organizational Documents of the Company, each as amended or restated to date, or the Organizational Documents of any Subsidiary, each as amended or restated to date, (ii) require on the part of the Company or any Subsidiary any notice to or filing with, or any Permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any contract, lease, sublease, license, sublicense, franchise, Permit, indenture, agreement or mortgage for borrowed money, instrument of Indebtedness, Lien or other arrangement to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any of the assets of the Company or any Subsidiary are subject, (iv) result in the imposition of any Lien upon any assets of the Company or any Subsidiary or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any Subsidiary or any of their respective properties or assets, except in the case of the foregoing clauses (iii), (iv) and (v) for such notices, consents and waivers that, if not obtained or made, and such conflicts, breaches, defaults, accelerations, terminations, modifications, cancellations, Liens and violations that, individually or in the aggregate, have not been and would not reasonably be expected to result in, the loss of a material right or in a material liability of the Company and the Subsidiaries, taken as a whole.

(c) No consent, approval, license, Permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Company or any Subsidiary in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement.

 

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3.5 Financial Statements .

(a) The Company has provided to the Buyer the Company Financial Statements. The Company Financial Statements (i) comply as to form with all applicable accounting requirements and (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby; provided , however , that the Company Financial Statements referred to in clause (b) of the definition of the “Company Financial Statements” are subject to normal recurring adjustments (which, individually and in the aggregate, will not be material) and do not include footnotes.

(b) Each of the Company Financial Statements (with the exception of the trial balances in clause (c) of the definition of the “Company Financial Statements”) fairly presents in all material respects the consolidated assets, liabilities, business, financial condition, results of operations and cash flows of the Company and the Subsidiaries as of the date thereof and for the period referred to therein, and is consistent in all material respects with the books and records of the Company and the Subsidiaries.

(c) The Company maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls which provide assurance that (i) transactions are executed with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets, (iii) access to assets of the Company is permitted only in accordance with management’s authorization, (iv) the reporting of assets of the Company is compared with existing assets at regular intervals, and (v) accounts, notes and other receivables and inventory were recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

(d) The Company maintains disclosure controls and procedures that are effective in all material respects to ensure that all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company’s financial statements.  Section 3.5(d) of the Company Disclosure Schedule lists, and the Company has delivered to the Buyer copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.

(e) Section 3.5(e) of the Company Disclosure Schedule lists, and the Company has delivered to the Buyer copies of the documentation creating or governing, all

 

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securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(a)(4) of Regulation S-K of the SEC) effected by the Company or any Subsidiary.  Section 3.5(e) of the Company Disclosure Schedule lists all non-audit services performed by the Company’s auditors for the Company or any Subsidiary.

(f) Neither the Company nor any Subsidiary has extended or maintained credit, arranged for the extension of credit, modified or renewed an extension of credit, in the form of a personal loan or otherwise, to or for any director or executive officer of the Company or any Subsidiary.  Section   3.5(f) of the Company Disclosure Schedule identifies any loan or extension of credit maintained by the Company or any Subsidiary to which the second sentence of Section 13(k)(1) of the Exchange Act would apply.

(g) PricewaterhouseCoopers LLP, the Company’s current auditor, is and has been at all times since its engagement by the Company in 2014 (i) “independent” with respect to the Company and the Subsidiaries within the meaning of Regulation S-X and (ii) in compliance in all material respects with subsections (g) through (l) of Section 10A of the Exchange Act (to the extent applicable) and the related rules of the SEC and the Public Company Accounting Oversight Board.

3.6 Absence of Certain Changes . Since December 31, 2015, (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Company Material Adverse Effect, (b) the Company and the Subsidiaries have conducted their businesses in the Ordinary Course of Business and (c) neither the Company nor any Subsidiary has taken any of the following actions:

(i) issued or sold any shares or other securities of the Company or any Subsidiary or any options, warrants or rights to acquire any such shares or other securities (except pursuant to the exercise or conversion of shares of Company Options, Company RSUs or Convertible Securities outstanding on the date hereof, in each case solely to the extent reflected on the Closing Date Allocation Schedule), or amended any of the terms of (including the vesting of) any Company Options, Company RSUs or restricted stock agreements, or repurchase or redeem any shares or other securities of the Company;

(ii) split, combined or reclassified any shares; or declared, set aside or paid any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of the shares in its capital;

(iii) created, incurred or assumed any Indebtedness; assumed, guaranteed, endorsed or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; or made any loans, advances or capital contributions to, or investments in, any other Person;

(iv) hired any new officers or, except in the Ordinary Course of Business, any new employees or consultants;

 

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(v) except as required to comply with applicable Law or pursuant to agreements, plans or arrangements existing on the date hereof and disclosed in Section 3.6(c)(v) of the Company Disclosure Schedule, (i) adopted, entered into, terminated or amended any employment or severance plan, agreement or arrangement, any Company Plan or any collective bargaining agreement, (ii) increased the compensation or fringe benefits of, or pay any bonus to, any director, officer, employee or consultant, (iii) amended or accelerated the payment, right to payment or vesting of any compensation or benefits, including any outstanding Company Options, (iv) paid any material benefit not provided for as of the date of this Agreement under any Company Plan, (v) granted any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of equity or equity-based compensation, or removed existing restrictions in any benefit plans or agreements or awards made thereunder, or (vi) taken any action (other than in the Ordinary Course of Business) to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or benefit plan;

(vi) acquired, sold, leased, licensed or disposed of any assets or property (including any shares or other equity interests in or securities of any Subsidiary or any other corporation, partnership, association or other business organization or division thereof), other than sales of assets to customers in the Ordinary Course of Business;

(vii) mortgaged or pledged any of its property or assets or subjected any such property or assets to any Lien;

(viii) discharged or satisfied any Lien or paid any obligation or liability other than in the Ordinary Course of Business;

(ix) amended its Organizational Documents;

(x) sold, assigned, transferred, licensed or sublicensed any Company Intellectual Property;

(xi) changed its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in GAAP;

(xii) made or changed any Tax election, changed an annual accounting period, file any amended Tax Return, entered into any closing agreement, waived or extended any statute of limitations with respect to Taxes, settled or compromised any Tax liability, claim or assessment, surrendered any right to claim a refund of Taxes or taken any other similar action relating to the filing of any Tax Return or the payment of any Tax;

(xiii) entered into, amended, terminated, taken or omitted to take any action that would constitute a violation of or default under, or waived any rights under, applicable Law or any contract or agreement of a nature required to be listed in Section 3.11(b) , Section 3.12 or Section 3.13 of the Company Disclosure Schedule;

 

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(xiv) instituted or settled any Legal Proceeding;

(xv) suspended any clinical trials sponsored by the Company or any Subsidiary or involving any products marketed or in development by the Company or any Subsidiary;

(xvi) failed to take any action necessary to preserve the validity of any Company Intellectual Property or Permit; or

(xvii) agreed in writing or otherwise to take any of the foregoing actions

3.7 Undisclosed Liabilities . Neither the Company nor any Subsidiary has any liability (whether absolute or contingent, whether liquidated or unliquidated, whether due or to become due and whether known or, to the extent the amount of such liabilities do not exceed, individually or in the aggregate, $100,000, unknown), except for (a) liabilities shown on the Most Recent Balance Sheet, a copy of which is attached to Section 3.7 of the Company Disclosure Schedule, (b) liabilities that have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business and which are similar in nature and amount to the liabilities that arose during the comparable period of time in the immediately preceding fiscal period and (c) contractual and other liabilities incurred in the Ordinary Course of Business that are not required by GAAP to be reflected on a balance sheet and that are not in the aggregate material (in each case, none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement or violation of Law).

3.8 Books and Records . The minute books and other similar records of the Company and each Subsidiary contain complete and accurate records of all actions taken at any meetings of the Company’s or such Subsidiary’s shareholders, board of directors or any committee thereof and of all written consents executed in lieu of the holding of any such meeting. The books and records of the Company and each Subsidiary accurately reflect in all material respects the assets, liabilities, business, financial condition and results of operations of the Company and the Subsidiaries and have been maintained in accordance with good business and bookkeeping practices. Section 3.8 of the Company Disclosure Schedule contains a list of all bank accounts and safe deposit boxes of the Company and the Subsidiaries and the names of Persons having signature authority with respect thereto or access thereto.

3.9 Tax Matters .

(a) Each of the Company and the Subsidiaries has properly filed on a timely basis all Tax Returns that it was required to file, and all such Tax Returns are true, correct and complete in all material respects and were prepared in compliance with all applicable Laws. Each of the Company and the Subsidiaries has paid on a timely basis all Taxes, whether or not shown on any Tax Return, that were due and payable. The unpaid Taxes of the Company and each Subsidiary (i) for Tax periods through the date of the Most Recent Balance Sheet do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Most

 

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Recent Balance Sheet and (ii) for Tax periods through the Closing Date, will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with GAAP. All unpaid Taxes of the Company and each Subsidiary for all Tax periods commencing after the date of the Most Recent Balance Sheet arose in the Ordinary Course of Business.

(b) All material Taxes that the Company or any Subsidiary is or was required by Law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Entity, and each of the Company and any Subsidiary has complied with all information reporting and backup withholding requirements, including the maintenance of required records with respect thereto, in connection with amounts paid to any Company Employee, independent contractor, creditor, or other third party.

(c) Neither the Company nor any Subsidiary is or has ever been a member of an affiliated group with which it has filed (or been required to file) consolidated, combined, unitary or similar Tax Returns. Neither the Company nor any Subsidiary (i) has any liability under Treasury Regulation Section 1.1502-6 (or any comparable or similar provision of federal, state, local or foreign Law), as a transferee or successor, pursuant to any contractual obligation, or otherwise for any Taxes of any Person other than the Company or any Subsidiary, or (ii) is a party to or bound by any Tax indemnity, Tax sharing, Tax allocation or similar agreement.

(d) The Company made available to the Buyer (i) complete and correct copies of all Tax Returns of the Company and any Subsidiary relating to Taxes for all taxable periods for which the applicable statute of limitations has not yet expired, (ii) complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents submitted by, received by, or agreed to by or on behalf of the Company or any Subsidiary relating to Taxes for all taxable periods for which the statute of limitations has not yet expired, and (iii) complete and correct copies of all material agreements, rulings, settlements or other Tax documents with or from any Governmental Entity relating to Tax incentives of the Company or any Subsidiary.

(e) No examination or audit or other action of or relating to any Tax Return of the Company or any Subsidiary by any Governmental Entity is currently in progress or, to the Knowledge of the Company, threatened or contemplated. No deficiencies for Taxes of the Company or any Subsidiary have been claimed, proposed or assessed in writing by any Governmental Entity that have not been finally settled. Neither the Company nor any Subsidiary has been informed in writing by any jurisdiction in which the Company or any Subsidiary does not file a Tax Return that the jurisdiction believes that the Company or any Subsidiary was required to file any Tax Return that was not filed or is subject to Tax in such jurisdiction. Neither the Company nor any Subsidiary has (i) waived any statute of limitations with respect to Taxes or agreed to extend the period for assessment or collection of any Taxes, which waiver or extension is still in effect, (ii) requested any extension of time within which to file any Tax Return, which Tax Return has not yet been filed, or (iii) executed or filed any power of attorney with any taxing authority, which is still in effect.

 

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(f) [Intentionally deleted.]

(g) None of the assets of the Company or any Subsidiary is “tax-exempt use property” within the meaning of Section 168(h) of the Code or directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code.

(h) Neither the Company nor any Subsidiary will be required to include any item of income in taxable income for any period (or portion thereof) ending after the Closing Date that is attributable to income economically realized in any period (or portion thereof) ending on or before the Closing Date or has claimed in a period (or portion thereof) ending on or before the Closing Date an item of deduction economically attributable to any period (or portion thereof) ending after the Closing Date, including as a result of (i) any adjustments under Section 481 of the Code (or any similar adjustments under any provision of the Code or the corresponding foreign, state or local Tax Law), (ii) deferred intercompany gain or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local or foreign Tax Law), (iii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law) executed on or prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date, (v) prepaid amount received on or prior to the Closing Date, or (vi) any election made pursuant to Section 108(i) of the Code on or prior to the Closing Date.

(i) Neither the Company nor any Subsidiary has distributed to its shareholders or security holders stock or securities of a controlled corporation, nor has stock or securities of the Company or any Subsidiary been distributed, in a transaction to which Section 355 of the Code applies (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.

(j) There are no Liens with respect to Taxes upon any of the assets of the Company or any Subsidiary, other than with respect to Taxes not yet due and payable.

(k) Section 3.9(k) of the Company Disclosure Schedule sets forth each jurisdiction (other than United States federal) in which the Company or any Subsidiary files, is required to file or has been required to file a Tax Return or is or has been liable for any Taxes on a “nexus” basis and each jurisdiction that has sent notices or communications of any kind in writing requesting information relating to the Company’s or any Subsidiary’s nexus with such jurisdiction.  Section 3.9(k) of the Company Disclosure Schedule lists all Tax Returns (and their respective due dates without regard to extensions) required to be filed by the Company or any Subsidiary for periods beginning before the Closing Date that will not be filed on or before the Closing Date.

(l) Neither the Company nor any Subsidiary (i) is a party to any joint venture, partnership, or other arrangement that is treated as a partnership for federal income Tax

 

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purposes, (ii) has made an entity classification (“check-the-box”) election under Section 7701 of the Code, (iii) is, or is a shareholder of, a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign Law), or (iv) is, or is a shareholder in, a “passive foreign investment company” within the meaning of Section 1297 of the Code.

(m) All related party transactions involving the Company or any Subsidiary have been conducted at arm’s length in compliance with Section 482 of the Code and the Treasury Regulations promulgated thereunder and any comparable provisions of any other Tax Law. Each of the Company and the Subsidiaries has maintained documentation (including any applicable transfer pricing studies) in connection with such related party transactions in accordance with Sections 482 and 6662 of the Code and the Treasury Regulations promulgated thereunder and any comparable provisions of any other Tax Law.

(n) Other than the United States permanent establishment of Viventia Bio USA Inc., neither the Company nor any Subsidiary has or has had a permanent establishment in any country (other than its country of incorporation) as defined in any applicable Tax treaty or convention between its country of incorporation and another country.

(o) Neither the Company nor any Subsidiary has engaged in a “reportable transaction” as set forth in Treasury Regulation section 1.6011-4(b) or a “listed transaction” as set forth in Treasury Regulation section 301.6111-2(b)(2) or any analogous provision of state or local Law. Each of the Company and the Subsidiaries has disclosed on its federal income Tax Returns or has substantial authority for all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.

(p) Neither the Company nor any Subsidiary is a party to a gain recognition agreement under Section 367 of the Code.

(q) All research and development investment tax credits (“ ITCs ”) were claimed by the Company and each Subsidiary in accordance with the Tax Act and the relevant provincial Tax Laws and the Company and each Subsidiary satisfied at all times the relevant criteria and conditions entitling it to such ITCs. All refunds of ITCs received or receivable by the Company and each Subsidiary in any taxation year were claimed in accordance with the Tax Act and the relevant provincial Tax Laws and the Company and each Subsidiary satisfied at all times the relevant criteria and conditions entitling it to claim a refund of such ITCs.

(r) There are no circumstances existing which could result in the application of sections 80 to 80.04 of the Tax Act to the Company or any Subsidiary, including the consummation of the transactions contemplated in this Agreement.

 

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3.10 Assets .

(a) The Company or the applicable Subsidiary is the true and lawful owner of, and has good title to, all of the assets (tangible or intangible) purported to be owned by the Company or such Subsidiary, free and clear of all Liens. The Company and each Subsidiary owns or leases all tangible assets sufficient for the conduct of its businesses as presently conducted and as presently proposed to be conducted, which tangible assets are reflected in the Company Financial Statements (other than to the extent disposed of in the Ordinary Course of Business). Each such tangible asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used.

(b) Section 3.10(b) of the Company Disclosure Schedule lists individually (i) all fixed assets (within the meaning of GAAP) of the Company or the Subsidiaries, indicating the cost, accumulated book depreciation (if any) and the net book value of each such fixed asset as of the Most Recent Balance Sheet Date, and (ii) all other assets of a tangible nature (other than inventories) of the Company or the Subsidiaries.

(c) Each item of equipment, motor vehicle and other asset that the Company or a Subsidiary has possession of pursuant to a lease agreement or other contractual arrangement is in such condition that, upon its return to its lessor or owner in its present condition at the end of the relevant lease term or as otherwise contemplated by the applicable lease or contract, the obligations of the Company or such Subsidiary to such lessor or owner will have been discharged in all material respects.

(d) The Shares do not derive, and have not derived at any particular time during the 60 months before Closing, directly or indirectly, more than fifty percent (50%) of their fair market value from one or any combination of (i) real or immovable property situated in Canada; (ii) Canadian resource properties; (iii) timber resource properties; or (iv) options in respect of, or interests in, or for civil law rights in, any of the foregoing, whether or not the property exists, as such terms are defined for purposes of the definition of “taxable Canadian property” in subsection 248(1) of the Tax Act.

3.11 Owned and Leased Real Property .

(a) Neither the Company nor any Subsidiary owns, or has ever owned, any real property.

(b) Section 3.11(b) of the Company Disclosure Schedule lists all Leases and lists the term of such Lease, any extension and expansion options, and the rent payable, security deposit, maintenance and like charges thereunder, and any advance rent thereunder. The Company has delivered to the Buyer complete and accurate copies of the Leases. Neither the Company nor any Subsidiary occupies any space other than pursuant to a Lease. With respect to each Lease:

(i) such Lease is legal, valid, binding, enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto, subject to the Bankruptcy and Equity Exception;

 

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(ii) such Lease will continue to be legal, valid, binding, enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing, subject to the Bankruptcy and Equity Exception;

(iii) none of the Company, any Subsidiary or, to the Knowledge of the Company, any other party, is, in any material respect, in breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute any such breach or default by the Company or any Subsidiary or, to the Knowledge of the Company, any other party under such Lease; and, to the Company’s Knowledge, no event has occurred that would give rise to a termination right under such Lease;

(iv) there are no disputes, oral agreements or forbearance programs in effect as to such Lease;

(v) neither the Company nor any Subsidiary has assigned, transferred, conveyed, mortgaged, subleased, licensed, deeded in trust or encumbered any material interest in the leasehold or subleasehold;

(vi) all facilities leased or subleased thereunder are supplied with utilities and other services adequate for the present operation of said facilities;

(vii) to the Knowledge of the Company, there are no Liens, easements, covenants or other restrictions applicable to the real property subject to such Lease which would reasonably be expected to impair the current uses or the occupancy by the Company or any Subsidiary of the property subject thereto;

(viii) no construction, alteration or other leasehold improvement work with respect to the Lease remains to be paid for or performed by the Company or any Subsidiary;

(ix) neither the Company nor any Subsidiary is obligated to pay any leasing or brokerage commission relating to such Lease and will not have any obligation to pay any leasing or brokerage commission upon the renewal or expansion of the Lease; and

(x) the Company Financial Statements contain adequate reserves to provide for the restoration of the property subject to the Lease at the end of the respective Lease term, to the extent required by the Lease.

 

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3.12 Intellectual Property .

(a) The Company and the Subsidiaries own, license or otherwise possess legally enforceable rights to use all material Intellectual Property used or necessary to conduct the business of the Company and the Subsidiaries as currently conducted, or that would be used or necessary as such business is currently proposed to be conducted (excluding currently-available, off-the-shelf software programs that are licensed by the Company pursuant to “shrink wrap” licenses).

(b) The execution and delivery of this Agreement and consummation of the transactions contemplated hereby will not result in the breach of, or create on behalf of any third party the right to terminate or modify, (i) any license, sublicense or other agreement relating to any Intellectual Property owned by the Company or any of the Subsidiaries that is material to the business of the Company and the Subsidiaries, taken as a whole, including software that is used in the development or manufacture of or forms a part of any product or service sold by or expected to be sold by the Company or any of the Subsidiaries, but excluding generally commercially available software programs (such Intellectual Property, the “ Company Intellectual Property ”) or (ii) any license, sublicense and other agreement as to which Company or any of the Subsidiaries is a party and pursuant to which the Company or any of the Subsidiaries is authorized to use any third party Intellectual Property that is material to the business of the Company and the Subsidiaries, taken as a whole, including software that is used in the development or manufacture of or forms a part of any product or service sold by or expected to be sold by the Company or any of the Subsidiaries, but excluding generally commercially available software programs (such Intellectual Property, the “ Company Third Party Intellectual Property ”).  Section 3.12(b)(i) of the Company Disclosure Schedule sets forth a complete and accurate list of Company Intellectual Property (other than unregistered copyrights, trade secrets and confidential information) and Section 3.12(b)(ii) sets forth a complete and accurate list of all Company Third Party Intellectual Property.

(c) All patents and registrations and applications for Trademarks, service marks and copyrights which are held by the Company or any of the Subsidiaries and that are material to the business of the Company and the Subsidiaries, taken as a whole, are valid and subsisting. The Company and the Subsidiaries have taken reasonable measures to protect the proprietary nature of the Company Intellectual Property. To the Knowledge of the Company, no other Person or entity is infringing, violating or misappropriating any of the Company Intellectual Property or Company Third Party Intellectual Property.

(d) To the Knowledge of the Company, none of the (i) products previously or currently sold by the Company or any of the Subsidiaries or (ii) business or activities previously or currently conducted by the Company or any of the Subsidiaries infringes, violates or constitutes a misappropriation of, any Intellectual Property of any third party. Neither the Company nor any of the Subsidiaries has received any written complaint, claim or notice alleging any such infringement, violation or misappropriation.

3.13 Contracts .

(a) Section 3.13(a) of the Company Disclosure Schedule lists the following agreements (each a “ Contract ”) to which the Company or any Subsidiary is a party:

(i) any agreement (or group of related agreements) for the lease of personal property from or to third parties;

 

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(ii) any agreement (or group of related agreements) for the purchase or sale of products or for the furnishing or receipt of services (A) which calls for performance over a period of more than one year, (B) which involves more than the sum of $100,000, or (C) in which the Company or any Subsidiary has granted manufacturing rights, “most favored nation” pricing provisions or marketing or distribution rights relating to any services, products or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from a certain party;

(iii) any agreement providing for any royalty, milestone or similar payments by the Company;

(iv) any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;

(v) any agreement (or group of related agreements) under which the Company or any Subsidiary has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Indebtedness (including capitalized lease obligations) or under which it has imposed (or may impose) a Lien on any of its assets, tangible or intangible;

(vi) any agreement for the disposition of any significant portion of the assets or business of the Company or any Subsidiary (other than sales of products in the Ordinary Course of Business) or any agreement for the acquisition of the assets or business of any other Person (other than purchases of inventory or components in the Ordinary Course of Business);

(vii) any agreement concerning confidentiality, noncompetition or non-solicitation (other than confidentiality agreements with customers of the Company or any Subsidiary or Company Employees set forth in the Company’s or the applicable Subsidiary’s standard terms and conditions of sale or standard form of employment agreement, copies of which have previously been delivered to the Buyer);

(viii) any employment agreement, consulting agreement, severance agreement (or agreement that includes provisions for the payment of severance), change in control, or retention agreement;

(ix) any settlement agreement or settlement-related agreement (including any agreement in connection with which any employment-related claim is settled);

(x) any agreement involving any current or former officer, director or shareholder of the Company or any Affiliate thereof;

(xi) any agreement under which the consequences of a default or termination would reasonably be expected to have a Company Material Adverse Effect;

 

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(xii) any agency, distributor, sales representative, franchise or similar agreements to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound;

(xiii) any agreement which contains any provisions requiring the Company or any Subsidiary to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products or services entered into in the Ordinary Course of Business);

(xiv) any agreement that could reasonably be expected to have the effect of prohibiting or impairing the conduct of the business of the Company or any of the Subsidiaries or the Buyer or any of its subsidiaries as currently conducted and as currently proposed to be conducted;

(xv) any agreement, contract, license, covenant, assignment, instrument or other arrangement required to be listed in Section 3.12 of the Company Disclosure Schedule;

(xvi) any agreement that would entitle any third party to receive a license or any other right to Intellectual Property of the Buyer or any of the Buyer’s Affiliates (excluding the Company and the Subsidiaries) following the Closing;

(xvii) any Contract relating to the research, development, clinical trial, manufacturing, distribution, supply, marketing or co-promotion of any products in development by or which has been or which is being marketed, distributed, supported, sold or licensed out, in each case by or on behalf of Company or any of its Subsidiaries;

(xviii) any agreement that, following the Closing, would bind or purport to bind the Buyer or any of its Affiliates (excluding the Company and the Subsidiaries); and

(xix) any other agreement (or group of related agreements) either involving more than $100,000 or not entered into in the Ordinary Course of Business.

(b) The Company has delivered to the Buyer a complete and accurate copy of each Contract (as amended to date). With respect to each Contract: (i) the Contract is legal, valid, binding and enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto, subject to the Bankruptcy and Equity Exception; (ii) the Contract will continue to be legal, valid, binding and enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing, subject to the Bankruptcy and Equity Exception; and (iii) neither the Company, any Subsidiary nor, to the Knowledge of the Company, any other party, is, in any material respect, in breach or violation of, or default under, any such Contract, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute any such breach or default by the Company, any Subsidiary or, to the Knowledge of the Company, any other party under such Contract.

(c) Neither the Company nor any Subsidiary is a party to any oral contract, agreement or other arrangement which, if reduced to written form, would be required to be listed in Section 3.13(a) of the Company Disclosure Schedule under the terms of Section 3.13(a) . Neither the Company nor any Subsidiary is a party to any written or oral arrangement (i) to perform services or sell products which is expected to be performed at, or to result in, a loss or (ii) for which the customer has already been billed or paid that have not been fully accounted for on the Most Recent Balance Sheet.

 

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3.14 Litigation . There is no Legal Proceeding (excluding, for this purpose, inquiries and investigations from the definition of such term) pending and, to the Knowledge of the Company, there is no Legal Proceeding (including, for this purpose, investigations and inquiries in the definition of such term) threatened with respect to, against or affecting the Company or any Subsidiary or any current or former officer, director, employee, consultant, agent or shareholder of the Company or any Subsidiary in its, his or her capacity as such or with respect to the Company or any Subsidiary, or seeking to prevent or delay the transactions contemplated hereby, and no written notice of any Legal Proceeding involving or relating to the Company or any Subsidiary, whether pending or threatened, has been received by the Company or any Subsidiary. There are no judgments, orders, injunctions, decrees, stipulations or awards (whether rendered by a court, administrative agency or other Governmental Entity, by arbitration or otherwise) against or involving the Company or any Subsidiary. There is no Legal Proceeding by the Company or any Subsidiary pending, or which the Company or any Subsidiary has commenced preparations to initiate, against any other Person.

3.15 Environmental Matters .

(a) The Company and the Subsidiaries have complied in all material respects with all applicable Environmental Laws. There is no pending or, to the Knowledge of the Company, threatened Legal Proceeding relating to any Environmental Law involving the Company or any Subsidiary.

(b) Neither the Company nor any Subsidiary has any material liabilities or obligations arising from the release or threatened release of any Materials of Environmental Concern into the environment.

(c) Neither the Company nor any Subsidiary is a party to or bound by any court order, administrative order, consent order or other agreement between the Company or any Subsidiary and any Governmental Entity entered into in connection with any legal obligation or liability arising under any Environmental Law.

(d) Set forth in Section 3.15(d) of the Company Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) that contain any environmental reports, investigations and audits relating to premises currently or previously owned or operated

 

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by the Company or any Subsidiary (whether conducted by or on behalf of the Company, any Subsidiary or a third party, and whether done at the initiative of the Company or a Subsidiary or directed by a Governmental Entity or other third party) which the Company has possession of or access to. A complete and accurate copy of each such document has been provided to the Buyer.

(e) The Company has no Knowledge of any environmental liability relating to any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by the Company or any Subsidiary.

3.16 Labor and Employment .

(a) Section 3.16(a) of the Company Disclosure Schedule contains a list of all Company Employees, along with the position, location, date of hire, annual rate of compensation (or with respect to Company Employees compensated on an hourly or per diem basis, the hourly or per diem rate of compensation), target annual incentive compensation of each such Person, if any, and employment status of each such Person (including whether the Person is on leave of absence and the dates of such leave, the expected date of return to work (if known) and whether they are in receipt of disability benefits or workers’ compensation benefits). Section 3.16(a) of the Company Disclosure Schedule sets forth all bonuses earned by any Company Employee through the Closing Date that are expected to be accrued but unpaid as of the Closing Date and the amounts of accrued vacation or paid time off, accrued sick time, and the amount of such liabilities as of September 20, 2016. Each such Company Employee (other than those employed in Canada) is retained at-will and none of such Company Employees is a party to an employment agreement or contract with the Company or any Subsidiary. Each Company Employee has entered into the Company’s or such Subsidiary’s standard form of confidentiality, non-competition and assignment of inventions agreement, a copy of which has previously been made available to the Buyer. All of the agreements referenced in the preceding sentence will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing. Section 3.16(a) of the Company Disclosure Schedule contains a list of all Company Employees employed by the Company in the United States who are not citizens of the United States and, for each such employee, the employee’s visa, work authorization and/or green card status and the date the employee’s work authorization is scheduled to expire. To the Knowledge of the Company, no key Company Employee or group of Company Employees has any plans to terminate employment with the Company or any Subsidiary prior to the Closing.

(b) Neither the Company nor any Subsidiary has materially breached or violated in any material respect any (i) applicable Law respecting employment and employment practices, terms and conditions of employment and wages and hours, including any such Law respecting employment discrimination, employee classification (for overtime purposes or as employee versus independent contractor), workers’ compensation, family and medical leave, the Immigration Reform and Control Act and occupational safety and health requirements, or (ii) employment agreement. No material claims, controversies, investigations, audits or other Legal Proceedings (excluding, for this purpose, inquiries and investigations from the definition of such term) are pending or, to the Knowledge of the Company (including, for this purpose, inquiries and investigations in the definition of Legal Proceedings), threatened, with respect to such Laws or agreements, either by private Persons or by Governmental Entities.

 

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(c) Neither the Company nor any Subsidiary have been certified by a labor union or works council nor is the Company nor any Subsidiary is a party to or bound by any collective bargaining agreement, nor has either of them experienced any actual or, to the Knowledge of the Company, threatened strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Company has no Knowledge of any organizational effort made or threatened (including the filing of a petition for certification) either currently or within the past three (3) years, by or on behalf of any labor union or works council with respect to Company Employees.

(d) Section 3.16(d) of the Company Disclosure Schedule contains a list of all consultants and independent contractors currently engaged by either the Company or any Subsidiary, along with the position, date of retention and rate of remuneration for each such Person. None of such consultants or independent contractors is a party to a written agreement or contract with the Company or any Subsidiary. Each such consultant and independent contractor has entered into a confidentiality, non-competition and assignment of inventions agreement with the Company or such Subsidiary, a copy of which has previously been made available to the Buyer. No independent contractor has provided services to the Company or any Subsidiary for a period of six (6) consecutive months or longer. Neither the Company nor any Subsidiary has or has had any temporary or leased employees.

(e) Section 3.16(e) of the Company Disclosure Schedule sets forth a true, correct and complete list and description of all expatriate contracts that the Company or any Subsidiary has in effect with any Company Employee and all employment contracts and independent contractor arrangements covering any individuals providing services outside the country in which they are nationals. Each Company Employee working in a country other than one of which such Company Employee is a national has a valid work permit, certificate of sponsorship, visa, or other right under applicable Law that permits him or her to be employed lawfully by the Company or the applicable Subsidiary in the country in which he or she is so employed.

(f) The Company has withheld and paid to the appropriate Governmental Entity or is holding for payment not yet due to such Governmental Entity all amounts required to be withheld from Company Employees and is not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing.

(g) No material charges or complaints are open and pending against the Company or any Subsidiary with the Equal Employment Opportunity Commission or similar Governmental Entity or pursuant to internal complaint procedures, and, to the Knowledge of the Company, no current or former employee of the Company or any Subsidiary has made, during the last two (2) years, an oral or a written complaint of discrimination, retaliation or other similar wrongdoing. True, correct and complete information regarding any closed charges or complaints filed since December 31, 2013 with the Equal Employment Opportunity Commission or similar Governmental Entity (or, with respect to discrimination, retaliation, or similar wrongdoing, pursuant to internal complaint procedures) has been made available to the Buyer.

 

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(h) Section 3.16(h) of the Company Disclosure Schedule contains a complete and accurate list of all of the Company’s and each Subsidiary’s written employee handbooks, employment manuals, employment policies, and affirmative action plans. Section 3.16(h) of the Company Disclosure Schedule sets forth the policy of the Company and each Subsidiary with respect to accrued vacation, paid time off, accrued sick time and earned time off.

(i) Neither the Company nor any Subsidiary has caused (i) a plant closing as defined in the Worker Adjustment and Retraining Notification Act (the “ WARN Act ”) affecting any site of employment or one or more operating units within any site of employment of the Company or any Subsidiary or (ii) a mass layoff as defined in the WARN Act, nor has the Company or any Subsidiary been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar foreign, state or local Law. There are no outstanding assessments, penalties, fines, Liens, charges, surcharges, or other amounts due or owing pursuant to any applicable workers’ compensation legislation in respect of the Company and the Company has not been reassessed in any material respect under such legislation during the past three (3) years and no audit of the Company or any Subsidiary is currently being performed pursuant to such legislation. To the Knowledge of the Company, there are no claims or, to the Company’s Knowledge, potential claims which may materially adversely affect the Company’s accident cost experience.

(j) All orders and inspection reports under applicable Occupational Health and Safety legislation (“ OHSA ”) relating to the Company or any Subsidiary have been made available to the Buyer. There are no charges pending under OHSA in respect of the Company or any Subsidiary. The Company and each Subsidiary has complied in all material respects with any orders issued under OHSA and there are no appeals of any orders under OHSA currently outstanding.

(k) Neither the Company nor any Subsidiary has incurred any liability arising from the misclassification of employees as consultants or independent contractors, or from the misclassification of consultants or independent contractors as employees.

3.17 Employee Benefit Plans .

(a) Section 3.17(a) of the Company Disclosure Schedule contains a complete and accurate list of all Company Plans. Complete and accurate copies of (i) the documents constituting all Company Plans which have been reduced to writing, together with all amendments thereto, (ii) written summaries of all unwritten Company Plans, (iii) all related trust agreements, insurance contracts, employee booklets, the most recently filed actuarial valuations and summary plan descriptions, (iv) the most recent annual reports filed on IRS Form 5500 and (for all funded plans) the most recent plan financial statements for each Company Plan, all annual information returns filed with a Canadian Governmental Entity for the last five (5) plan years, (v) all reports regarding the satisfaction of the nondiscrimination requirements of Sections

 

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410(b), 401(k), and 401(m) of the Code for the past five (5) years, (vi) all disclosures received by the Company with respect to ERISA Section 408(b)(2) or provided by a Company Plan pursuant to ERISA Section 404(a) and (vii) any written or electronic communications from or to the Internal Revenue Service, the DOL or any other Governmental Entity with respect to a Company Plan (including any voluntary correction submissions), have been delivered to the Buyer. No Company Plan is or has been subject to non-U.S. or non-Canadian Law.

(b) Each Company Plan has been established, registered, administered, communicated and invested in accordance in all material respects with its terms and applicable Laws and each of the Company, the Subsidiaries and the ERISA Affiliates has met its obligations with respect to each Company Plan and has timely made all required contributions thereto. The Company, the Subsidiaries, each ERISA Affiliate and each Company Plan are in compliance in all material respects with the currently applicable provisions of ERISA and the Code, applicable pension Laws and the Income Tax Act (Canada) and the regulations thereunder. All filings and reports as to each Company Plan required to have been submitted to the Internal Revenue Service, the Canada Revenue Agency, a Canadian Governmental Entity or to the DOL have been timely submitted. There is no plan or commitment, whether legally binding or not, to create any additional Company Plans or to modify any existing Company Plans.

(c) There are no Legal Proceedings (except claims for benefits payable in the normal operation of the Company Plans and proceedings with respect to qualified domestic relations orders) against or involving any Company Plan or asserting any rights or claims to benefits under any Company Plan that could give rise to any liability. No Company Plan is or within the last three (3) calendar years has been the subject of, or has received or provided notice that it is the subject of, examination by a Governmental Entity or a participant in a government sponsored amnesty, voluntary compliance or similar program.

(d) All the Company Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters or opinion letters from the Internal Revenue Service to the effect that such Company Plans are qualified and the plans and the trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code or is based on prototype or volume submitter documents that have received such letter, no such determination letter or opinion letter has been revoked (or, in the case of a prototype or volume submitter document, to the Knowledge of the Company has not been revoked) and revocation has not been threatened (or, in the case of a prototype or volume submitter document, to the Knowledge of the Company has not been threatened), and no such Company Plan has been amended since the date of its most recent determination letter, or opinion letter or application therefor in any respect, and no act or omission has occurred, that would adversely affect its qualification or increase its cost. There has been no termination or partial termination of such a Company Plan. Each Company Plan that is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for compliance with, and satisfies the requirements of Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to the Closing Date. Each Company Plan that provides for compliance with Section 404(c) of ERISA or is intended to comply with such provision, so complies. Each Company Plan is in compliance with ERISA Section 408(b)(2) (or other applicable exemption) and with ERISA Section 404(a).

 

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(e) Neither the Company, any Subsidiary nor any ERISA Affiliate has ever maintained or contributed to an Employee Benefit Plan that was ever subject to Section 412 of the Code or Title IV of ERISA. Neither the Company nor any Subsidiary has ever sponsored, contributed or participated in a Canadian defined benefit pension plan. At no time has the Company, any Subsidiary or any ERISA Affiliate been obligated to contribute to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).

(f) With respect to the Company Plans, there are no benefit obligations for which contributions have not been made or properly accrued and there are no benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted in accordance with GAAP, on the Company Financial Statements. Neither the Company nor any Subsidiary has any liability for benefits (contingent or otherwise) under any Company Plan, except as set forth on the Company Financial Statements. The assets of each Company Plan that is funded are reported at their fair market value on the books and records of such Company Plan. No Company Plan subject to ERISA has assets that include securities issued by the Company, any Subsidiary or any ERISA Affiliate.

(g) All group health plans of the Company, any Subsidiary and any ERISA Affiliate comply in all material respects with the requirements of COBRA, Code Section 5000, the Health Insurance Portability and Accountability Act, the Patient Protection and Affordable Care Act (“ PPACA ”), and any other comparable domestic or foreign Laws. No Company Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code. Neither the Company, any Subsidiary, nor any ERISA Affiliate has any liability or obligation under or with respect to COBRA for its own actions or omissions, or those of any predecessor other than to provide health care continuation coverage to COBRA qualified beneficiaries at their own, and not at the Company’s, expense. No employee, officer, director or manager, or former employee, officer, director, or manager (or beneficiary of any of the foregoing) of the Company or any Subsidiary is entitled to receive any health or welfare benefits, including death or medical benefits (whether or not insured) beyond retirement or other termination of employment, other than as required by applicable Law, and there have been no written or oral commitments inconsistent with the foregoing. Each group health plan subject to PPACA is grandfathered.

(h) No act or omission has occurred and no condition exists with respect to any Company Plan that would subject the Buyer, the Company, any Subsidiary, any ERISA Affiliate, or, to the Knowledge of the Company, any plan participant to (i) any fine, penalty, Tax or liability of any kind imposed under ERISA, the Code or any other applicable Law or (ii) any contractual indemnification or contribution obligation protecting any fiduciary, insurer or service provider with respect to any Company Plan, nor will the transactions contemplated by this Agreement give rise to any such liability.

(i) Each Company Plan is amendable and terminable unilaterally by the Company and any Subsidiary that is a party thereto or covered thereby at any time without

 

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liability or expense to the Company, any Subsidiary or such Company Plan as a result thereof (other than for benefits accrued through the date of termination or amendment and reasonable administrative expenses related thereto) and no Company Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees by its terms prohibits the Company or any Subsidiary from amending or terminating any such Company Plan, or in any way limit such action. The investment vehicles used to fund any Company Plan may be changed at any time without incurring a sales charge, surrender fee or other similar expense.

(j) No Company Plan or other contract, agreement, plan or arrangement covering any one or more individuals contains any provision or is subject to any applicable Law that, in connection with any of the transactions contemplated by this Agreement or upon related, concurrent or subsequent employment termination, or in combination with any other event, would (i) increase, accelerate or vest any compensation or benefit, (ii) require severance, termination or retention payments, (iii) provide any term of employment or compensation guaranty, (iv) forgive any Indebtedness, (v) require or provide any payment or compensation subject to Section 280G of the Code (and no such payment or compensation has previously been made), (vi) promise or provide any Tax gross ups or indemnification, whether under Sections 280G or 409A of the Code or otherwise or (vii) measure any values of benefits on the basis of any of the transactions contemplated hereby. No shareholder, employee, officer or director of the Company has been promised or paid any bonus or incentive compensation related to the transactions contemplated hereby. The Company has made available to the Buyer the information necessary to accurately calculate any excise tax due under Section 4999 of the Code as a result of any of the transactions contemplated by this Agreement for which the Company, any Subsidiary or the Buyer is or may become directly or indirectly liable and the amount of deductions that may be disallowed under Section 280G of the Code in connection with any of the transactions contemplated by this Agreement.

(k) There are no loans or extensions of credit from the Company, any Subsidiary or any ERISA Affiliate to any Company Employee or any independent contractor to the Company or any Subsidiary (other than advances of business expenses in the Ordinary Course of Business). There is no corporate-owned life insurance (COLI), split-dollar life insurance policy or any other life insurance policy on the life of any Company Employee or on any Seller.

(l) Each Company Plan that is a “nonqualified deferred compensation plan” (as defined in Code Section 409A(d)(1)) has been since January 1, 2005 in compliance in all material respects with Code Section 409A and IRS Notice 2005-1 and has been in documentary compliance since January 1, 2009. No corrections of violations of Code Section 409A have occurred. No Company Plan that is a “nonqualified deferred compensation plan” has been materially modified (as determined under Notice 2005-1) after October 3, 2004. No stock option or equity unit option granted under any Company Plan has an exercise price that has been less than the fair market value of the underlying stock or equity units (as the case may be) as of the date such option was granted or has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option.

(m) All data necessary to administer each Company Plan in accordance with its terms and applicable Laws is in the possession of the Company and the Subsidiaries, and such data is complete, correct and in a form which is sufficient for the proper administration of each Company Plan.

 

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3.18 Compliance with Laws . Each of the Company and the Subsidiaries has conducted, and is conducting, its business and operations in compliance in all material respects with all applicable Laws. Neither the Company nor any Subsidiary has received any notice from any Governmental Entity or other Person alleging any noncompliance with any applicable Law. Neither the Company nor any Subsidiary has any material liability for failure to comply with any Law and, to the Knowledge of the Company, there is no act, omission, event or circumstance that would reasonably be expected to give rise to any such liability. Neither the Company nor any Subsidiary has conducted any internal investigation with respect to any actual, potential or alleged violation of any Law by any manager, member or other equity holder, officer or Company Employee or concerning any actual or alleged fraud.

3.19 Permits and Regulatory Matters .

(a) Section 3.19 of the Company Disclosure Schedule sets forth a list of all Permits issued to or held by the Company or any Subsidiary. Each such Permit is in full force and effect; the Company or the applicable Subsidiary, as the case may be, is in compliance in all material respects with the terms of each such Permit; and, to the Knowledge of the Company, no suspension or cancellation of such Permit is threatened and there is no basis for believing that such Permit will not be renewable upon expiration. Each such Permit will continue in full force and effect immediately following the Closing.

(b) The Company and the Subsidiaries have all material Permits required to conduct their businesses as currently conducted, including all such Permits required by the FDA, Health Canada, the European Medicines Agency (the “ EMA ”) or any other Governmental Entity exercising comparable authority.

(c) All manufacturing, processing, distribution, labeling, storage, and testing of product candidates performed by or on behalf of Company are in compliance in all material respects with all applicable Laws administered or issued by the FDA, Health Canada, the EMA or any other Governmental Entity exercising comparable authority. Neither the Company nor any Subsidiary has received any written notices or correspondence from the FDA, the Health Canada, the EMA or any other Governmental Entity exercising comparable authority, and to the Knowledge of the Company, there is no action or proceeding pending or threatened (including any prosecution, injunction, seizure, civil fine, suspension or recall), in each case alleging that the Company or any Subsidiary is not currently in compliance with any and all applicable Laws implemented by the FDA, Health Canada, the EMA or any other Governmental Entity exercising comparable authority.

(d) The studies, tests and preclinical and clinical trials of product candidates conducted by or on behalf of the Company and the Subsidiaries were and, if still pending, are

 

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being conducted in all material respects in accordance with experimental protocols, procedures and controls pursuant to, where applicable, accepted professional and scientific standards. Neither the Company nor any Subsidiary has received any written notices or correspondence from the FDA, Health Canada, the EMA or any other Governmental Entity exercising comparable authority requiring the termination, suspension or material modification of any studies, tests or preclinical or clinical trials conducted by or on behalf of the Company and/or any of the Subsidiaries.

(e) There is no pending, completed or, to the Knowledge of the Company, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint or investigation) against the Company, and the Company has not received any notice, warning letter or other communication from the FDA, Health Canada, EMA or any other Governmental Entity exercising comparable authority, in each case which (a) imposes a clinical hold on any clinical investigation by the Company or (b) enters or proposes to enter into a consent decree of permanent injunction with the Company, which, either individually or in the aggregate, would result in the loss of a material benefit to, or in the creation of any material liability for, the Company. The operations of the Company have been and are being conducted in all material respects in accordance with all applicable Laws of the FDA, Health Canada, EMA or any other Governmental Entity exercising comparable authority. The Company has not been informed by the FDA, Health Canada, EMA or any other Governmental Entity exercising comparable authority that such Governmental Authority will prohibit the marketing, sale, license or use in any jurisdiction of any product proposed to be developed, produced or marketed by the Company.

3.20 Insurance . Section 3.20 of the Company Disclosure Schedule lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the Company or any Subsidiary is a party, a named insured or otherwise the beneficiary of coverage, all of which are in full force and effect. Such insurance policies are of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company and the Subsidiaries. There is no claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies have been paid, neither the Company nor any Subsidiary may be liable for retroactive premiums or similar payments, and the Company and the Subsidiaries are otherwise in compliance in all material respects with the terms of such policies. The Company has no Knowledge of any threatened termination of, or premium increase with respect to, any such policy. Each such policy will continue to be enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing. Section 3.20 of the Company Disclosure Schedule identifies all claims asserted by the Company pursuant to any insurance policy since January 1, 2012, and describes the nature and status of each such claim.

3.21 Certain Business Relationships With Affiliates . No Affiliate of the Company or any Subsidiary, directly or indirectly, (a) owns any property or right, tangible or intangible,

 

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which is used in the business of the Company or any Subsidiary, (b) has any claim or cause of action against the Company or any Subsidiary, (c) owes any money to, or is owed any money by, the Company or any Subsidiary, or (d) is a party to any contract or other arrangement (written or oral) with the Company or any Subsidiary. Section 3.21 of the Company Disclosure Schedule describes any transactions or relationships between the Company or any Subsidiary and any Affiliate thereof that occurred or have existed since the beginning of the time period covered by the Company Financial Statements.

3.22 Brokers; Schedule of Fees and Expenses . Neither the Company nor any Subsidiary has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. The fees and expenses of any accountant, broker, financial advisor, consultant, legal counsel or other Person retained by the Company or any Subsidiary in connection with this Agreement and the other transactions contemplated by this Agreement incurred or to be incurred by the Company or any Subsidiary will not exceed the fees and expenses for such Person set forth in Section 3.22 of the Company Disclosure Schedule.

3.23 Powers of Attorney . There are no outstanding powers of attorney executed on behalf of the Company or any Subsidiary.

3.24 Convertible Securities; Indebtedness . The Company has executed a debt forgiveness agreement with respect to all Convertible Securities and/or Indebtedness of the Company outstanding as of immediately prior to the Closing with the holders of such Convertible Securities and/or Indebtedness, which debt forgiveness agreement provides that (a) all such Convertible Securities and/or Indebtedness and related instruments have been terminated and cancelled, (b) all Liens (and guarantees), if any, in connection therewith relating to the assets, rights and/or properties of the Company securing such Convertible Securities and/or Indebtedness, have been released and terminated and (c) all obligations of the Company in respect of such Convertible Securities and/or Indebtedness have been discharged in full, which debt forgiveness agreement has been made available to Buyer.

3.25 Privacy . Each of the Company and the Subsidiaries is conducting the business in compliance with all applicable Laws governing privacy and the protection of personal information, other than acts of non-compliance which individually or in the aggregate are not material. The Company and the Subsidiaries have a written privacy policy which governs the collection, use and disclosure of personal information and the Company and the Subsidiaries are in compliance in all material respects with such policy.

3.26 Competition Act (Canada) . Neither the aggregate value of the assets in Canada of the Company, nor the aggregate gross revenues from sales in or from Canada generated from such assets, exceeds the monetary threshold set out in section 110(3) of the Competition Act (Canada) and related regulations.

3.27 Investment Canada Act (Canada) . The applicable threshold for requiring that the Buyer submit an application for review under Part IV of the Investment Canada Act (Canada)

 

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will not be exceeded through the purchase of the Shares by the Buyer on the terms of this Agreement. Neither the Company nor any Subsidiary is a cultural business within the meaning of sections 14.1 and 14.2 of the Investment Canada Act (Canada).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Sellers that, except (a) as set forth in the Buyer Disclosure Schedule or (b) as disclosed in the Buyer SEC Reports filed or furnished on or prior to the date of this Agreement, the statements contained in this Article IV are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

4.1 Organization, Standing and Power . The Buyer is a corporation duly organized, validly existing and is in good standing under the Laws of the state of its incorporation. The Buyer has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it, and is qualified to do business and is in good standing in every jurisdiction in which the operation of the business of the Buyer requires it to be so qualified, except for such failures to be so qualified or in good standing, individually or in the aggregate, that have not had, and are not reasonably likely to have, a Buyer Material Adverse Effect. The Buyer does not have any Subsidiaries. The Buyer is not in default under or in violation of any provision of its Organizational Documents.

4.2 Authority; No Conflict; Required Filings and Consents .

(a) The Buyer has all requisite power and authority (corporate and other) to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by the Buyer of this Agreement and the Ancillary Agreements and the performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and other action on the part of the Buyer. This Agreement and the Ancillary Agreements have been or will be as of the Closing Date duly and validly executed and delivered by the Buyer and, assuming the due authorization, execution and delivery by the Company, the Sellers, the Seller Representative and any other party thereto, constitutes or will constitute a valid and binding obligation of the Buyer, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception.

(b) Neither the execution and delivery by the Buyer of this Agreement or the Ancillary Agreements, nor the performance by the Buyer of its obligations hereunder or thereunder, nor the consummation by the Buyer of the transactions contemplated hereby or thereby, will (i) conflict with or violate any provision of the Organizational Documents of the Buyer, each as amended or restated to date, (ii) require on the part of the Buyer any notice to or

 

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filing with, or any Permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any material contract, lease, sublease, license, sublicense, franchise, Permit, indenture, agreement or mortgage for borrowed money, instrument of Indebtedness, Lien or other arrangement to which the Buyer is a party or by which the Buyer is bound or to which any of the assets of the Buyer are subject, (iv) result in the imposition of any Lien upon any assets of the Buyer or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer or any of its properties or assets, except in the case of the foregoing clauses (iii), (iv) and (v) for such notices, consents and waivers that, if not obtained or made, and such conflicts, breaches, defaults, accelerations, terminations, modifications, cancellations, Liens and violations that, individually or in the aggregate, have not had and would not reasonably be expected to result in, the loss of a material right or in a material liability of the Buyer, taken as a whole.

(c) No consent, approval, license, Permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Buyer in connection with the execution and delivery of this Agreement by the Buyer or the consummation by the Buyer of the transactions contemplated by this Agreement.

4.3 Capitalization .

(a) The authorized capital stock of the Buyer consists of 200,000,000 shares of Buyer Common Stock and 5,000,000 shares of Buyer Preferred Stock, $0.001 par value per share (“ Buyer Preferred Stock ”). As of the close of business on the Business Day prior to the date of this Agreement, there were (i) 20,167,997 shares of Buyer Common Stock and no shares of Buyer Preferred Stock outstanding and (ii) no shares of Buyer Stock held in treasury.

(b) Section 4.3(b) of the Buyer Disclosure Schedule sets forth a complete and accurate list, as of the date of this Agreement, of: (i) all Buyer Stock Plans, indicating for each Buyer Stock Plan the number of shares of Buyer Stock issued to date under such Buyer Stock Plan and how many of such shares are subject to, and the terms, of restriction, the number of Buyer Options under such Buyer Stock Plan and the number of shares of Buyer Stock reserved for future issuance under such Buyer Stock Plan; (ii) all holders of outstanding Buyer Options, indicating with respect to each Buyer Option the Buyer Stock Plan under which it was granted, the number of shares of Buyer Stock subject to such Buyer Option, the exercise price, the date of grant, and the vesting schedule (including any acceleration provisions with respect thereto); and (iii) all holders of Buyer RSUs, indicating with respect to each Buyer RSU, the Buyer Stock Plan under which it was granted, the number of shares of capital stock, and the class or series of such shares, subject to such Buyer RSU, the date of issuance, the expiration date and any other material terms thereof. All of the shares of capital stock of the Buyer subject to Buyer Options and Buyer RSUs will be, upon issuance pursuant to the exercise of such instruments, duly authorized, validly issued, fully paid, non-assessable and free of all preemptive rights.

 

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(c) Except as set forth in Section 4.3(b) or Section 4.3(c) of the Buyer Disclosure Schedule, (i) there are no Equity Interests of any class of the Buyer, or any security exchangeable into or exercisable for such Equity Interests, issued, reserved for issuance or outstanding, (ii) there are no options, warrants, equity securities, calls, rights, commitments or agreements to which the Buyer is a party or by which the Buyer is bound obligating the Buyer to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other Equity Interests of the Buyer or any security or rights convertible into or exchangeable or exercisable for any such shares or other Equity Interests, or obligating the Buyer to grant, extend, otherwise modify or amend or enter into any such option, warrant, Equity Interest, call, right, commitment or agreement, (iii) the Buyer has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right, or to issue or distribute to holders of any Equity Interests of the Buyer any evidences of Indebtedness or assets of the Buyer, and (iv) the Buyer has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any Equity Interests or to pay any dividend or to make any other distribution in respect thereof.

4.4 Buyer Stock . The shares of Buyer Stock subject to issuance pursuant to Article I of this Agreement, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable, free and clear of all Liens (other than restrictions on transfer imposed under applicable securities Laws and restrictions on transfer thereof as provided for herein or Liens imposed as a result of any action or inaction of any Seller), and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Delaware General Corporation Law, Buyer’s Organizational Documents or any agreement to which Buyer is a party or is otherwise bound. There are no obligations, contingent or otherwise, of Buyer to repurchase, redeem or otherwise acquire any shares of Buyer Stock.

4.5 SEC Filings; Financial Statements; Information Provided .

(a) The Buyer has filed all registration statements, forms, reports, certifications and other documents required to be filed by Buyer with the SEC since February 6, 2014. All such registration statements, forms, reports and other documents (including those that the Buyer may file after the date hereof until the Closing) are referred to herein as the “ Buyer SEC Reports .” All of the Buyer SEC Reports (i) were or will be filed on a timely basis, (ii) at the time filed, complied, or will comply when filed, as to form in all material respects with the requirements of the Securities Act and the Exchange Act applicable to such Buyer SEC Reports and (iii) did not or will not at the time they were or are filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC Reports, in the light of the circumstances under which they were made, not misleading, in any material respect.

(b) Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained or to be contained in the Buyer SEC Reports at the time filed (i) complied or will comply as to form in all material respects with applicable accounting

 

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requirements and the published rules and regulations of the SEC with respect thereto, (ii) were or will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and at the dates involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented or will fairly present in accordance with GAAP the consolidated financial position of Buyer and its Subsidiaries as of the dates indicated and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments.

4.6 Listing; Investment Company . The Buyer Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Buyer has not received any written notification that the SEC is contemplating terminating such registration. The Buyer has not, in the twelve (12) months preceding the date hereof, received written notice from NASDAQ to the effect that the Buyer is not in compliance with the listing or maintenance requirements of such market or exchange. The Buyer is not, and is not an Affiliate of, and immediately after the Closing, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

4.7 Contracts .

(a) As of the date of this Agreement, there are no agreements, instruments, contracts, licenses, notes, deeds, mortgages, commitments or arrangements that are material contracts (as defined in Item 601(b)(10) of Regulation S-K) with respect to the Buyer and its Subsidiaries (“ Buyer Material Contracts ”), other than those Buyer Material Contracts identified or described in the Buyer SEC Reports filed prior to the date hereof. Each Buyer Material Contract is in full force and effect and is enforceable against Buyer and/or its Subsidiaries party thereto, as applicable, and, to the knowledge of Buyer, against each other party thereto in accordance with the terms thereof, subject to the Bankruptcy and Equity Exception. Neither Buyer nor any of its Subsidiaries nor, to the knowledge of Buyer, any other party to any Buyer Material Contract is in violation of or in default under (nor does there exist any condition which, with or without notice or lapse of time, or both, would cause such a violation of or default under) any Buyer Material Contract, except for violations or defaults that, individually or in the aggregate, have not had, and are not reasonably likely to have, a Buyer Material Adverse Effect.

(b) Neither Buyer nor any of its Subsidiaries has entered into any transaction that would be subject to proxy statement disclosure pursuant to Item 404 of Regulation S-K other than as disclosed in a Buyer SEC Report filed prior to the date hereof.

4.8 Absence of Certain Changes . Since June 30, 2016: (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Buyer Material Adverse Effect, (b) the Buyer has not incurred any liabilities (contingent or otherwise) in excess of $200,000, other than liabilities not required to be reflected in the Buyer’s financial statements pursuant to GAAP or disclosed in filings made with the SEC and the transactions contemplated by this Agreement, and (c) the Buyer has not

 

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declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock.

4.9 License Agreement . The Buyer has entered into that certain License Agreement, dated June 10, 2016, between Buyer and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (the “ License Agreement ”). The License Agreement is in full force and effect and is enforceable against Buyer and, to the knowledge of Buyer, against each other party thereto, as applicable, subject to the Bankruptcy and Equity Exception. The License Agreement will continue to be in full force and effect and enforceable against Buyer and, to the knowledge of Buyer, against each other party thereto, immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing, subject to the Bankruptcy and Equity Exception. Neither Buyer nor, to the knowledge of Buyer, any other party thereto, is in material breach or violation of, or material default under, the License Agreement, and no event has occurred, is pending or, to the knowledge of Buyer, is threatened, which, with or without notice or lapse of time, or both, would constitute a material breach or material default by Buyer or, to the knowledge of Buyer, any other party under the License Agreement. The License Agreement has not been amended or modified in any material respect from the License Agreement in effect as of the date of this Agreement, and represents the entire agreement between the parties thereto with respect to the subject thereof.

4.10 Brokers . Except for the fees payable to Stifel, Nicolaus & Company, Incorporated, the Buyer does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

4.11 Litigation . There is no Legal Proceeding pending or, to the knowledge of the Buyer, threatened against the Buyer seeking to prevent or delay the transactions contemplated hereby.

4.12 Employee Benefit Plans . The Buyer is not party to any contract, agreement, plan or arrangement with any of its employees or independent contractors that contains any provision pursuant to which, as a result of the transactions contemplated by this Agreement or upon related, concurrent or subsequent employment termination, or in combination with any other event, (a) any compensation or benefit will become due, increase, accelerate or vest, (b) the Buyer will be required to make any severance, termination or retention payments, (c) the Buyer will be required to provide any term of employment or compensation guaranty, or (d) the Buyer will be required to forgive any Indebtedness.

4.13 WTO Investor . The Buyer is a WTO Investor within the meaning of Section 14.1(6) of the Investment Canada Act .

 

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ARTICLE V

INDEMNIFICATION

5.1 Indemnification .

(a) Each Seller shall, on a several basis in accordance with each Seller’s Pro Rata Share, defend and indemnify the Buyer in respect of, and hold it harmless against and will compensate and reimburse the Buyer for, any and all Damages incurred or suffered by any Buyer Indemnified Party (regardless of whether such Damages relate to any Third Party Action) resulting from, relating to or constituting:

(i) any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of such Seller contained in this Agreement;

(ii) any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of the Company contained in this Agreement;

(iii) any failure to perform any covenant or agreement of such Seller contained in this Agreement;

(iv) any failure to perform any covenant or agreement of the Company contained in this Agreement;

(v) the following Taxes: (i) any Taxes for any taxable period (or portion thereof) ending on or before the Closing Date due and payable by the Company or any Subsidiary, excluding any Taxes included as a liability in the Most Recent Balance Sheet; (ii) any Taxes for which the Company or any Subsidiary has any liability under Treasury Regulation Section 1.1502-6 or under any comparable or similar provision of state, local or foreign Laws as a result of being a member of an affiliated, consolidated, combined, unitary or similar group on or prior to the Closing Date; (iii) any Taxes for which the Company or any Subsidiary has any liability as a transferee or successor, pursuant to any contractual obligation or otherwise, which Tax is attributable to the operations of the Company or any Subsidiary on or prior to the Closing Date or an event or transaction occurring before the Closing; and (iv) any transfer, sales, use, stamp, conveyance, value added, recording, registration, documentary, filing and other non-income Taxes and administrative fees (including notary fees) arising in connection with the consummation of the transactions contemplated by this Agreement, whether levied on any Buyer Indemnified Party, the Sellers, the Company, any Subsidiary or any of their respective Affiliates;

(vi) any Employee Amount, any Closing Indebtedness and any Company Transaction Expenses, in each case to the extent unpaid as of immediately prior to the Closing;

(vii) any failure of such Seller to have good, valid and marketable title to the Shares issued in the name of such Seller, free and clear of all Liens;

 

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(viii) any claim by a shareholder or former shareholder of the Company, or any other Person, seeking to assert, or based upon: (i) the ownership or rights to ownership of any Company Shares; (ii) any rights of a shareholder (other than the right of a Seller to receive consideration pursuant to Article I), including any option, preemptive rights or rights to notice or to vote; (iii) any rights under the Organizational Documents of the Company; (iv) any claim that his, her or its shares were wrongfully repurchased by the Company; or (v) any claim arising out of or related to the matters set forth on Section 5.1(a)(viii) of the Company Disclosure Schedule;

(ix) any inaccuracy in the Closing Date Allocation Schedule;

(x) any fraud on the part of the Company or any Seller in connection with the transactions contemplated by this Agreement; or

(xi) any Litigation Matter.

(b) The Buyer shall defend and indemnify the Sellers in respect of, and hold them harmless against and will compensate and reimburse the Sellers for, any and all Damages incurred or suffered by any Seller (regardless of whether such Damages relate to any Third Party Action) resulting from, relating to or constituting:

(i) any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of the Buyer contained in this Agreement;

(ii) any failure to perform any covenant or agreement of the Buyer contained in this Agreement; or

(iii) any fraud on the part of the Buyer in connection with the transactions contemplated by this Agreement.

(c) For purposes of Section 5.1(a)(v), in the case of any taxable period that includes (but does not end on) the Closing Date (a “ Straddle Period ”), the amount of any Taxes based on or measured by income or receipts of the Company for the portion of the taxable period ending on the Closing Date shall be determined based on an interim closing of the books as of the close of business on the Closing Date and the amount of other Taxes of the Company for a Straddle Period that relates to the portion ending on the Closing Date shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.

5.2 Indemnification Claims .

(a) The Indemnified Party shall give written notification to the Indemnifying Party of the commencement of any Third Party Action. Such notification shall be given within 20 days after receipt by the Indemnified Party of notice of such Third Party Action, and shall describe in reasonable detail (to the extent then known by the Indemnified Party) the facts

 

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constituting the basis for such Third Party Action and the amount of the claimed damages. No delay or failure on the part of the Buyer in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder except to the extent of any damage or liability caused by or arising out of such delay or failure. Within 20 days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third Party Action with counsel reasonably satisfactory to the Indemnified Party; provided that (i) the Indemnifying Party may only assume control of such defense if (A) it acknowledges in writing to the Indemnified Party on behalf of Indemnifying Party that any damages, fines, costs or other liabilities that may be assessed against the Indemnified Party in connection with such Third Party Action constitute Damages for which the Indemnified Party shall be indemnified pursuant to this Article V , (B) the ad damnum in such Third Party Action, taken together with the estimated costs of defense thereof and the Claimed Amount with respect to any unresolved claims for indemnification then pending, is less than or equal to the current Value of the remaining Escrow Shares, and (C) an adverse resolution of the Third Party Action would not have a material adverse effect on the goodwill or reputation of the Indemnified Party or the business, operations or future conduct of the Indemnified Party and (ii) the Indemnifying Party may not assume control of the defense of any Third Party Action involving Taxes, any Governmental Entity or criminal liability or in which equitable relief is sought against the Indemnified Party or any of its Subsidiaries. If the Indemnifying Party does not, or is not permitted under the terms hereof to, so assume control of the defense of a Third Party Action, the Indemnified Party shall control such defense. The Non-controlling Party may participate in such defense at its own expense. The Controlling Party shall keep the Non-controlling Party advised of the status of such Third Party Action and the defense thereof and shall consider in good faith recommendations made by the Non-controlling Party with respect thereto. The Non-controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Action (including copies of any summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Action. The fees and expenses of counsel to the Indemnified Party with respect to a Third Party Action shall be considered Damages for purposes of this Agreement if (i) the Indemnified Party controls the defense of such Third Party Action pursuant to the terms of this Section 5.2(a) or (ii) the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to such Third Party Action. The Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from, any Third Party Action without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, conditioned or delayed; provided that the consent of the Indemnified Party shall not be required if the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment and such settlement or judgment includes a complete release of the Indemnified Party from further liability and has no other adverse effect on the Indemnified Party. Except as provided in Section 5.2(e) , the Indemnified Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third Party Action without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, conditioned or delayed.

 

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(b) In order to seek indemnification under this Article V , an Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.

(c) Within 20 days after delivery of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified Party a Response, in which the Indemnifying Party shall: (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount (in which case the Response shall be accompanied by a payment by the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check or by wire transfer; provided that if the Indemnified Party is the Buyer and is seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent, within three days following the delivery of the Response, a written notice executed by the Buyer and the Seller Representative instructing the Escrow Agent to distribute to the Buyer such number of Escrow Shares as have an aggregate Value equal to the Claimed Amount), (ii) agree that the Indemnified Party is entitled to receive the Agreed Amount (in which case the Response shall be accompanied by a payment by the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check or by wire transfer; provided that if the Indemnified Party is the Buyer and is seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified Party shall deliver to the Escrow Agent, within three days following the delivery of the Response, a written notice executed by the Buyer and the Seller Representative instructing the Escrow Agent to distribute to the Buyer such number of Escrow Shares as have an aggregate Value equal to the Claimed Amount) or (iii) dispute that the Indemnified Party is entitled to receive any of the Claimed Amount. If no Response is delivered by the Indemnifying Party within such 20-day period, the Indemnifying Party shall be deemed to have agreed that all of the Claimed Amount is owed to the Indemnified Party. Acceptance by the Indemnified Party of partial payment of any Claimed Amount shall be without prejudice to the Indemnified Party’s right to claim the balance of any such Claimed Amount. For purposes of this Article V , the “ Value ” of any Escrow Shares delivered in satisfaction of an indemnity claim shall be the average of the last reported sale prices per share of the Buyer Common Stock on NASDAQ over the five consecutive trading days ending two trading days before such Escrow Shares are distributed by the Escrow Agent to the Buyer as provided above (subject to equitable adjustment in the event of any stock split, stock dividend, reverse stock split or similar event affecting the Buyer Common Stock since the beginning of such five-day period), multiplied by the number of such Escrow Shares.

(d) Any Dispute shall be resolved in accordance with Section 8.12 . If the Indemnified Party is the Buyer and the Buyer seeks to enforce the claim that is the subject of the Dispute pursuant to the Escrow Agreement, the Seller Representative and the Buyer shall deliver to the Escrow Agent, promptly following the resolution of the Dispute (whether by mutual agreement, judicial decision or otherwise), a written notice executed by both parties instructing the Escrow Agent as to what (if any) portion of the Escrow Account shall be distributed to the Buyer (which notice shall be consistent with the terms of the resolution of the Dispute).

(e) Without limitation of Section 1.6 , the Seller Representative shall have full power and authority on behalf of each Seller to take any and all actions on behalf of, execute any and all instruments on behalf of, and execute or waive any and all rights of, the Sellers under this Article V . The Seller Representative shall have no liability to any Sellers for any action taken or omitted on behalf of the Sellers pursuant to this Article V .

 

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5.3 Survival of Representations and Warranties .

(b) Unless otherwise specified in this Section 5.3 or elsewhere in this Agreement, all provisions of this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby and shall continue in full force and effect in accordance with their terms until the expiration of the applicable statute of limitations; provided , however , that, except with respect to claims based on fraud, all representations and warranties that are covered by the indemnification obligations in Section 5.1(a)(i) , Section 5.1(a)(ii) and Section 5.1(b)(i) shall expire on the date that is fifteen (15) months following the Closing Date; provided further , however , that (i) the representations and warranties set forth in Sections 2.1 , 2.2(a) , 2.3 , 2.6 , 3.1 , 3.2 , 3.3 , 3.4(a) , 3.21 , 3.22 , 4.1 , 4.2(a), 4.3 and 4.10 shall survive indefinitely and (ii) the representations and warranties in Sections 3.9 and 3.17 (to the extent related to Tax) shall survive until the date that is 60 days after the expiration of the longest applicable statute of limitations (collectively, with the representations and warranties described in the foregoing clause (i), the “ Fundamental Representations ”).

(c) If (i) the Buyer delivers to the Seller Representative, or (ii) the Seller Representative delivers to the Buyer on behalf of the Sellers, in each case before expiration of a representation, warranty, covenant or agreement, either a Claim Notice based upon a breach of such representation, warranty, covenant or agreement or an Expected Claim Notice based upon a breach of such representation, warranty, covenant or agreement then the applicable representation, warranty, covenant or agreement shall survive until, but only for purposes of, the resolution of the matter covered by such notice. If the legal proceeding or written claim with respect to which an Expected Claim Notice has been given is definitively withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party shall promptly so notify the Indemnifying Party.

5.4 Limitations .

(a) (i) With respect to claims for Damages arising under Section 5.1(a)(i) or Section 5.1(a)(ii) , the Sellers shall not be liable for any such Damages until the aggregate amount of all such Damages exceeds $200,000 (the “ Basket ”) (at which point the Sellers shall become liable only for Damages under Section 5.1(a)(i) or Section 5.1(a)(ii) in excess of the Basket) and (ii) with respect to claims for Damages arising under Section 5.1(b)(i) , the Buyer shall not be liable for any such Damages until the aggregate amount of all such Damages exceeds the Basket (at which point the Buyer shall become liable only for Damages under Section 5.1(b)(i) in excess of the Basket); provided that the limitation set forth in this sentence shall not apply to (A) claims based on fraud or (B) any claim relating to a breach of any of the Fundamental Representations.

 

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(b) Except for claims based on fraud and claims for breaches of Fundamental Representations, the Escrow Agreement shall be the exclusive means for the Buyer to collect any Damages for which it is entitled to indemnification under Section 5.1(a)(i) and Section 5.1(a)(ii) . The Buyer shall not attempt to collect any Damages directly from any Seller, unless there are insufficient unclaimed Escrow Shares remaining to satisfy such Damages pursuant to the Escrow Agreement.

(c) Except for claims based on fraud and claims for breaches of Fundamental Representations, no Seller shall attempt or be entitled to collect any Damages for which it is entitled to indemnification under Section 5.1(b)(i) from the Buyer in an amount in excess, individually or in the aggregate, of $1,304,364.75.

(d) Except for claims based on fraud, the aggregate liability of each Seller for Damages under this Article V shall not exceed the portion of the Aggregate Consideration such Seller receives pursuant to this Agreement (including any amounts held in the Escrow Account but not, for the avoidance of doubt, Contingent Payments not yet earned). The aggregate liability of the Buyer for Damages under this Article V shall not exceed the Aggregate Consideration.

(e) No Seller shall have any right of contribution against the Company with respect to any breach by the Company of any of its representations, warranties, covenants or agreements.

(f) The rights to indemnification set forth in this Article V shall not be affected by any investigation conducted by or on behalf of any Indemnified Party or any knowledge acquired (or capable of being acquired) by any Indemnified Party, whether before or after the date of this Agreement or the Closing Date, with respect to the inaccuracy or noncompliance with any representation, warranty, covenant or obligation which is the subject of indemnification hereunder.

(g) Notwithstanding anything to the contrary in this Agreement, for purposes of determining (i) whether there has been a breach of any representation or warranty set forth in Article II , Article III or Article IV and (ii) the amount of Damages for which any Indemnified Party may be entitled to indemnification under this Article V , each such representation or warranty (other than the representations and warranties set forth in Section 3.6(a) or Section 4.8(a) ) shall be deemed to have been made without any qualifications or limitations as to materiality (including any qualifications or limitations made by reference to a Company Material Adverse Effect).

(h) Except with respect to claims based on fraud or for specific performance, after the Closing, the rights of the Buyer under this Article V shall be the exclusive remedy of the Buyer with respect to claims resulting from or relating to any misrepresentation, breach of warranty or failure to perform any covenant or agreement of the Company or the Sellers contained in this Agreement.

 

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(i) Any payments made to a party pursuant to this Article V or pursuant to the Escrow Agreement shall be treated as an adjustment to the Aggregate Consideration for Tax purposes to the extent permitted by Law.

(j) Payments by an Indemnifying Party pursuant to this Article V in respect of any Damages shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds actually received (without any obligation to pursue any such proceeds) and any indemnity, contribution or other similar payment actually received (without any obligation to pursue any such payments) by the Indemnified Party in respect of any such claim.

ARTICLE VI

OTHER POST-CLOSING AGREEMENTS

6.1 No Claims . Effective as of the Closing, each Seller, by its execution and delivery of this Agreement, hereby (a) waives any and all rights of indemnification, contribution and other similar rights against the Company or any Subsidiary (whether arising pursuant to any charter document of the Company or any Subsidiary, any contract, applicable Law or otherwise) arising out of the representations, warranties, covenants and agreements contained in this Agreement and/or out of the negotiation, execution or performance of this Agreement, and agrees that any claim of the Buyer, whether for indemnity or otherwise, may be asserted directly against the Sellers or any Seller (solely to the extent, and subject to the limitations, provided in this Agreement), without any need for any claim against, or joinder of, the Company or any Subsidiary and (b) forever waives, releases and discharges (and hereby agrees to cause each of its representatives to forever waive, release and discharge) with prejudice the Company and each Subsidiary from any and all claims, rights (including rights of indemnification, contribution and other similar rights, from whatever source, whether under contract, applicable Law or otherwise), causes of action, protests, suits, disputes, orders, obligations, debts, demands, proceedings, contracts, agreements, promises, liabilities, controversies, costs, expenses, fees (including attorneys’ fees), or damages of any kind, arising by any means (including subrogation, assignment, reimbursement, operation of law or otherwise), whether known or unknown, suspected or unsuspected, accrued or not accrued, foreseen or unforeseen, or mature or unmature related or with respect to, in connection with, or arising out of, directly or indirectly, any event, fact, condition, circumstance, occurrence, act or omission that was in existence (or that occurred or failed to occur) at or prior to the Closing; provided, however, this clause (b) shall not be construed as releasing any party from its obligations otherwise expressly set forth in this Agreement or any agreement delivered pursuant hereto.

6.2 Succession . The Buyer shall take all action necessary to cause the Persons identified on Section 6.2 of the Buyer Disclosure Schedule to be appointed as executive officers of the Buyer effective as of immediately after the Closing.

6.3 Board of Directors of Buyer . The Buyer shall take all action necessary to cause the number of members of the board of directors of the Buyer to be fixed at nine (9), to cause the

 

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Persons identified on Section 6.3(i) of the Buyer Disclosure Schedule to be appointed to Buyer Board as directors of the class set forth opposite their respective names on Section 6.3 (i) of the Buyer Disclosure Schedule and obtain the resignations of the directors of Buyer identified on Section 6.3(ii) of the Buyer Disclosure Schedule, in each case effective as of immediately after the Closing.

6.4 Lock-Up; Regulation S .

(a) Until the date which is 180 days following the Closing Date, each Seller will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities of the Buyer, including shares of Buyer Common Stock or securities convertible into or exchangeable or exercisable for any such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or otherwise to enter into any such transaction, swap, hedge or other arrangement.

(b) Each Regulation S Seller agrees (i) not to, in connection with the transactions contemplated by this Agreement, engage in any “directed selling efforts” within the United States, as such term is defined in Regulation S under the Securities Act, (ii) not to resell any Buyer Common Stock received pursuant to this Agreement except in accordance with the provisions of Regulation S under the Securities Act, pursuant to an effective registration statement or pursuant to an available exemption from registration, and agrees not to engage in hedging transactions with regard to such shares of Buyer Common Stock, (iii) that Buyer will not register any proposed transfer of any shares of Buyer Common Stock by such Seller to the extent such transfer is proposed to not be made in accordance with the provisions of Regulation S, pursuant to an effective registration statement or pursuant to an available exemption from registration and (iv) not to sell or offer to sell any shares of Buyer Common Stock to any “U.S. person” (as such term is defined in Regulation S under the Securities Act), or for the account or benefit of any “U.S. person” (as such term is defined in Regulation S under the Securities Act), in each case until the date that is six-months following the Closing Date.

6.5 Tax Agreements .

(a) Buyer shall prepare or cause the Company to prepare and timely file or cause to be filed all Tax Returns of the Company and any Subsidiary that are filed after the Closing Date. Except as otherwise required by applicable Law, Tax Returns of the Company and any Subsidiary for any taxable period ending on the Closing Date shall be prepared in a manner consistent with prior practice. Buyer shall permit the Seller Representative to review and comment on each such Tax Return described in the immediately preceding sentence and shall make such revisions as are reasonably requested by the Seller Representative. Notwithstanding the foregoing, each of the Sellers, the Company and the Buyer acknowledge and agree that Buyer, in its sole discretion, shall cause the Company to make an election pursuant to subsection 256(9) of the Tax Act (Canada) in respect of its taxation year ending on the acquisition of control of the Company by Buyer.

 

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(b) Buyer, the Sellers and the Company shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns and any audit, appeal, hearing, litigation or other proceeding with respect to Taxes, and the preparation of provisions for financial statements. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, appeal, hearing, litigation, or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(c) Any Tax refunds (or credits in lieu of refunds) of the Company or any Subsidiary received by Buyer or the Company that relate to taxable periods or portions thereof ending on or before the Closing Date, excluding any ITCs, shall be for the account of the Sellers and shall be paid over to Sellers within 15 days after receipt thereof including any interest received but net of (i) any reasonable costs incurred in connection with the recovery of such refund or credit, and (ii) any Taxes incurred by the Company or the Subsidiary in respect of such refund or credit.

ARTICLE VII

DEFINITIONS

For purposes of this Agreement, each of the following terms has the meaning set forth below.

Acquired Company Financials ” means (i) historical consolidated financial statements for the Company and its Subsidiaries for the fiscal years ended December 31, 2013, 2014 and 2015, and the relevant quarterly periods of 2016, in a form that complies with the requirements of Item 9.01 of Form 8-K and Rule 3-05 of Regulation S-X of the SEC for a business acquisition required to be described in answer to Item 2.01 of Form 8-K, including information required in order for the Buyer to prepare the pro forma financial information required by Item 9.01 of Form 8-K, (ii) an unqualified report with respect to the fiscal years ended December 31, 2013, 2014 and 2015 from the Company’s independent accounting firm stating that such financial statements present fairly, in all material respects, the consolidated financial position, as well as the consolidated results of operations and cash flows, of the Company and its Subsidiaries for the periods covered by such financial statements, in conformity with GAAP, and (iii) such additional information, including reliance letters from the Company’s independent accounting firm, as the Buyer may reasonably request in order to comply with the requirements of the Exchange Act applicable to the Company.

Affiliate ” means, with respect to a Person, any other Person who is an “affiliate” of that Person within the meaning of Rule 405 promulgated under the Securities Act of 1933, as amended.

 

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Aggregate Closing Consideration ” means (a) the Aggregate Consideration minus (b) the Contingent Payments minus (c) the Escrow Amount.

Aggregate Consideration ” means (a) an aggregate of 4,013,431 newly issued shares of Buyer Common Stock plus (b) the Contingent Payments.

Agreed Amount ” means part, but not all, of the Claimed Amount.

Agreement ” has the meaning set forth in the first paragraph of this Agreement.

Ancillary Agreements ” means the Escrow Agreement and the Registration Rights Agreement.

Bankruptcy and Equity Exception ” has the meaning set forth in Section 2.2(a) .

Basket ” has the meaning set forth in Section 5.4(a) .

Business Day ” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in Wilmington, Delaware or New York, New York are permitted or required by Law, executive order or governmental decree to remain closed.

Buyer ” has the meaning set forth in the first paragraph of this Agreement.

Buyer Common Stock ” means the common stock, $0.001 par value per share, of the Buyer.

Buyer Disclosure Schedule ” means the Buyer Company Disclosure Schedule provided by the Buyer to the Company on the date hereof.

Buyer Indemnified Parties ” means the Buyer and its Affiliates (including, after the Closing, the Company and the Subsidiaries).

Buyer Material Adverse Effect ” means any Change that, individually or in the aggregate with all other Changes, has had or could reasonably be expected to have a material adverse effect on the business, assets, liabilities, capitalization, condition (financial or other), or results of operations of the Buyer, taken as a whole, other than any Change to the extent resulting from (a) Changes in the United States economy in general, so long as such changes do not disproportionately affect the business of the Buyer taken as a whole, and (b) Changes in the industry in which the Buyer operates, so long as such Changes do not disproportionately affect the business of the Buyer, taken as a whole. For the avoidance of doubt, the parties agree that the terms “material,” “materially” and “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meaning ascribed to Buyer Material Adverse Effect.

Buyer Material Contracts ” has the meaning set forth in Section 4.7 .

 

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Buyer Option ” means an option to purchase Buyer Common Stock issued by the Buyer pursuant to the Buyer Stock Plan.

Buyer Preferred Stock ” has the meaning set forth in Section 4.3 .

Buyer RSU ” means a restricted stock unit in respect of Buyer Common Stock issued by the Buyer pursuant to the Buyer Stock Plan.

Buyer SEC Reports ” has the meaning set forth in Section 4.5 .

Buyer Stock ” means the Buyer Common Stock and the Buyer Preferred Stock.

Buyer Stock Plan ” means the Amended and Restated Eleven Biotherapeutics, Inc. 2009 Stock Incentive Plan, the Eleven Biotherapeutics, Inc. 2014 Stock Incentive Plan and the Eleven Biotherapeutics, Inc. 2014 Employee Stock Purchase Plan.

CERCLA ” means the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

Certificate ” means a certificate which as of immediately prior to the Closing represented outstanding Company Shares.

Change ” means any change, event, circumstance or development.

Claim Notice ” means written notification which contains (a) a description of the Damages incurred or reasonably expected to be incurred by the Indemnified Party and the Claimed Amount of such Damages, to the extent then known, (b) a statement that the Indemnified Party is entitled to indemnification under Article V for such Damages and a reasonable explanation of the basis therefor, and (c) a demand for payment in the amount of such Damages.

Claimed Amount ” means the amount of any Damages incurred or reasonably expected to be incurred by the Indemnified Party in connection with a claim for indemnification pursuant to Article V .

Closing ” means the closing of the transactions contemplated by this Agreement.

Closing Date ” means the date of this Agreement.

Closing Date Allocation Schedule ” means the schedule attached hereto as Exhibit C and dated as of the Closing Date (as such schedule may be updated, corrected, amended or modified in accordance with Section 1.8(a) from time to time after the Closing), setting forth, for each Seller: (a) such Seller’s name and address; (b) the number of Company Shares held as of the Closing Date by such Seller; (c) the portion of the Aggregate Closing Consideration attributable to such Seller’s Company Shares; and (d) the portion of any Escrow Shares attributable to such Seller’s Company Shares.

 

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Closing Indebtedness ” means all Indebtedness of the Company and the Subsidiaries to the extent outstanding as of the Closing.

Closing Payment Certificate ” means a certificate, signed by an executive officer of the Company on behalf of the Company, which (a) sets forth (i) the identity of each Seller entitled to a payment of shares of Buyer Common Stock pursuant to Article I and (ii) the portion of the Aggregate Closing Consideration attributable to such Seller’s Company Shares and (b) attaches the Closing Date Allocation Schedule as a schedule thereto.

COBRA ” means Part 6 of Title I of ERISA.

Code ” means the Internal Revenue Code of 1986, as amended.

Company ” has the meaning set forth in the first paragraph of this Agreement.

Company Common Shares ” means the common shares, no par value per share, of the Company.

Company Disclosure Schedule ” means the Company Disclosure Schedule provided by the Sellers and the Company to the Buyer on the date hereof.

Company Employee ” means any employee (whether current or former) of the Company or any Subsidiary.

Company Financial Statements ” means:

(a) the consolidated audited balance sheets and statements of income, changes in shareholders’ equity and cash flows of the Company as of the end of and for each of the fiscal years ended December 31, 2013, 2014 and 2015, as certified without qualification by PricewaterhouseCoopers LLP, the Company’s independent public accountants;

(b) the consolidated unaudited balance sheets of the Company for the last day of each completed calendar quarter for any interim periods since December 31, 2015, including at June 30, 2016, and the related consolidated unaudited statements of operations, changes in shareholders’ equity and cash flows for each of the quarters then ended; and

(c) a trial balance (prepared in accordance with (i) the books and records of the Company and (ii) GAAP, consistently applied) for the last day of each completed calendar month between the Most Recent Balance Sheet Date and the date of this Agreement.

Company Intellectual Property ” has the meaning set forth in Section 3.12(b) .

Company’s Knowledge ,” “ Knowledge of the Company ” and words of similar effect means the knowledge of each of the individuals identified in Section 7.1 of the Company Disclosure Schedule, in each case after due and reasonable inquiry.

 

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Company Material Adverse Effect ” means any Change that, individually or in the aggregate with all other Changes, has had or could reasonably be expected to have a material adverse effect on the business, assets, liabilities, capitalization, condition (financial or other), or results of operations of the Company and the Subsidiaries, taken as a whole, other than any Change to the extent resulting from (a) Changes in the United States economy in general, so long as such changes do not disproportionately affect the business of the Company and the Subsidiaries taken as a whole, and (b) Changes in the industry in which the Company and the Subsidiaries operate, so long as such Changes do not disproportionately affect the business of the Company and the Subsidiaries, taken as a whole. For the avoidance of doubt, the parties agree that the terms “material,” “materially” and “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meaning ascribed to Company Material Adverse Effect.

Company Option ” means an option to purchase Company Common Shares issued by the Company pursuant to the Company Share Plan.

Company Plan ” means any Employee Benefit Plan in respect of any current or former employees, independent contractors, directors, officers or shareholders of the Company or any Subsidiary that are sponsored, contributed to or maintained by the Company or any Subsidiary or with respect to which the Company or any Subsidiary has made or is required to make payments, transfers or contributions or has or may have any actual or potential liability.

Company Preferred Shares ” means the preferred shares of the Company, no par value per share.

Company RSU ” means a restricted share unit in respect of Company Common Shares issued by the Company pursuant to the Company Share Plan.

Company Share ” means the Company Common Shares and the Company Preferred Shares.

Company Share Plan ” means the Viventia Bio Inc. Amended and Restated Equity Incentive Plan.

Company Third Party Intellectual Property ” has the meaning set forth in Section 3.12(b) .

Company Transaction Expenses ” means all costs and expenses of the Company or any Subsidiary incurred in connection with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby, including any brokerage fees and commissions, finders’ fees or financial advisory fees and any fees and expenses of counsel or accountants payable by the Company or any Subsidiary; provided that the matters set forth on Section 7C of the Company Disclosure Schedules shall be deemed to be “Company Transaction Expenses” for purposes of this definition.

 

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Contract ” has the meaning set forth in Section 3.13(a) .

Confidentiality Agreement ” means the Confidentiality Agreement, dated as of June 29, 2016, by and between the Company and the Buyer.

Contingent Payments ” means the payments from Buyer to the Sellers described in Section 1.9(a) and Section 1.9(b) .

Controlling Party ” means the party controlling the defense of any Third Party Action.

Convertible Securities ” means any securities of the Company convertible into or exchangeable for Equity Interests of the Company.

Damages ” means any and all claims, debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), diminution in value, monetary damages, fines, fees, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, costs of investigators, fees and expenses of attorneys, accountants, financial advisors and other experts, and other expenses of litigation, arbitration or other dispute resolution procedures).

Dispute ” means the dispute resulting if the Indemnifying Party in a Response disputes liability for all or part of a Claimed Amount.

DOL ” means the United States Department of Labor.

EMA ” has the meaning set forth in Section 3.19(b) .

Employee Amount ” means all amounts payable pursuant to (a) any Transaction Bonus Plan or (b) any other change in control bonus plan, severance plan, change of control, retention or similar arrangement of the Company or any Subsidiary, in each case of this clause (b) payable in connection with the transactions contemplated by this Agreement or upon related, concurrent or subsequent employment termination, or in combination with any other event, plus all deductions at source at other amounts required to be withheld and the employer’s share of Taxes payable with respect to (i) all such amounts described in the foregoing clauses (a) and (b) and (ii) any exercise of or payments with respect to Company Options or Company RSUs outstanding or issuance of Restricted Stock at any time prior to the Closing; provided , that amounts payable pursuant to the agreements set forth on Section 7E of the Company Disclosure Schedule shall be deemed to not constitute “Employee Amounts” under this definition.

Employee Benefit Plans ” means all (a) “employee benefit plans,” as defined in Section 3(3) of ERISA, together with plans or arrangements that would be so defined if they were not (i) otherwise exempt from ERISA by Section 3(3) of ERISA or another Section of ERISA, (ii) maintained outside the United States or (iii) individually negotiated or applicable only to one individual and (b) any other written or oral benefit arrangement or obligation to provide benefits as compensation for services rendered, including employment or consulting agreements (except

 

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for agreements that provide for at will employment that can be terminated at no cost to the Company and the Subsidiaries or non-U.S. agreements that provide only what is legally required by applicable local Law), severance agreements, arrangements, plans or pay policies, stay or retention bonuses or compensation, incentive (including equity or equity-linked) plans, programs or arrangements, patent award programs, sick leave, supplemental unemployment benefits, vacation pay, plant closing benefits, salary continuation or insurance for disability, consulting, or other compensation arrangements, retirement, deferred compensation, bonus, stock option or purchase plans or programs, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs or similar plans or programs, any plans subject to Section 125 of the Code and any plans providing benefits or payments in the event of a change of control, change in ownership or effective control, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof.

Environmental Law ” means any Law relating to the environment, occupational health and safety, or exposure of Persons or property to Materials of Environmental Concern, including any statute, regulation, administrative decision or order pertaining to: (a) the presence of or the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration, investigation or remediation of Materials of Environmental Concern or documentation related to the foregoing; (b) air, water and noise pollution; (c) groundwater and soil contamination; (d) the release, threatened release, or accidental release into the environment, the workplace or other areas of Materials of Environmental Concern, including emissions, discharges, injections, spills, escapes or dumping of Materials of Environmental Concern; (e) transfer of interests in or control of real property which may be contaminated; (f) community or worker right-to-know disclosures with respect to Materials of Environmental Concern; (g) the protection of wild life, marine life and wetlands, and endangered and threatened species; (h) storage tanks, vessels, containers, abandoned or discarded barrels and other closed receptacles; and (i) health and safety of employees and other Persons. As used above, the term “release” shall have the meaning set forth in CERCLA.

Equity Interest ” means, with respect to any Person, (a) any share, partnership or membership interest, unit of participation or other similar interest (however designated) in such Person and (b) any warrant, purchase right, conversion right, exchange right or other agreement which would entitle any other Person to acquire any such interest in such Person (including share appreciation, phantom share, profit participation or other similar rights).

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” means any entity that is, or at any applicable time was, a member of (a) a controlled group of corporations (as defined in Section 414(b) of the Code), (b) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (c) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Company or any Subsidiary.

Escrow Account ” means the account established pursuant to the Escrow Agreement to hold the Escrow Amount.

 

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Escrow Agent ” means Citibank, N.A., as escrow agent pursuant to the Escrow Agreement, or any successor escrow agent pursuant to the Escrow Agreement.

Escrow Agreement ” means the Escrow Agreement in the form attached hereto as Exhibit B .

Escrow Amount ” means 401,343 shares of Buyer Common Stock.

Escrow Shares ” means the shares of Buyer Common Stock held by the Escrow Agent pursuant to this Agreement and the Escrow Agreement.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Executive Employment Agreement ” means the Executive Employment Agreement in the form attached hereto as Exhibit E.

Expected Claim Notice ” means a notice that, as a result of a legal proceeding instituted by or written claim made by a third party, the Indemnified Party reasonably expects to incur Damages for which it is entitled to indemnification under Article V .

Fundamental Representations ” has the meaning set forth in Section 5.3(a) .

GAAP ” means United States generally accepted accounting principles.

Governmental Entity ” means any United States or Canadian federal, state, provincial, municipal, local or any foreign government or any court, arbitrational tribunal, administrative agency or commission or government authority acting under the authority of a federal, state or local or foreign government.

Indebtedness ” with respect to any Person means (a) any indebtedness or other obligation for borrowed money; (b) any obligation incurred for all or any part of the purchase price of property or other assets (including earnout, milestone, royalty and similar obligations) or for the cost of property or other assets constructed or of improvements thereto, other than accounts payable included in current liabilities and incurred in respect of property purchased in the Ordinary Course of Business; (c) the face amount of all letters of credit issued for the account of such Person; (d) obligations (whether or not such Person has assumed or become liable for the payment of such obligation) secured by Liens; (e) capitalized lease obligations; (f) all guarantees and similar obligations of such Person; (g) all accrued interest, fees and charges in respect of any indebtedness; (h) all bankers acceptances and overdrafts; and (i) all interest, prepayment premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as a result of the prepayment or discharge of any indebtedness.

Indemnified Party ” shall mean a party entitled, or seeking to assert rights, to indemnification under Article   V .

Indemnifying Party ” shall mean the party from whom indemnification is sought by the Indemnified Party.

 

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Intellectual Property ” means the following subsisting throughout the world:

 

  (a) Patent Rights;

 

  (b) Trademarks and all goodwill in the Trademarks;

 

  (c) copyrights, works of authorship, designs, industrial designs, data and database rights and registrations and applications for registration thereof, including moral rights of authors;

 

  (d) integrated circuit topographies, mask works and registrations and applications for registration thereof and any other rights in semiconductor topologies under the Laws of any jurisdiction;

 

  (e) inventions, invention disclosures, statutory invention registrations, trade secrets and confidential business information, know-how, scientific and technical information, data and technology, including medical, clinical, toxicological and other scientific data, manufacturing and product processes, algorithms, techniques and analytical methodology, research and development information, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, whether patentable or nonpatentable, whether copyrightable or noncopyrightable and whether or not reduced to practice; and

 

  (f) other proprietary rights relating to any of the foregoing (including remedies against past, present and future infringement thereof and rights of protection of interest therein under the Laws of all jurisdictions).

Law ” means any United States or Canadian federal, provincial, state, municipal or local or foreign law, common law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any decree, order, injunction, rule, judgment, consent of or by any Governmental Entity, or any Permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.

Lease ” means any lease, sublease, license, or occupancy agreement pursuant to which the Company or any Subsidiary leases or subleases from or to another party any real property, or otherwise occupies any real property.

Legal Proceeding ” means any action, suit, proceeding (including administrative proceeding), claim, complaint, hearing, information request, notice of violation, arbitration, inquiry or investigation of or before any Governmental Entity or before any arbitrator.

License Agreement ” has the meaning set forth in Section 4.9 .

 

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Lien ” means any mortgage, pledge, security interest, encumbrance, charge or other lien (whether arising by contract or by operation of Law), other than (a) mechanic’s, material men’s and similar liens, (b) liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation, and (c) liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the Ordinary Course of Business of the Company and the Subsidiaries or the Buyer, as applicable, and not material to the Company and the Subsidiaries or the Buyer, as applicable, in each case taken as a whole.

Litigation Matter ” means any Legal Proceedings set forth in Section 2.4 or Section 3.14 of the Company Disclosure Schedule.

Materials of Environmental Concern ” means any: pollutants, contaminants or hazardous substances (as such terms are defined under CERCLA), pesticides (as such term is defined under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined under the Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive or toxic materials, oil, petroleum and petroleum products (and fractions thereof), or any other material (or article containing such material) listed or subject to regulation under any Law due to its potential, directly or indirectly, to harm the environment or the health of humans or other living beings.

Most Recent Balance Sheet ” means the unaudited balance sheet of the Company as of the Most Recent Balance Sheet Date.

Most Recent Balance Sheet Date ” means June 30, 2016.

NASDAQ ” means The NASDAQ Stock Market LLC.

Non-controlling Party ” means the party not controlling the defense of any Third Party Action.

“OHSA” has the meaning set forth in Section 3.17(g).

Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to frequency and amount).

Organizational Documents ” means, with respect to any Person (other than an individual), (a) the certificate or articles of incorporation, organization, amalgamation or continuation and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and (b) all by-laws, voting agreements and similar documents, instruments or agreements relating to the organization or governance of such Person, in each case, as amended or supplemented. “ Patent Rights ” means all patents, patent applications (including provisional patent applications), utility models, design registrations and certificates of invention and other governmental grants for the protection of inventions or industrial designs (including all related continuations, continuations-in-part, divisionals, reissues and reexaminations).

 

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Permits ” means all permits, licenses, registrations, authorizations, applications, certificates, orders, approvals, franchises, variances and similar rights issued by or obtained from any Governmental Entity (including those issued or required under Environmental Laws and those relating to the occupancy or use of owned or leased real property).

Person ” means any natural person, firm, limited liability company, general or limited partnership, association, corporation, unincorporated organization, company, joint venture, trust, Governmental Entity or other entity.

PPACA ” has the meaning set forth in Section 3.17(g) .

Pro Rata Share ” means, with respect to any Company Common Shares, a fraction, (a) the numerator of which is the number of Company Common Shares represented thereby as of immediately prior to the Closing and (b) the denominator of which is the aggregate number of Company Common Shares outstanding as of immediately prior to the Closing.

Registration Rights Agreement ” means the Registration Rights Agreement in the form attached hereto as Exhibit A .

Regulation S Seller ” has the meaning set forth in Section 2.8 .

Response ” means a written response containing the information provided for in Section 5.2(c) .

Rule 145 Affiliates ” has the meaning set forth in Section 1.5(e).

SEC ” means the United States Securities and Exchange Commission.

Securities Act ” means the Securities Act of 1933, as amended.

Seller ” has the meaning set forth in the first paragraph of this Agreement.

Seller Representative ” has the meaning set forth in the first paragraph of this Agreement.

Shares ” means the issued and outstanding Company Shares owned by each Seller, as set forth opposite his, her or its name on the Closing Date Allocation Schedule, which in the aggregate represent all of the issued and outstanding Company Shares.

Straddle Period ” has the meaning set forth in Section 5.1(c) .

Subsidiary ” means any corporation, partnership, trust, limited liability company, unlimited liability company or other non-corporate business enterprise in which the Company (or

 

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another Subsidiary) holds stock or other ownership interests representing (a) more than fifty percent (50%) of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than fifty percent (50%) of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

Tax Act ” means the Income Tax Act (Canada) and the regulations thereunder as amended.

Tax Returns ” means any and all reports, returns (including information returns), declarations, elections, designations, or statements relating to Taxes, including any schedule or attachment thereto and any amendment thereof, filed with or submitted to any Governmental Entity in connection with the determination, assessment, collection or payment of Taxes or in connection with the administration, implementation or enforcement of or compliance with any legal requirement relating to any Tax.

Taxes ” means any and all taxes, charges, fees, duties, contributions, levies or other similar assessments or liabilities, including, without limitation, income, gross receipts, corporation, ad valorem, premium, value-added, net worth, capital stock, capital gains, documentary, recapture, alternative or add-on minimum, disability, registration, recording, excise, real property, personal property, sales, use, goods and services, harmonized sales, license, lease, service, service use, transfer, withholding, employment, unemployment, insurance, social security, national insurance, business license, business organization, environmental, workers compensation, payroll, profits, severance, stamp, occupation, escheat, windfall profits, customs duties, franchise, estimated and other taxes of any kind whatsoever imposed by the United States of America or any state, local or foreign government, or any agency or political subdivision thereof, and any interest, fines, penalties, assessments or additions to tax imposed with respect to or related to such items.

Third Party Action ” means any Legal Proceeding by a Person other than a party for which indemnification may be sought by the Buyer under Article V .

Trademarks ” means all registered trademarks and service marks, logos, Internet domain names, corporate names and doing business designations and all registrations and applications for registration of the foregoing, common law trademarks and service marks and trade dress.

Transaction Bonus Plan ” means any bonus plan implemented by the Company or any Subsidiary in connection with the transactions contemplated by this Agreement.

Value ” has the meaning set forth in Section 5.2(c) .

WARN Act ” has the meaning set forth in Section 3.16(i) .

 

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ARTICLE VIII

MISCELLANEOUS

8.1 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly delivered (i) four (4) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service or (iii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date of such receipt is not a Business Day) of transmission by facsimile, in each case to the intended recipient as set forth below:

 

  (a) if to the Buyer or the Company, to:

 

Eleven Biotherapeutics, Inc.
215 First Street, Suite 400
Cambridge, Massachusetts 02142
Attention:    Chief Financial Officer
Telecopy:    (617) 858-0911
with a copy to:
Wilmer Cutler Pickering Hale and Dorr LLP
7 World Trade Center
250 Greenwich Street
New York, New York 10007
Attention:    Brian A. Johnson, Esq.
   Hal J. Leibowitz, Esq.
Telecopy:    (212) 230-8888

 

  (b) if to any Seller or the Seller Representative, to:

 

Clairmark Investments Ltd.   
305 Milner Avenue, Suite 914   
Toronto, ON M1B 3V4   
Attention: Leslie L. Dan   
Telecopy:    (416) 291-2162   
with a copy to:   
Fogler, Rubinoff LLP   
77 King Street West   
Suite 3000, P.O. Box 95   
TD Centre North Tower   
Toronto, ON M5K 1G8   
Attention:    Peter K. Guselle   
   Karen A. Murray   
Telecopy:    (416) 941-8852   

 

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Any party to this Agreement may give any notice or other communication hereunder using any other means (including personal delivery, messenger service, ordinary mail or electronic mail), but no such notice or other communication shall be deemed to have been duly given unless and until it actually is received by the party for whom it is intended. Any party to this Agreement may change the address to which notices and other communications hereunder are to be delivered by giving the other parties to this Agreement notice in the manner herein set forth.

8.2 Entire Agreement . This Agreement (including the Ancillary Agreements and the documents and instruments referred to herein) constitutes the entire agreement among the parties to this Agreement and supersedes any prior understandings, agreements or representations by or among the parties hereto, or any of them, written or oral, with respect to the subject matter hereof; provided that the Confidentiality Agreement shall remain in effect in accordance with its terms.

8.3 Fees and Expenses . Except as otherwise expressly provided herein, the Buyer will pay all fees and expenses (including legal and accounting fees and expenses) incurred by it in connection with the transactions contemplated hereby and the Company Transaction Expenses and any Employee Amounts unpaid as of the Closing shall be paid by the Sellers, and for greater certainty, no Company Transaction Expenses shall be claimed as a deduction in determining the Taxes of the Company or Subsidiary. Each Seller shall be responsible for payment of all sales or transfer Taxes (including real property transfer Taxes) arising out of the conveyance of the Shares owned by such Seller.

8.4 Amendment . This Agreement may be mutually amended by the Buyer, the Company and the Seller Representative (on behalf of the Sellers) at any time. This Agreement may not be amended except by an instrument in writing signed (a) in the case of an amendment of any of Section 1.6 , Section 1.9 , Article V , Article VII and this Article VIII , on behalf of each of the parties hereto, and (b) in the case of an amendment of any other provision of this Agreement, on behalf of the Buyer, the Company and the Seller Representative.

8.5 Third-Party Beneficiaries . This Agreement is not intended to, and shall not, confer upon any other Person any rights or remedies hereunder, except that the Buyer Indemnified Parties shall be third-party beneficiaries of Article V .

8.6 Assignment . Subject to the proviso set forth in Section 1.9(g) , neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of Law or otherwise by any of the parties hereto without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void, except that the Buyer may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to one (1) or more of its

 

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Affiliates. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.

8.7 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

8.8 Counterparts and Signature . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall be considered one (1) and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile or by an electronic scan delivered by electronic transmission.

8.9 Interpretation . Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “either” and “or” are not exclusive and “include,” “includes” and “including” are not limiting; (b) “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (c) “date of this Agreement” refers to the date set forth in the initial caption of this Agreement; (d) “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”; (e) the descriptive headings and table of contents included herein are included for convenience only and shall not affect in any way the meaning or interpretation of this Agreement or any provision hereof; (f) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a contract or agreement mean such contract or agreement as amended or otherwise supplemented or modified from time to time; (h) references to a Person are also to its permitted successors and assigns; (i) references to an “Article,” “Section,” “Exhibit” or “Schedule” refer to an Article or Section of, or an Exhibit or Schedule to, this Agreement; (j) references to “$” or otherwise to dollar amounts refer to the lawful currency of the United States; (k) references to a federal, state, local or foreign Law include any rules, regulations and delegated legislation issued thereunder; (l) references to accounting terms used and not otherwise defined herein have the meaning assigned to them under GAAP; and (m) a term that begins with an initial capital letter, is not defined herein and reflects a different part of speech than a term that begins with an initial

 

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capital letter and is defined herein, shall be interpreted in a correlative manner. When reference is made in this Agreement to information that has been “made available” to the Buyer, that shall consist of only the information that was (i) contained in the Company’s electronic data room no later than 5:00 p.m., Eastern time, on the second (2nd) Business Day prior to the date of this Agreement or (ii) delivered to the Buyer or its counsel. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party hereto. No summary of this Agreement prepared by any party shall affect the meaning or interpretation of this Agreement. If any date on which a party is required to make a payment or a delivery pursuant to the terms hereof is not a Business Day, then such party shall make such payment or delivery on the next succeeding Business Day. Time shall be of the essence in this Agreement.

8.10 Governing Law . This Agreement (and any claims or disputes arising out of or related hereto or the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed in all respects, including validity, interpretation, and effect, by and construed in accordance with the internal Laws of the State of Delaware (including in respect of the statute of limitations or other limitations period applicable to any claim, controversy or dispute) without giving effect to any choice or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of Laws of any jurisdictions other than those of the State of Delaware; provided , that this Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein solely to the extent necessary to effect the purchase by the Buyer and the sale by the Sellers of the Company Shares and the transactions related thereto.

8.11 Remedies .

(a) Except as otherwise provided in Section 5.4(h) with respect to the period from and after the Closing, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such party, and the exercise by a party of any one (1) remedy will not preclude the exercise of any other remedy.

(b) The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case without posting a bond or undertaking, this being in addition to any other remedy to which they are entitled at Law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (i) the party seeking such remedy has an adequate remedy at Law or (ii) an award of specific performance is not an appropriate remedy for any reason at Law or equity.

 

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8.12 Submission to Jurisdiction . Each of the parties to this Agreement (a) consents to submit itself to the exclusive personal jurisdiction of the Court of Chancery of the State of Delaware, New Castle County, or, if that court does not have jurisdiction, a federal court sitting in Wilmington, Delaware in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (d)   agrees not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court, and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Any party hereto may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 8.1 . Nothing in this Section 8.12 , however, shall affect the right of any party to serve legal process in any other manner permitted by Law.

8.13 Disclosure Schedules . Each of the Company Disclosure Schedule and the Buyer Disclosure Schedule shall be arranged in sections corresponding to the numbered sections contained in this Agreement, and the disclosure in any section shall qualify only (a) the corresponding section of this Agreement and (b) the other sections of this Agreement to the extent that it is reasonably apparent from a reading of such disclosure that it also qualifies or applies to such other sections. The inclusion of any information in the Company Disclosure Schedule or the Buyer Disclosure Schedule, as applicable, shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material, has resulted in or would result in a Company Material Adverse Effect or a Buyer Material Adverse Effect, as applicable, or is outside the Ordinary Course of Business.

[Remainder of the Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

BUYER:
ELEVEN BIOTHERAPEUTICS, INC.
By:  

/s/ Abbie C. Celniker

Name:   Abbie C. Celniker
Title:   President and Chief Executive Officer
COMPANY:
VIVENTIA BIO INC.
By:  

/s/ Stephen A. Hurly

Name:   Stephen A. Hurly
Title:   Chief Executive Officer

 

[Signature Page to Share Purchase Agreement]


SELLER REPRESENTATIVE:
CLAIRMARK INVESTMENTS LTD.,
Solely for purposes of being bound by Section 1.6 , Section 1.9 , Article V , Article VII and Article VIII and solely in its capacity as the Seller Representative
By:  

/s/ Leslie L. Dan

Name:   Leslie L. Dan
Title:   President

 

[Signature Page to Share Purchase Agreement]


SELLERS:
CLAIRMARK INVESTMENTS LTD.
By:  

/s/ Leslie L. Dan

Name:   Leslie L. Dan
Title:   President

/s/ Stephen A. Hurly

STEPHEN A. HURLY

/s/ George W. Bickerstaff

GEORGE W. BICKERSTAFF

/s/ Annalisa Jenkins

ANNALISA JENKINS

/s/ Sanford Zweifach

SANFORD S. ZWEIFACH

/s/ Catherine J. Mackey

CATHERINE J. MACKEY

 

[Signature Page to Share Purchase Agreement]

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT is made as of the 20 th day of September, 2016, by and among Eleven Biotherapeutics, Inc., a Delaware corporation (the “ Company ”), Viventia Bio Inc., a corporation existing under the laws of the Province of Ontario (“ Viventia ”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “ Investor .”

WHEREAS, concurrently herewith, the Company, Viventia and the Investors have entered into a Share Purchase Agreement, dated as of the date of this Agreement (the “ Share Purchase Agreement ”), pursuant to which the Company shall purchase from the Investors party thereto all of the outstanding shares of Viventia owned by each such Investor, in exchange for which the Company shall issue to such Investors shares of Common Stock.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the Company, Viventia and the Investors agree as follows:

1. Definitions . For purposes of this Agreement:

1.1 “ Affiliate ” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, such Person.

1.2 “ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banking institutions in New York are authorized or permitted by law to be closed.

1.3 “ Common Stock ” means shares of the Company’s common stock, par value $0.001 per share.

1.4 “ Consideration Shares ” means the shares of Common Stock issued to the Investors set forth on Schedule A hereto, as updated from time to time to reflect any successors and assigns in accordance with this Agreement, pursuant to the Share Purchase Agreement.

1.5 “ Damages ” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement of the Company, including any Prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 


1.6 “ Derivative Securities ” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including without limitation options and warrants.

1.7 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

1.8 “ Excluded Registration ” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

1.9 “ Form S-3 ” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

1.10 “ GAAP ” means generally accepted accounting principles in the United States.

1.11 “ Holder ” means any holder of Registrable Securities, or holder of Derivative Securities convertible into, or exercisable or exchangeable for, Registrable Securities, who is a party to this Agreement. For purposes hereof, a holder of Derivative Securities convertible into, or exercisable or exchangeable for, Registrable Securities, shall be deemed to hold such Registrable Securities.

1.12 “ Immediate Family Member ” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

1.13 “ Initiating Holders ” means, collectively, Holders who properly initiate a registration request under this Agreement.

1.14 “ Person ” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

1.15 “ Prospectus ” means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the Securities Act.

 

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1.16 “ Registrable Securities means (i) the Consideration Shares and (ii) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that, a security shall cease to be a Registrable Security upon the earlier to occur of (A) the sale of such security pursuant to a Registration Statement or a valid exemption under the Securities Act, or (B) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such shares held by such Holder without limitation during a three-month period without registration.

1.17 “ Registration Statement ” means any registration statement of the Company under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

1.18 “ Requisite Holders ” means the Holders of fifty percent (50%) of the Registrable Securities then outstanding.

1.19 “ Restated Certificate of Incorporation ” means the Restated Certificate of Incorporation of the Company, as the same may be further amended or restated from time to time.

1.20 “ Restricted Securities ” means the securities of the Company required to bear the legend set forth in Section 2.11(b) hereof.

1.21 “ SEC ” means the Securities and Exchange Commission.

1.22 “ SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

1.23 “ SEC Rule 145 ” means Rule 145 promulgated by the SEC under the Securities Act.

1.24 “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.25 “ Selling Expenses ” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6 .

2. Registration Rights . The Company covenants and agrees as follows:

2.1 Demand Registration .

(a) If after ninety (90) days after the date of this Agreement, the Company receives a request from Holders of at least fifty percent (50%) of the Registrable Securities then outstanding that the Company file a Registration Statement with respect to at least fifty (50%) of the Registrable Securities then outstanding, which Registrable Securities represent an anticipated

 

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aggregate offering price, net of Selling Expenses, of at least $5 million, then the Company shall (i) within ten (10) days after the date such request is given, give notice thereof (the “ Demand Notice ”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders (the “ Filing Deadline ”), file a Registration Statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(b) , Section 2.1(e) , Section 2.1(f) and Section 2.3 .

(b) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such Registration Statement to either become effective or remain effective for as long as such Registration Statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however , that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such ninety (90) day period other than an Excluded Registration.

(c) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided , that the Company is actively employing in good faith commercially reasonable efforts to cause such Registration Statement to become effective; or (ii) after the Company has effected two registrations pursuant to Section 2.1(a) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Section 2.1(c) until such time as the applicable Registration Statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration (other than as a result of a material adverse change to the Company), elect not to pay the registration expenses therefor, and forfeit their right to one demand Registration Statement pursuant to Section 2.6 , in which case such withdrawn Registration Statement shall be counted as “effected” for purposes of this Section 2.1(c) .

(d) The Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section for such period of time as the Company determines is reasonably necessary or advisable (but in no event for more than an aggregate of

 

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ninety (90) days in any consecutive 12-month period commencing on the date hereof or more than an aggregate of sixty (60) days in any consecutive 180-day period; provided, however , that the Company shall be entitled to toll the running of such time periods for up to forty-five (45) days as a result of a review of any post-effective amendment to the Registration Statement by the SEC prior to such post-effective amendment being declared effective, so long as the Company is using its commercially reasonable efforts to cause such post-effective amendment to be declared effective), in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “ Allowed Delay ”); provided, that the Company shall promptly (a) notify each Investor then holding Registrable Securities that were registered pursuant to such Registration Statement in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of an Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors then holding Registrable Securities that were registered pursuant to such Registration Statement in writing to cease all sales under such Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

(e) If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Investor to be named as an “underwriter,” the Company shall use its best efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter.” The Investors shall have the right to select one legal counsel to participate or have their counsel participate in any meetings or discussions with the SEC regarding the SEC’s position and to comment or have their counsel comment on any written submission made to the SEC with respect thereto. In the event that, despite the Company’s reasonable best efforts and compliance with the terms of this Section   2(e) , the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “ Cut Back Shares ”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “ SEC Restrictions ”); provided, however, that the Company shall not agree to name any Investor as an “underwriter” in such Registration Statement without the prior written consent of such Investor. Any cut-back imposed on those Investors seeking to include their Registrable Securities in such Registration Statement pursuant to this Section 2(e) shall be allocated among such Investors on a pro rata basis and shall be applied first to any of the Registrable Securities of such Investor as such Investor shall designate, unless the SEC Restrictions otherwise require or provide or the Investors otherwise agree. From and after such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions applicable to such Cut Back Shares (such date, the “ Restriction Termination Date ”), all of the provisions of this

 

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Section 2 (including the Company’s obligations with respect to the filing of a Registration Statement and its obligations to use commercially reasonable efforts to have such Registration Statement declared effective) shall again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such Restriction Termination Date.

(f) The Company shall not be obligated to request that the SEC declare effective any Registration Statement pursuant to Section 2.1 prior to the date that is one hundred eighty (180) days after the date of this Agreement.

2.2 Company Registration . If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3 , cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6 .

2.3 Underwriting Requirements .

(a) If, pursuant to Section 2.1 , the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1 , and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e) ) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Section 2.3 , if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however , that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

 

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(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2 , the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below twenty percent (20%) of the total number of securities included in such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

(c) For purposes of Section 2.1(a) , a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a) , fewer than all of the Registrable Securities that Holders have requested to be included in such Registration Statement are actually included.

2.4 Obligations of the Company . Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become and, subject to Section 2.1(d) , remain effective until the earlier of (i) such time as there cease to be Registrable Securities registered thereunder and (ii) such time as which all Registrable Securities covered by such Registration Statement have been sold;

 

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(b) prepare and file with the SEC such amendments and supplements to such Registration Statement, and the Prospectus used in connection with such Registration Statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such Registration Statement;

(c) furnish to the selling Holders such numbers of copies of a Prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

(d) use its commercially reasonable efforts to register and qualify the securities covered by such Registration Statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such Registration Statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such Registration Statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such Registration Statement and to conduct appropriate due diligence in connection therewith;

(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed; and

(j) after such Registration Statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such Registration Statement or Prospectus.

 

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2.5 Furnish Information . It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

2.6 Expenses of Registration . All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2 , including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel for the selling Holders in each such registration (“ Selling Holder Counsel ”), shall be borne and paid by the Company; provided, however , that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Section 2.1(a) ; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) . All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

2.7 Delay of Registration . No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2 .

2.8 Indemnification . If any Registrable Securities are included in a Registration Statement under this Section 2 :

(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however , that the indemnity agreement contained

 

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in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the Registration Statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such Registration Statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however , that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8 , give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however , that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8 , to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8 .

 

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(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8 , then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however , that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such Registration Statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d) , when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b) , exceed the proceeds from the offering received by such Holder (net of any Selling Expenses) paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2 , and otherwise shall survive the termination of this Agreement.

2.9 Reports Under Exchange Act . With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144;

 

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(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time when the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to Form S-3 (at any time when the Company qualifies to use such form).

2.10 Limitations on Subsequent Registration Rights . From and after the date of this Agreement, the Company shall not, without the prior written consent of the Requisite Holders, enter into any agreement with any holder or prospective holder of any securities of the Company that would (i) allow such holder or prospective holder to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder.

2.11 Restrictions on Transfer .

(a) The Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

(b) Each certificate or instrument representing (i) the Registrable Securities, and (ii) any other securities issued in respect of the Registrable Securities, upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.11(c) ) be stamped or otherwise imprinted with a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

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THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.11.

(c) The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2 . Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.11 . Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.11(b) , except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

2.12 Termination of Registration Rights . The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or Section 2.2 shall terminate upon the earliest to occur of:

(a) the date on which all of such Holder’s Registrable Securities have been sold; and

 

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(b) September 20, 2021.

3. Confidentiality . Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a Registration Statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however , that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3 ; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

4. Successor Indemnification . If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Restated Certificate of Incorporation, or elsewhere, as the case may be.

5. Miscellaneous .

5.1 Successors and Assigns . The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 50,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however , that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not

 

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qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

5.2 Governing Law . All matters arising out of or relating to this Agreement and the transactions contemplated hereby (including its interpretation, construction, performance and enforcement) shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware.

5.3 Counterparts; Facsimile . This Agreement may be executed in two or more counterparts (including by facsimile, by an electronic scan delivered by electronic mail or any electronic signature), each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile, by an electronic scan delivered by electronic mail or by delivery of any electronic signature.

5.4 Titles and Subtitles . The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

5.5 Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) for deliveries within the United States, five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, specifying next business day delivery for United States deliveries or three (3) business days after such deposit with an internationally recognized express overnight courier for deliveries outside of the United States, in either case, freight prepaid, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 5.5.

5.6 Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Requisite Holders; provided that the Company may in its sole discretion waive

 

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compliance with Section 2.11(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.11(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Section 5.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

5.7 Severability . In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

5.8 Aggregation of Stock . All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

5.9 Entire Agreement . This Agreement (including the Schedule and Exhibit hereto) constitutes the full and entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly superseded and/or canceled to the extent relating to the parties hereto.

5.10 Delays or Omissions . No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

5.11 Acknowledgment . The Company acknowledges that certain of the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict such Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

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5.12 Registrable Securities . Each Investor represents and warrants that it owns as of the date hereof such number of Registrable Securities set forth next to such Investor’s name on Schedule A hereto.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

COMPANY:
E LEVEN B IOTHERAPEUTICS , I NC .
By:   /s/ Abbie C. Celniker
Name:   Abbie C. Celniker
Title:   President and Chief Executive Officer

— Signature Page to Registration Rights Agreement —


INVESTORS:
C LAIRMARK I NVESTMENTS L TD .
By:   /s/ Leslie L. Dan
Name:   Leslie L. Dan
Title:   President

 

Acknowledged and Agreed:
V IVENTIA B IO I NC .
By:   /s/ Leslie L. Dan
Name:   Leslie L. Dan
Title:   Executive Chairman

— Signature Page to Registration Rights Agreement —


SCHEDULE A

Investors

 

Name and Address

  

Number of Registrable Securities

Clairmark Investments Ltd.

305 Milner Avenue, Suite 914

Toronto, ON M1B 3V4

Attention: Leslie L. Dan

   3,582,328

Exhibit 10.1

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Double asterisks denote omissions.

LICENSE AGREEMENT

This agreement (“Agreement”) is made by and between

The University of Zürich

Rämistrasse 71, CH-8006 Zürich (SWITZERLAND)

(hereinafter referred to as UNIVERSITY)

and

Viventia BioInc.

147 Hamelin Street

Winnipeg MB, R3T 3Z1 (CANADA)

(“LICENSEE”)

This Agreement is effective January 9, 2003 (“Effective Date”).

RECITALS

WHEREAS, UNIVERSITY is owner of Patent Rights as defined below on a stabilized anti-EGP-2 scFv fragment termed 4D5MOC-B (“Invention”);

WHEREAS, LICENSEE entered into an Option Agreement with UNIVERSITY, effective March 19, 2002, (“Option Agreement”), for the purpose of negotiating this Agreement;

WHEREAS, UNIVERSITY is desirous that the Invention be developed and utilized to the fullest possible extent so that its benefits can be enjoyed by the general public;

WHEREAS, LICENSEE wishes to obtain, and UNIVERSITY is willing to grant, an exclusive license to the Patent Rights on the terms and conditions set out below.

NOW, THEREFORE, the parties agree:

ARTICLE 1. DEFINITIONS

The terms, as defined herein, shall have the same meanings in both their singular and plural forms.

1.1 “Affiliate” means any corporation or other business entity in which LICENSEE owns or controls, directly or indirectly, at least fifty percent (50%) of the outstanding stock or other voting rights entitled to elect directors, or in which

 

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LICENSEE is owned or controlled directly or indirectly by at least fifty percent (50%) of the outstanding stock or other voting rights entitled to elect directors.

1.2 “Sublicensee” means a third party to whom LICENSEE grants a sublicense of certain rights granted to LICENSEE under this Agreement.

1.3 “Field” means the treatment, stasis, and palliation of disease in humans by anti-EGP-2 antibodies or antibody fragments, whether by themselves or in combination with other materials or methods.

1.4 “Territory” means world-wide.

1.5 “Term” means the period of time beginning on the Effective Date and ending on the expiration date of the longest-lived Patent Rights.

1.6 “Patent Rights” means any of the patent applications set forth in Attachment A to this Agreement and any other patents or patent applications now or in the future owned or controlled by UNIVERSITY, including those jointly-owned or jointly-controlled by UNIVERSITY and LICENSEE, describing or claiming the Invention (including methods of making or using same) and continuing applications thereof including divisions, substitutions, and continuations-in-part; any patents issuing on said applications including reissues, reexaminations and extensions.

1.7 “Licensed Method” means any method that is covered by Patent Rights the use of which would constitute, but for the license granted to LICENSEE under this Agreement, an infringement of any pending or issued and unexpired Valid Claim within Patent Rights.

1.8 “Licensed Product” means any composition or product that is covered by the claims of Patent Rights, or that is produced by the Licensed Method, the manufacture, use, sale, offer for sale, or importation of which would constitute, but for the license granted to LICENSEE by UNIVERSITY herein, an infringement of any pending or issued and unexpired Valid Claim within the Patent Rights.

1.9 “Net Sales” means the total of the gross invoice prices of Licensed Products sold by LICENSEE, its Sublicensee, an Affiliate, a distributor or any combination thereof, to end-user customers of Licensed Products less the sum of the following actual and customary deductions where applicable and separately itemized on the invoice and actually paid or allowed: cash, trade, or quantity discounts; value added, sales or use taxes, and custom duties; transportation charges; or credits to customers because of rejections or returns. Net Sales shall be calculated on the price from Licensee, a sublicensee, a distributor or their Affiliates to the first purchaser who is an end-user and not on sales between or among Licensee, sublicensees, distributors or their Affiliates for the purpose of resale.

 

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1.10 “Patent Costs” means all out-of-pocket expenses for the preparation, filing, prosecution, and maintenance of all patents included in Patent Rights in at least the following countries: US, Canada, Japan, Europe (i. e. the following EPC-countries; AT, BE, CH, DE, DK, FR, GB, IT, NL, SE).

1.11 “Valid Claim” means a claim of the Patent Rights which has not been withdrawn, canceled, or disclaimed, nor held invalid by a court of competent jurisdiction in any unappealed or unappealable decision in the country where the product or process was made, use or sold by LICENSEE, its Affiliate or sublicensee.

ARTICLE 2. GRANTS

2.1  License.  Subject to the limitations set forth in this Agreement, UNIVERSITY hereby grants to LICENSEE, and LICENSEE hereby accepts, a royalty bearing, exclusive license (with the right to sublicense) under Patent Rights to make, have made, use, sell, offer for sale, and import Licensed Products and to practice Licensed Methods, in the Field within the Territory and during the Term.

The license granted herein is exclusive for Patent Rights and UNIVERSITY shall not grant to third parties a further license under Patent Rights in the Field, within the Territory and during the Term.

Upon expiration of each patent within the Patent Rights, Viventia shall have a fully paid-up, royalty-free license under such patent in the respective country to make, have made, use, sell, offer for sale, and import Licensed Products and to practice the Licensed Methods, in the Field.

2.2  Sublicense.

(a) The license granted in Paragraph 2.1 includes the right of LICENSEE to grant sublicense to third parties during the Term.

(b) With respect to sublicense granted pursuant to Paragraph 2.2(a), LICENSEE shall:

(1) to the extent applicable, include all of the rights of and obligations due to UNIVERSITY and contained in this Agreement;

(2) promptly provide UNIVERSITY with a copy of each sublicense issued; and

(3) collect and guarantee payment of all payments due, directly or indirectly, to UNIVERSITY from Sublicensees and summarize and deliver all reports due, directly or indirectly, to UNIVERSITY from Sublicensees.

 

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(c) Upon termination of this Agreement for any reason, UNIVERSITY, at its sole discretion, shall determine whether LICENSEE shall cancel or assign to UNIVERSITY any and all sublicenses.

2.3  Reservation of Rights.  UNIVERSITY reserves the right to:

(a) use the Invention, and Patent Rights for educational and research purposes;

(b) notwithstanding the provisions of Paragraph 5.1.b publish or otherwise disseminate any information about the Invention at any time; and

(c) allow other academic, nonprofit institutions to use Invention, and Patent Rights for educational and non-commercial research purposes in their facilities, subject to a written agreement from such institution acknowledging such restriction and agreeing that no Licensed Products will be transferred to any other person or institution. LICENSEE shall have the right to consult UNIVERSITY in setting up such written agreements and UNIVERSITY shall consider LICENSEE’s comments in good faith.

ARTICLE 3. CONSIDERATIONS

3.1  Fees and Royalties.  The parties hereto understand that the fees and royalties payable by LICENSEE to UNIVERSITY under this Agreement are partial considerations for the license granted herein to LICENSEE under Patent Rights. LICENSEE shall pay UNIVERSITY:

(a) a  license issue fee  of fifty thousand United States Dollars (US$ 50,000) upon execution of the this Agreement;

(b)  milestone payments  in the amounts payable according to the following schedule or events by LICENSEE, its Affiliates or sublicensees with respect to the first Licensed Product:

 

Amount

  

Event

(1) US$ 250,000-

  

Completion of first Phase II clinical studies

(2) US$ 250,000-

  

First Filing of a New Drug Application (NDA) or equivalent

(3) US$ 500,000-

  

Within 30 days of completion of regulatory agency review of New Drug Application (NDA) or equivalent, regardless whether the NDA or equivalent is approved or not

 

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(c) an  earned royalty  of four percent (4%) on Net Sales of Licensed Products by LICENSEE, its Affiliates, or sublicensees; If LICENSEE is required to pay royalties to third parties on sales of Licensed Products under patents claiming the composition and/or method of making or using such Licensed Products and the resulting aggregate royalty rate is 10% or greater, then the royalty rate will be adjusted as follows: The royalty rate payable to UNIVERSITY will be reduced to a rate determined by multiplying the royalty rate by a fraction, the numerator of which is 10% and the denominator of which is the aggregate royalty rate, provided that University shall not receive less than 2% royalties.

All fees and royalty payments specified in Paragraphs 3.1(a) through 3.1(c) above shall be paid by LICENSEE pursuant to Paragraph 4.3 and shall be delivered by LICENSEE to UNIVERSITY as noted in Paragraph 10.1.

3.2  Patent Costs.  LICENSEE shall reimburse UNIVERSITY all Patent Costs within thirty (30) days following receipt by LICENSEE of an itemized invoice from UNIVERSITY.

3.3  Due Diligence.

(a) LICENSEE shall:

(1) diligently proceed with the development, manufacture and sale of Licensed Products;

(2) upon market entry on a country-by-country basis, use its reasonable efforts to promote the sale of the Licensed Products in the Territory as widely as its resources reasonably permit and reasonably fill the market demand for Licensed Products at any time during the term of this Agreement; and

(3) obtain all necessary governmental approvals for the manufacture, use and sale of Licensed Products.

(b) If LICENSEE fails to perform any of its obligations specified in Paragraphs 3.3(a)(1)-(3), then UNIVERSITY shall have the right to demand a development and, if applicable, marketing plan, detailing key activities and expected timetables. If UNIVERSITY rejects such a plan, the Parties shall meet to discuss in good faith possible amendments to the development and/or marketing plan. In the absence of agreement to such amendments the UNIVERSITY shall have the right and option to terminate this Agreement. If LICENSEE disagrees with such termination it shall have the right within 60 days of the notification of termination to seek arbitration as foreseen in clause 10.6. The arbitrators shall decide whether the termination is justified or not and if the conclude that the termination is not justified decide which amendments to the development and/or marketing plan shall be done.

 

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ARTICLE 4. REPORTS, RECORDS AND PAYMENTS

4.1  Reports.

(a)  Progress Reports .

(1) Beginning January 1, 2004 and ending on the date of first commercial sale of a Licensed Product, LICENSEE shall submit to UNIVERSITY annual progress reports covering LICENSEE’s (and Affiliate’s and Sublicensee’s) activities to develop and test all Licensed Products and obtain governmental approvals necessary for marketing the same. Such reports shall include a summary of work completed; summary of work in progress; current schedule of anticipated events or milestones; market plans for introduction of Licensed Products; and summary of resources spent in the reporting period.

(2) LICENSEE shall also report to UNIVERSITY, in its immediately subsequent progress report, the date of first commercial sale of a Licensed Product in each country.

(b)  Royalty Reports.  After the first commercial sale of a Licensed Product anywhere in the world, LICENSEE shall submit to UNIVERSITY quarterly royalty reports on a schedule to be determined by LICENSEE based on its fiscal year or other related license agreements. Each royalty report shall cover LICENSEE’s (and each Affiliate’s and Sublicensee’s) most recently completed quarter and shall show:

(1) the gross sales, deductions as provided in Paragraph 1.9, and Net Sales during the most recently completed quarter and the royalties payable with respect thereto;

(2) the number of each type of Licensed Product sold;

(3) sublicense fees and royalties received during the most recently completed quarter, payable with respect thereto;

(4) the method used to calculate the royalties; and

(5) the exchange rates used.

If no sales of Licensed Products has been made and no sublicense revenues has been received by LICENSEE during any reporting period, LICENSEE shall so report.

4.2  Records & Audits.

(a) LICENSEE shall keep, and shall require its Affiliates and Sublicensees to keep, accurate and correct records of all Licensed Products manufactured, used, and sold, and sublicense fees received under this Agreement. Such records shall be retained by LICENSEE for at least three (3) years following a given reporting period.

 

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(b) All records shall be available during normal business hours for inspection at the expense of UNIVERSITY by an independent public accountant selected by UNIVERSITY and reasonably acceptable to LICENSEE and in compliance with the other terms of this Agreement for the sole purpose of verifying reports and payments; such accountant shall not be retained on a contingency-fee basis or on any other terms by which the accountant’s compensation depends on the results of the audit. Such accountant shall not disclose to UNIVERSITY any information other than information relating to the accuracy of reports and payments made under this Agreement or other compliance issues. In the event that any such inspection shows an under reporting and underpayment in excess of five percent (5%) for any twelve (12) month period, then LICENSEE shall pay the reasonable cost of the audit as well as any additional sum that would have been payable to UNIVERSITY had the LICENSEE reported correctly, plus an interest charge at a rate of ten percent (10%) per year. Such interest shall be calculated from the date the correct payment was due to UNIVERSITY up to the date when such payment is actually made by LICENSEE. For underpayment not in excess of five percent (5%) for any twelve (12) month period, LICENSEE shall pay the difference within thirty (30) days without interest charge or inspection cost.

4.3  Payments .

(a) All fees due UNIVERSITY shall be paid in accordance with Attachment B:

(b) Royalty Payments.

(1) LICENSEE shall pay earned royalties quarterly on a schedule to be determined by LICENSEE based on its fiscal year or other related license agreements. Each such payment shall be for earned royalties accrued within LICENSEE’s most recently completed calendar quarter.

(2) Royalties earned on sales occurring or under sublicense granted pursuant to this Agreement shall not be reduced by LICENSEE for any taxes, fees, or other charges imposed by the government of such country on the payment of royalty income, except that all payments made by LICENSEE in fulfillment of UNIVERSITY’ tax liability in any particular country may be credited against earned royalties or fees due UNIVERSITY for that country. LICENSEE shall pay all bank charges resulting from the transfer of such royalty payments.

(3) In the event that any patent or patent claim within Patent Rights is held invalid in a final decision by a patent office from which no appeal or additional patent prosecution has been or can be taken, or by a court of competent jurisdiction and last resort and from which no appeal has or can be taken, all obligation to pay royalties based solely on that patent or claim or any claim patentably indistinct therefrom shall cease as of the date of such final decision. LICENSEE shall not, however, be relieved from paying any royalties that accrued before the date of such final decision, that are based on another patent or claim not involved in such final decision.

 

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(c) Late Payments. In the event royalty, reimbursement and/or fee payments are not received by UNIVERSITY when due, LICENSEE shall pay to UNIVERSITY interest charges at a rate of ten percent (10%) per year. Such interest shall be calculated from the date payment was due until actually received by UNIVERSITY.

ARTICLE 5. PATENT MATTERS

5.1  Patent Prosecution and Maintenance .

(a) LICENSEE, at its own expense, shall be responsible for and have control over the filing, prosecution and maintenance of patents and patent applications in Patent Rights, including the appointment of local patent counsel as agents of record. All patents and patent applications in Patent Rights shall be assigned solely to UNIVERSITY and LICENSEE shall be acting in the best interest of UNVERSITY in filing, prosecuting and maintaining Patent Rights.

(b) UNIVERSITY shall provide LICENSEE with all necessary information including patent application drafts in order to enable LICENSEE to file, prosecute and maintain patents and patent applications in Patent Rights. LICENSEE shall consult in good faith with UNIVERSITY as to the content of all applications and papers to be filed, and shall act in good faith upon comments received from UNIVERSITY. UNIVERSITY shall ensure that no public disclosures are made prior to filing of patent applications. LICENSEE shall provide UNIVERSITY with copies of all documentation relating to the filing, prosecution and maintenance of Patent Rights and UNIVERSITY shall keep this documentation confidential.

(c) LICENSEE shall apply for an extension of the term of any patent in Patent Rights if appropriate under the US Drug Price Competition and Patent Term Restoration Act and/or European, Japanese and other counterparts thereof. LICENSEE shall prepare all documents for such application, and UNIVERSITY shall execute such documents and take any other additional action as LICENSEE reasonably requests in connection therewith.

5.2  Patent Infringement.

(a) If LICENSEE learns of any substantial infringement of Patent Rights, LICENSEE shall so inform UNIVERSITY and provide UNIVERSITY with reasonable evidence of the infringement. Neither party shall notify a third party of the infringement of Patent Rights without the consent of the other party. Both parties shall use reasonable efforts and cooperation to terminate infringement without litigation.

 

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(b) LICENSEE may request UNIVERSITY to take legal action against such third party for the infringement of Patent Rights. Such request shall be made in writing and shall include reasonable evidence of such infringement and damages to LICENSEE. If the infringing activity has not abated ninety (90) days following LICENSEE’s request, UNIVERSITY shall elect to or not to commence suit on its own account. UNIVERSITY shall give notice of its election in writing to LICENSEE by the end of the one-hundredth (100th) day after receiving notice of such request from LICENSEE. LICENSEE may thereafter bring suit for patent infringement in its own name (and in the name of UNIVERSITY if necessary) and at its own expense, if and only if UNIVERSITY elects not to commence suit and the infringement occurred in a jurisdiction where LICENSEE has an exclusive license under this Agreement. If LICENSEE elects to bring suit, UNIVERSITY may join that suit at its own expense.

(c) Recoveries from actions brought pursuant to Paragraph 5.2(b) shall belong to the party bringing suit except that in the event that LICENSEE brings suit for infringement of Patent Rights and an acceptable settlement is entered into or monetary damages are awarded in a final non-appealable judgment, UNIVERSITY shall be reimbursed for any amount which would have been due to UNIVERSITY under this Agreement if the products sold by the infringer actually had been sold by LICENSEE. Legal actions brought jointly by UNIVERSITY and LICENSEE and fully participated in by both shall be at the joint expense of the parties and all recoveries shall be shared jointly by them in proportion to the share of expense paid by each party.

(d) Each party shall cooperate with the other in litigation proceedings at the expense of the party bringing suit. Litigation shall be controlled by the party bringing the suit, except that UNIVERSITY may choose to be represented by counsel of its choice (at its expense) in any suit brought by LICENSEE.

5.3  Patent Marking.  LICENSEE shall mark all Licensed Products made, used or sold under the terms of this Agreement, or their containers, in accordance with the applicable patent marking laws.

ARTICLE 6. GOVERNMENTAL MATTERS

6.1  Governmental Approval or Registration.  If this Agreement or any associated transaction is required by the law of any nation to be either approved or registered with any governmental agency, LICENSEE shall assume all legal obligations to do so. LICENSEE shall notify UNIVERSITY if it becomes aware that this Agreement is subject to any government reporting or approval requirement. LICENSEE shall make all necessary filings and pay all costs including fees, penalties, and all other out-of-pocket costs associated with such reporting or approval process.

 

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ARTICLE 7. TERMINATION OF THE AGREEMENT

7.1  Termination by UNIVERSITY.

(a) If LICENSEE fails to perform or violates any term of this Agreement, then UNIVERSITY may give written notice of default (“Notice of Default”) to LICENSEE. If LICENSEE fails to cure the default within sixty (60) days of the Notice of Default with respect to the failure to make payments required under this Agreement or within one hundred twenty (120) days for any other breach, UNIVERSITY may terminate this Agreement and the license granted herein by a second written notice (“Notice of Termination”) to LICENSEE. If a Notice of Termination is sent to LICENSEE, this Agreement shall automatically terminate on the effective date of that notice. Termination shall not relieve LICENSEE of its obligation to pay any fees owed at the time of termination and shall not impair any accrued right of UNIVERSITY.

(b) UNIVERSITY shall have the right to terminate this Agreement by giving written notice, in the event of filing by LICENSEE of a petition of bankruptcy or insolvency or both, or in the event of an adjudication that LICENSEE is bankrupt or insolvent or both, or after filing by LICENSEE of any petition or pleading asking reorganization, readjustment or rearrangement of its business under any law relating to bankruptcy or insolvency, or upon or after appointment of a receiver for all or substantially all of the property of LICENSEE or upon or after the making of any assignment for the benefit of creditors or upon or after the institution of any proceedings for the liquidation or winding-up of LICENSEE’s business or for the termination of its corporate charter, and this Agreement shall terminate upon the date specified in such written notice.

7.2  Termination by Licensee.

(a) LICENSEE shall have the right at any time and for any reason to terminate this Agreement upon a ninety (90) day written notice to UNIVERSITY. Said notice shall state LICENSEE’s reason for terminating this Agreement.

(b) Any termination under Paragraph 7.2(a) shall not relieve LICENSEE of any obligation or liability accrued under this Agreement prior to termination or rescind any payment made to UNIVERSITY or action by LICENSEE prior to the time termination becomes effective. Termination shall not affect in any manner any rights of UNIVERSITY arising under this Agreement prior to termination.

7.3  Survival on Termination.  The following Paragraphs and Articles shall survive the termination of this Agreement:

(a) Article 4 (REPORTS, RECORDS AND PAYMENTS);

(b) Paragraph 7.4 (Disposition of Licensed Products on Hand);

(c) Paragraph 8.2 (Indemnification);

 

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(d) Article 9 (USE OF NAMES AND TRADEMARKS);

(e) Paragraph 10.2 hereof (Secrecy); and

(f) Paragraph 10.5 (Failure to Perform).

7.4  Disposition of Licensed Products on Hand.  Upon termination of this Agreement, LICENSEE may dispose of all previously made or partially made Licensed Product within a period of one hundred and twenty (120) days of the effective date of such termination provided that the sale of such Licensed Product by LICENSEE, its Sublicensees, or Affiliates shall be subject to the terms of this Agreement, including but not limited to the rendering of reports and payment of royalties required under this Agreement.

ARTICLE 8. LIMITED WARRANTY AND INDEMNIFICATION

8.1  Limited Warranty.

(a) UNIVERSITY warrants that it has the lawful right to grant this license, that Attachment A to this Agreement is a complete list of all patents and applications owned or controlled by UNIVERSITY pertaining to the Invention, and that it has good and sufficient title to the Licensed Patents to grant the licenses herein free and clear of the rightful claim of any third party.

(b) The license granted herein is provided “AS IS” and without WARRANTY OF MERCHANTABILITY or WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE or any other warranty, express or implied. UNIVERSITY makes no representation or warranty that the Licensed Product, Licensed Method or the use of Patent Rights will not infringe any other patent or other proprietary rights.

(c) In no event shall UNIVERSITY be liable for any incidental, special or consequential damages resulting from exercise of the license granted herein or the use of the Invention, Licensed Product, or Licensed Method.

(d) Nothing in this Agreement shall be construed as:

(1) a warranty or representation by UNIVERSITY as to the validity or scope of any Patent Rights;

(2) a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or shall be free from infringement of patents of third parties;

(3) an obligation to bring or prosecute actions or suits against third parties for patent infringement except as provided in Paragraph 5.2 hereof;

(4) conferring by implication, estoppel or otherwise any license or rights under any patents of UNIVERSITY other than Patent Rights as defined in this Agreement, regardless of whether those patents are dominant or subordinate to Patent Rights;

 

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(5) an obligation to furnish any know-how not provided in Patent Rights.

8.2  Indemnification.

(a) LICENSEE shall indemnify, hold harmless and defend UNIVERSITY, its officers, employees, and agents; the sponsors of the research that led to the Invention; and the inventors of the patents and patent applications in Patent Rights and their employers against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license or any sublicense. This indemnification shall include, but not be limited to, any product liability.

(b) LICENSEE, at its sole cost and expense, shall insure its activities in connection with the work under this Agreement and obtain, keep in force and maintain insurance or an equivalent program of self insurance.

(c) UNIVERSITY shall notify LICENSEE in writing of any claim or suit brought against UNIVERSITY in respect of which UNIVERSITY intends to invoke the provisions of this Article. LICENSEE shall keep UNIVERSITY informed on a current basis of its defense of any claims under this Article.

ARTICLE 9. USE OF NAMES AND TRADEMARKS

9.1 Nothing contained in this Agreement confers any right to use in advertising, publicity, or other promotional activities any name, trade name, trademark, or other designation of either party hereto (including contraction, abbreviation or simulation of any of the foregoing).

9.2 UNIVERSITY may acknowledge the existence of this Agreement and the extent of the grant in Article 2 to third parties, but UNIVERSITY shall not disclose the financial terms of this Agreement to third parties, except where UNIVERSITY is required by law to do so.

ARTICLE 10. MISCELLANEOUS PROVISIONS

10.1  Correspondence.  Any notice or payment required to be given to either party under this Agreement shall be deemed to have been properly given and effective:

(a) on the date of delivery if delivered in person, or

 

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(b) five (5) days after mailing if mailed by registered mail, postage paid, to the respective addresses given below, or to such other address as is designated by written notice given to the other party.

If sent to LICENSEE:

Viventia Bio, Inc.

147 Hamelin Street

Winnipeg MD, R3T 3Z1 (CANADA)

Attention: Mr. Stephen A. Hurly

If sent to UNIVERSITY:

University of Zurich

c/o Unitectra; Ref. UZ-03/064

Scheuchzerstrasse 21; CH-8006 Zurich (SWITZERLAND)

10.2  Secrecy.

(a) “Confidential Information” shall mean information relating to the Invention or activities hereunder disclosed by one party to the other during the term of this Agreement, which if disclosed in writing shall be marked “Confidential.”

(b) The Receiving party of any such Confidential Information shall:

(1) use the Confidential Information for the sole purpose of performing under the terms of this Agreement;

(2) safeguard Confidential Information against disclosure to others with the same degree of care as it exercises with its own data of a similar nature;

(3) not disclose Confidential Information to others (except to its employees, agents or consultants who are bound to it by a like obligation of confidentiality) without the express written permission of the Disclosing party, , except that the Receiving party shall not be prevented from using or disclosing any of the Confidential Information that:

(i) it can demonstrate by written records was previously known to it;

(ii is now, or becomes in the future, public knowledge other than through acts or omissions of it; or

(iii) is lawfully obtained by it from sources independent of Disclosing party.

 

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(iv) is required to be disclosed by government authority;  provided however , that Receiving party has provided reasonable advance notice of the impending disclosure to Disclosing party and will disclose the Confidential Information to the extent necessary and to such authority only.

(c) The obligations of the Receiving party with respect to Confidential Information shall continue for a period ending five (5) years from the termination date of this Agreement.

10.3  Assignability.  UNIVERSITY and LICENSEE each agree that their rights and obligations under this Agreement may not be transferred or assigned to a third party without the prior written consent of the other party thereto, such consent not to be unreasonably withheld. Notwithstanding the foregoing, in the event of a merger, consolidation or similar reorganization of either Party with or into another party, or in the event of a sale of all or substantially all of the assets of a Party or the business unit or product to which this Agreement pertains, this Agreement shall be assigned to or become the obligation and liability of the acquiring entity, subject to written notification of such acquisition or merger to the other Party. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the Parties.

10.4  No Waiver.  No waiver by either party of any breach or default of any covenant or agreement set forth in this Agreement shall be deemed a waiver as to any subsequent and/or similar breach or default.

10.5  Failure to Perform.  In the event of a failure of performance due under this Agreement and if it becomes necessary for either party to undertake legal action against the other on account thereof, then the prevailing party shall be entitled to reasonable attorney’s fees in addition to costs and necessary disbursements.

10.6  Governing Laws; Arbitration.  THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SWITZERLAND, except that matters concerning the validity or infringement of any patent shall be governed by the national laws of the jurisdiction issuing such patent.

All disputes, differences or controversies arising out of or in connection with this Agreement, its interpretation, performance, or termination, which may arise between the Parties arising out of, or related to, this Agreement shall be amicably settled between the Parties. In case of failure of amicable settlement between the Parties, it shall be finally settled by binding arbitration conducted in accordance with the Rules of Concilliation and Arbitration of the International Chamber of Commerce (Paris, France) (the “ICC”). The arbitration panel shall be composed of three arbitrators, one of whom shall be selected by UNIVERSITY, one of whom shall be selected by LICENSEE and the third of whom shall be selected by the two so selected. If both or either of UNIVERSITY OR LICENSEE

 

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fails to select an arbitrator or arbitrators within fourteen (14) days after receiving notice of commencement of arbitration or if the two arbitrators fail to select a third arbitrator within fourteen (14) days after their appointment, the ICC shall, in accordance with said rules, upon the request of both or either of the Parties to the arbitration, appoint the arbitrator or arbitrators required to complete the panel. The venue of arbitration shall be Zurich.

The Parties shall share the costs of the arbitration, including administrative and arbitrators’ fees equally. Each Party shall bear its own costs and attorneys’ and witnesses’ fees;  provided however , that the prevailing Party, as determined by the arbitration panel, shall be entitled to an award against the other Party in the amount of the prevailing Party’s costs and reasonable attorneys’ fees. The arbitration award shall be final and each Party shall comply in good faith and submit itself to the jurisdiction of the appropriate courts in Zurich for the sole purpose of the entry of such arbitrator’s award to render effective such arbitration decision.

10.7  Force Majeure.  A party to this Agreement may be excused from any performance required herein if such performance is rendered impossible or unfeasible due to any catastrophe or other major event beyond its reasonable control, including, without limitation, war, riot, and insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes, lockouts, or other serious labor disputes; and floods, fires, explosions, or other natural disasters. When such events have abated, the non-performing party’s obligations herein shall resume.

10.8  Headings.  The headings of the several sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

10.9  Entire Agreement.  This Agreement embodies the entire understanding of the parties and supersedes all previous communications, representations or understandings, either oral or written, between the parties relating to the subject matter hereof.

10.10  Amendments.  No amendment or modification of this Agreement shall be valid or binding on the parties unless made in writing and signed on behalf of each party.

10.11  Severability.  In the event that any of the provisions contained in this Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provisions had never been contained in it.

 

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IN WITNESS WHEREOF, both UNIVERSITY and LICENSEE have executed this amended and restated Agreement, in duplicate originals, by their respective and duly authorized officers on 14 October, 2015.

 

UNIVERSITY      
Date:  

October 14, 2015

     
By:   Prof. Dr. Andreas Plückthun      

/s/ Dr. Andreas Plückthun

        (Signature)
Date:  

October 14, 2015

     
By:   Prof. Dr. Christoph Hock      

/s/ Dr. Christoph Hock

  Vice President       (Signature)
LICENSEE      
VIVENTIA BIO, INC.      
Date:  

October 14, 2015

     
By:   Stephen A. Hurly      

/s/ Stephen A. Hurly

  President and CEO       (Signature)
Date:  

October 14, 2015

     
By:   Erick J. Lucera      

/s/ Erick J. Lucera

  Chief Financial Officer       (Signature)

 

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Attachment A

[**]

 

17


Attachment B

Payments

[**]

 

18

Exhibit 10.2

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Double asterisks denote omissions.

AMENDED & RESTATED EXCLUSIVE LICENSE AGREEMENT

This Exclusive License Agreement (this “Agreement”) is effective as of the 8th day of March, 2004, (the “Effective Date”) and amended and restated as of October 14, 2015 to reflect Amendment 1 and 2 between Merck KGaA, of Frankfurter Str. 250, 64293 Darmstadt, Germany (hereinafter called “Merck,” which expression includes its successors and assigns) of the one part and Viventia Bio, Inc., of 147 Hamelin Street, Winnipeg MB, R3T 3Z1, CANADA (hereinafter called “Viventia,” which expression includes its successors and permitted assignees) of the other part. Each of Merck and Viventia are herein sometimes referred to individually as a “Party” and collectively as “Parties.”

WHEREAS, Merck Controls certain proprietary Technology related to the genetic engineering of biological materials, including proteins and the removal of immunogenic sequences from proteins to produce genetic variants of such proteins for therapeutic or in vivo diagnostic purposes.

WHEREAS, Merck and Viventia have entered into that certain Research Agreement (the “Research Agreement”) dated as of September 20, 2002.

WHEREAS, Viventia has exercised its option to obtain an exclusive license to certain proprietary Technology under Section 3.7 of the Research Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED as follows:

 

1. DEFINITIONS .

Throughout this Agreement, where the context so requires, the use of the singular form of a word shall be construed to include the plural and the use of the plural shall be construed to include the singular, and the use of any gender shall include all genders. Any words used but not otherwise defined herein shall have the meanings ascribed to them in Section 1 of the Research Agreement. In this Agreement the following words and expressions shall be construed as follows:

 

  (a) “Affiliate”  shall mean any corporation, company, firm, partnership or other entity that directly or indirectly controls, is controlled by or is under common control with either Party to this Agreement. For purposes of this definition, “control” shall mean the ownership, directly or indirectly, of fifty percent (50%) or more of the issued share capital or shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other entity or the legal power to direct or cause the direction of the general management and policies of the entity in question.

 

  (b) “Merck Technology”  shall mean Technology Controlled by Merck as of the Effective Date or developed hereafter whether or not in the course of the Research Program, by Merck or jointly by Merck and Viventia or a third party that is related to the genetic engineering of biological materials, including proteins and plasmids and the removal of immunogenic sequences from proteins or plasmids and the generation of genetic variants thereof,  provided that , any Technology Controlled by Viventia or developed by Viventia that is related to the Protein shall be deemed to be Viventia Technology and Viventia shall have exclusive ownership and control of same.

 

  (c) “BLA”  shall mean a Biologics License Application, or similar application for marketing approval of a Licensed Product for use in the Field submitted to the FDA, or a foreign equivalent of the FDA.

 

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  (d) “Confidential Information”  shall have the meaning set forth in Section 15 of this Agreement.

 

  (e) “Contract Year”  shall mean the period beginning on the Effective Date and ending on the first anniversary thereof (“Contract Year l “), and each succeeding twelve (12) month period thereafter during the term of this Agreement (referred to herein as “Contract Year 2,” “Contract Year 3,” etc.).

 

  (f) “Control”  or  “Controlled”  shall mean (i) with respect to any Technology (other than proprietary materials of a Party) and/or Patent Rights, the possession by a Party of the ability to grant a license or sublicense of such Technology and/or Patent Rights as provided herein without violating the terms of any agreement or arrangement between such Party and any third party and (ii) with respect to proprietary materials, the possession by a Party of the ability to supply such proprietary materials to the other Party as provided herein without violating the terms of any agreement or arrangement between such Party and any third party.

 

  (g) “DeImmunised Proteins”  shall mean the DeImmunised genetic variants of the Protein developed by Merck under the Research Agreement identified on  Schedule A , attached hereto and incorporated herein by reference.

 

  (h) “DeImmunised Plasmids”  shall mean the genetically engineered plasmids that encode the DeImmunised Protein identified on Schedule A, attached hereto and incorporated herein by reference.

 

  (i) “Effective Date”  shall have the meaning set forth above in the introduction to this Agreement.

 

  (j) “FDA”  means the United States Food and Drug Administration or its successor.

 

  (k) “Field”  shall mean the use of the DeImmunised Protein for therapeutic and in vivo diagnostic purposes in humans.

 

  (l) “First Commercial Sale”  shall mean the date of the first commercial sale (other than for purposes of obtaining Regulatory Approval) of a Licensed Product by or on behalf of Viventia or any sublicensee.

 

  (m) “IND”  shall mean Investigational New Drug application filing in the USA or its equivalent in any country in the European Union for approval to undertake a controlled and lawful study in humans of the Licensed Product that is designed to demonstrate statistically whether such Licensed Product is safe for use in humans in a manner sufficient to file a BLA or New Drug Application or its equivalent to obtain regulatory approval to market and sell that Licensed Product in the United States or any country in the European Union.

 

  (n) “Joint Patent Rights”  shall mean all Patent Rights that claim Joint Program Technology. Joint Patent Rights as of the Effective Date are listed in  Schedule B , attached hereto and incorporated herein by reference.

 

  (o) “Joint Program Technology”  shall mean any and all Technology relating to the Protein or any DeImmunised Plasmid or DeImmunised Protein jointly made, developed conceived and/or reduced to practice by employees of, or consultants to, both Parties, or (b) by Viventia through the material use of Merck Technology, provided that Joint Program

 

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  Technology shall not include Technology relating to (i) the Protein (ii) the composition, manufacture, or use of antibodies, antibody fragments (including single chain or single domain antibodies), or peptide-based antibody mimics, whether by themselves or conjugated to or associated with an active molecule, or (iii) fusion proteins.

 

  (p) “Licensed Patent Rights”  shall mean all Patent Rights which are Controlled by Merck as of the Effective Date (including Merck ‘s interest in Joint Patent Rights) and any other patents and applications set forth in Schedule C , and all provisional applications, substitutions, continuations, continuations-in-part, divisionals and renewals, all letters patent granted thereon, if any, and all reissues, reexaminations and extensions thereof, and supplemental protection certificates of invention and utility models of such patents and applications set forth in Schedule C. Schedule C is attached hereto and incorporated herein by reference.

 

  (q) “Licensed Product”  shall mean any product that (i) incorporates DeImminised Protein, (ii) is produced by use of a DeImmunised Plasmid, or (iii) the manufacture, use, or sale of which would, absent the license granted to Viventia hereunder, infringe one or more of the claims included in the Licensed Patent Rights that has not expired, been revoked or disclaimed, or found to be invalid or unenforceable in an unappealed or unappealable decision of a court of competent jurisdiction.

 

  (r) “Licensed Technology”  shall mean all Merck Technology and Merck’s interest in Joint Program Technology.

 

  (s) “New Drug Application”  shall mean a new drug application (as defined in Title 21 of the United States Code of Federal Regulations, as amended from time to time) filed with the FDA or its foreign equivalent seeking regulatory approval to market and sell any Licensed Product in the United States or any country in the European Union.

 

  (t) “Net Sales”  shall mean gross proceeds measured in Dollars as of the date of sale resulting from the invoice price less (a) usual trade and/or cash discounts actually allowed or taken; (b) forwarding expenses, freight, postage and duties actually paid or allowed and taxes imposed directly on licensee for sales, all if separately identified in the invoice; and (c) credits for goods actually returned. No deductions shall be made for commissions paid or for the cost of collections. For Licensed Products sold or otherwise transferred other than for money, “Net Sales” shall be calculated based upon the “fair market value” of the Licensed Product determined in an arm’s-length transaction. Net Sales shall be calculated on the price from Viventia, a licensee, a sublicensee, or their Affiliates to the first purchaser who is not a licensee, a sublicensee or Affiliate and not on sales between or among licensees, sublicensees, or their Affiliates.

 

  (u) “Patent Rights”  shall mean the rights and interests in and to (i) issued patents and pending patent applications without limitation to any country, including, without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisionals and renewals, all letters patent granted thereon,· if any, and all reissues, reexaminations and extensions thereof, and supplemental protection certificates of invention and utility models and (ii) copyrights with respect to data Controlled by a Party.

 

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  (v) “Phase III Clinical Trial”  shall mean, as to a particular Licensed Product for a particular indication, a controlled and lawful study in humans of the safety and efficacy of such Licensed Product for such indication, which is prospectively designed to demonstrate statistically whether such Licensed Product is safe and effective for use in such indication in a manner sufficient to file a BLA or New Drug Application or its equivalent to obtain regulatory approval to market and sell that Licensed Product in the United States or any country for the indication under investigation in such study.

 

  (w) “Protein”  shall mean the starting protein as specified in Schedule A hereto.

 

  (x) “Technology”  shall mean and include all inventions, discoveries, improvements, trade secrets and proprietary methods and materials, whether or not patentable, including, but not limited to (i) samples of, methods of production or use of; and structural and functional information pertaining to, chemical compounds, proteins or other biological substances and (ii) technical and scientific information (including any negative results), data, formulations, techniques and know-how.

 

  (y) For clarity, it is agreed that “Deliverables” (as defined in the Research Agreement and incorporated in this Agreement) include [**] and [**] and [**] and the expression products of the inserts of such plasmids.

 

2. COMMENCEMENT .

This Agreement shall be deemed to have been made as of the Effective Date and shall be read and construed accordingly.

 

3. GRANT OF RIGHTS .

 

  (a) Merck hereby grants to Viventia an exclusive world-wide, royalty bearing license under Licensed Technology and Licensed Patent Rights solely to develop, have developed, make, have made, use, sell, distribute for sale, have sold, import and/or have imported Licensed Products in the Field, together with the right to grant sublicenses. For clarity, this grant of an exclusive license to Viventia with respect to Licensed Products (including Deliverables, Deimmunised Plasmids and Deimmunised Proteins) shall not prevent Merck from granting licenses to others under the Merck Technology, Merck Patent Rights and Merck’s interest in Joint Program Technology and Joint Patent Rights outside the scope of the exclusive license granted to Viventia.

 

  (b) Viventia shall notify Merck of the grant of each sublicense within thirty (30) days of its effective date, such notification to include the name and address of the sublicensee and the general nature and subject matter of the sublicense. Viventia shall use its best efforts to ensure that any sublicensee performs its obligations under any such sublicense and shall remain liable for the performance of Viventia’s obligations hereunder. Merck will not establish any contact with the sublicensee in relation to the sublicense without the prior written consent of Viventia.

 

4. PAYMENTS .

 

  4.1 General . The Parties acknowledge that the principal value· contributed by Merck under this Agreement is the Licensed Technology. Viventia acknowledges and agrees that the value it receives hereunder is in its access to the Licensed Technology. Accordingly, Viventia has agreed to pay the license fees and milestones for access to and use of Licensed Technology as set forth herein even though Merck may not Control patent applications or patents covering the manufacture, sale, use or importation of a particular Licensed Product and, regardless of whether a Licensed Product is covered by a patent application or patent within the Licensed Patents.

 

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  4.2 Upfront Payment . In consideration for the exclusive license granted pursuant to Section 3(a) hereof Viventia shall pay to Merck the sum of twenty-five thousand U.S. dollars (U.S. $25,000) upon signature of this Agreement.

 

  4.3 Milestone Payments. Viventia shall pay Merck the following amounts upon the achievement of the milestones set forth below:

 

  (a) Two million U.S. dollars (U.S. $2,000,000) upon the commencement of the first Phase III Clinical Trial (first patient in) conducted on a Licensed Product.

 

  (b) Two million U.S. dollars (U.S. $2,000,000) upon submission of the first BLA (or its equivalent) for a Licensed Product.

 

  (c) Two million U.S. dollars (U.S. $2,000,000) upon first approval in any of the United States, Canada, Europe (including Switzerland) or Japan of a BLA for a Licensed Product, plus one million U.S. dollars (U.S. $1,000,000) on each of the second and third approval of such BLA in different jurisdictions within United States, Canada, Europe (including Switzerland) or Japan, for a total of four million U.S. dollars (U.S. $4,000,000).

 

  (d) Two million U.S. dollars (U.S. $2,000,000) upon first approval in any of the United States, Canada, Europe (including Switzerland) or Japan of the next BLA for a Licensed Product, plus one million U.S. dollars (U.S. $1,000,000) on each of the second and third approval of such BLA in different jurisdictions within United States, Canada, Europe (including Switzerland) or Japan, for a total of four million U.S. dollars (U.S. $4,000,000).

For clarity, each milestone payment in (a)-(d) above will be due only once per Licensed Product.

 

  4.4 Fees .

 

  (a) Viventia shall pay Merck a sublicense fee, of two hundred fifty thousand U.S. dollars (U.S. $250,000) for each and every sublicense that it grants hereunder.

 

  (b) Viventia shall also pay to Merck an annual license fee .of twenty five thousand U.S. dollars (U.S. $25,000) for the maintenance of the license granted pursuant to Section 3 of this Agreement for each Contract Year during the term of this Agreement. Such annual license fees shall be due and payable to Merck on the first day of each Contract Year during the term of this Agreement and are not creditable against amounts owed by Viventia to Merck pursuant to Sections 4.3 and 4.5. In the event that Licensee does not receive approval for an IND by the end of Contract Year 5, then the Licensee shall make an additional annual payment of one million U.S dollars ($1,000,000) in addition to the annual license fee payable for the relevant Contract Year (each, an “Additional Annual Payment”). Such Additional Annual Payments shall be due and payable on the first day of Contract Year 6 and each subsequent Contract Year until an IND is approved at which time such Additional Annual Payments will cease. All Additional Annual Payments to be paid under this Section 4.4(b) shall be creditable against amounts required to be paid by Viventia to Merck under Section 4.3 of this Agreement subsequent to the payment of such Additional Annual Payment.

 

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  (c) All of the payments set forth in sections 4.2, 4.3 and 4.4 are to be understood net, exclusive of Value Added Tax.

 

  4.5 Royalties .

Viventia shall pay Merck a royalty based on aggregate Net Sales of each Licensed Product sold during the License Term (as defined in Section 5) by Viventia and/or its Affiliates and sublicensees equal to one and a half percent (1.5%) on the first one hundred fifty million U.S. dollars (U.S. $150,000,000) of such Net Sales of each Licensed Product, and two percent (2.0%) on Net Sales above that amount.

 

  4.6 Accounting.

 

  (a) All payments under this Agreement shall be due. in the case of Section 4.3 within thirty (30) days of the occurrence of the relevant milestone event and, in the case of Section 4.4(a) within thirty (30) days of the execution of the sublicense, in each case without the requirement for an invoice from Merck. Viventia will promptly notify Merck of the achievement of any milestone event for which a payment to Merck is required under this Section 4. After the beginning of commercialization of each Licensed Product, all payments relating thereto under this Agreement pursuant to Section 4.5 above shall be due within thirty (30) days following the end of each calendar quarter.

 

  (b) The Net Sales used for computing the royalties payable hereunder shall be computed and the royalties shall be paid, in U.S. Dollars. For purposes of determining the amount of royalties due from Viventia, the amount of Net Sales in any foreign currency shall be computed by converting such amount into dollars at the prevailing commercial rate of exchange for purchasing dollars with such foreign currency as reported in The Wall Street Journal as of the last business day of the relevant quarter.

 

  (c) Viventia agrees to keep true and accurate records and books of account containing all data necessary for the calculation of the royalties payable to Merck under Section 4 of this Agreement. Such records and books of account shall upon reasonable notice having been given by Merck be open during business hours for inspection by a duly authorised, but neutral and independent accountant, who shall be acceptable to both parties without prejudice. Merck will bear the full cost of such audit unless such audit discloses an underpayment of more than five percent (5%) from the amount of total payments due. In such case, Viventia shall bear the full cost of such audit. The terms of this Section 4.6(c) shall survive any termination or expiration of this Agreement for a period of three (3) years.

 

  (d)

Viventia shall prepare a statement in respect of each calendar quarter of this Agreement, which shall show for the calendar quarter in question Viventia’s Net Sales, on sales by it, its Affiliates or sublicensees of the Licensed Products on a country by country basis, details of the quantities of Licensed Products manufactured and sold in each country and the royalty and VAT due, if any, to Merck thereon pursuant to Section 4 .above. Such statement shall be submitted to Merck within thirty (30) days following the end of the calendar quarter or part thereof to which it relates together with a remittance for the royalties and VAT due to Merck, if any. If Merck shall give notice to Viventia within thirty (30) days of the receipt of any such statement that it does not accept the same

 

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  such statement shall be certified by an independent chartered accountant appointed by mutual agreement between the parties hereto or, in default of such an agreement, within fourteen (14) days, by the President for the time being of the Institute of Chartered Accountants of England and Wales in London. Viventia shall make available all books and records required for the purpose of such certification at reasonable times during normal business hours and the statement so certified shall be binding between the parties to this Agreement. The costs of such certification shall be the responsibility of Merck if the certification shows the original statement to have been accurate and otherwise shall be the responsibility of Viventia. Following any such certification the Parties shall make any adjustments necessary in respect of the royalties already paid to Merck in relation to the year in question.

 

  (e) Viventia shall pay royalties to Merck free and clear of and without deduction or deferment in respect of any demand, set-off, counterclaim or other dispute and so far as is legally possible such payment shall be made free and clear of any taxes imposed by or under the authority of any government or public authority and, in particular but without limitation where any sums due to be paid to Merck hereunder are subject to any withholding or similar tax. Viventia shall pay such additional amount as shall be required to ensure that the net amount received by Merck hereunder will equal the full amount which would have been received by it had not such tax, including VAT, been imposed or withheld. Viventia and Merck, without prejudice to the foregoing, shall use their best endeavours to do all such lawful acts and things and to sign all such lawful deeds and documents as will enable Viventia to take advantage of any applicable legal provision or any double taxation treaties with the object of paying the sums due to Merck without imposing or withholding any tax. Sums are expressed in this Agreement as exclusive of value added tax. Merck agrees to provide Viventia with a VAT invoice in respect of every payment affected by VAT.

 

  (f) Where Merck does not receive payment of any sums due to it within the period specified hereunder in respect thereof, interest shall accrue on the sum outstanding at the rate of one percent (1% ) per month calculated on a daily basis without prejudice to Merck’s right to receive payment on the due date therefor.

 

5. LICENSE TERM AND TERMINATION .

 

  (a) Subject to the terms and conditions of this Agreement, the term of the license (the “License Term”) granted pursuant hereto shall commence upon the Effective Date and continue in force on a country-by-country and product-by product basis until the longer of (a) the expiration of the last to expire of the Licensed Patent Rights in the country covering the Licensed Product and (b) ten (10) years from the first commercial sale in such country of such Licensed Product, provided that in no event shall royalties on each Licensed Product be payable for more than 15 years from the first commercial launch anywhere in the world of such Licensed Product. Upon expiration of the License Term or royalty obligation for each Licensed Product, Viventia shall have a worldwide, exclusive, fully paid up, royalty-free license under any and all Licensed Technology and/or Licensed Patent Rights covering the Licensed Product to the extent necessary or useful to develop, have developed, make, have made, use, sell, distribute for sale, have sold, import and/or have imported Licensed Products in the Field.

 

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  (b) Viventia may terminate this Agreement and the licenses granted pursuant hereto by giving to Merck six (6) months prior written notice to Merck of the same. Such termination shall not prejudice Merck in its enforcement of the Licensed Patents in the event of subsequent manufacture of Licensed Products by Viventia.

 

  (c) Termination of this Agreement or of such licenses shall be without prejudice to any rights of either Party against the other which may have accrued up to the date of such termination and Viventia shall pay to Merck the·appropriate royalties hereunder on all inventory of Licensed Products (on which royalties have not already been paid) held at the date of termination by Viventia or any person engaged by Viventia to manufacture the Licensed Products and shall thereafter be free to sell such Licensed Products on which applicable royalties have been paid to Merck. Sections 5(a), 9, 11, 14, 15, 16, 19, 20 and 21 shall survive the expiration or termination of this Agreement.

 

  (d) Neither Party may terminate this Agreement for breach without first giving the alleged breaching Party written notice of the acts or omissions alleged to constitute a breach and providing a reasonable period of time to cure such alleged breach of not less than sixty (60) days with respect to the payment of money and not be less than one hundred twenty (120) days for any other acts.

 

6. MUTUAL REPRESENTATIONS AND WARRANTIES .

Each Party hereby represents and warrants to the other Party as follows:

 

  (a) It is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, and has full power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including, without limitation, the right to grant the licenses granted hereunder.

 

  (b) As of the Effective Date, (i) it has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder; (ii) it has taken all necessary corporate action on its part required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder; and (iii) the Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms.

 

  (c) As of the Effective Date, it has sufficient legal and/or beneficial title under its intellectual property rights necessary to perform activities contemplated under this Agreement and to grant the licenses contained in this Agreement exclusively to Viventia free and clear of the rightful claim of any third party.

 

7. LIMITATION ON WARRANTIES .

 

  (a) Nothing in this Agreement or in any licenses granted pursuant to this Agreement shall be construed as a representation or warranty that any of the Licensed Patent Rights are valid or that any manufacture, use, sale or other disposal of the Licensed Products is not an infringement of any patents or other rights not vested in Merck.

 

  (b) MERCK MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE LICENSED TECHNOLOGY AND LICENSED PATENT RIGHTS, DEIMMUNISED PLASMIDS, OR DEIMMUNISED PROTEINS, INCLUDING WITHOUT

 

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  LIMITATION, ANY REPRESENTATION OR WARRANTY REGARDING VALIDITY, ENFORCEABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, INCLUDING ANY CLINICAL PURPOSE OR OTHER USE WITH RESPECT TO HUMANS OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS. ALL TECHNOLOGY PROVIDED TO VIVENTIA BY MERCK HEREUNDER IS PROVIDED “AS IS.”

 

8. VIVENTIA COVENANTS .

 

  (a) Viventia shall promote the sale of the Licensed Products of good marketable quality and shall use reasonable endeavours to meet the market demand therefore.

 

  (b) Viventia will use all Licensed Technology and Licensed Patent Rights, licensed hereunder, in compliance with all applicable laws and regulations, including but not limited to, those relating to animal testing, biotechnological research or the handling and containment of biohazardous materials.

 

9. INDEMNIFICATION BY VIVENTIA .

Viventia shall indemnify, defend and hold harmless Merck, its Affiliates and their respective directors, officers, employees, and agents and their respective successors, heirs and assigns (the “Merck Indemnitees”), against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) (collectively, “Losses”) incurred by or imposed upon the Merck Indemnitees, or any one of them, in connection with any claims, suits, actions, demands or judgments of third parties, including without limitation personal injury and product liability matters and claims of suppliers and Viventia employees (except in cases where such claims, suits, actions, demands or judgments result from a material breach of this Agreement, negligence or wilful misconduct on the part of Merck) arising out of (a) the breach or alleged breach of any representation, warranty or covenant of Viventia under Sections 6, 7 or 8 hereof, (b) the negligence or misconduct of Viventia, its Affiliates or their respective employees or agents; or (c) the development, testing, production, manufacture, promotion, import, sale or use by any person of any Licensed Product which is manufactured or sold by Viventia or by an Affiliate, sublicensee, distributor or agent of Viventia.

 

10. DILIGENCE .

Viventia agrees to exercise reasonable commercial efforts to seek regulatory approval to market Licensed Products and develop markets for and market Licensed Products.

 

11. OWNERSHIP OF LICENSED TECHNOLOGY AND LICENSED PATENT RIGHTS .

 

  (a) Viventia acknowledges and agrees that as between the Parties, Merck shall own all Licensed Technology, and Licensed Patent Rights.

 

  (b) Except as provided in paragraph (c) below, Merck and its Affiliates shall have the right, but not the obligation to prosecute, file and maintain any patent applications or patents relating to any Licensed Patent Rights. To the extent that Merck decides not to prosecute, file, or maintain any Licensed Patent Rights, it shall notify Viventia of same and Viventia shall have the right, but not the obligation to prosecute, file and maintain any patent applications or patents with respect to Licensed Patent Rights reasonably related to Licensed Products; Merck shall reasonably cooperate with Viventia in such filings.

 

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  (c) Viventia shall have the right, but not the obligation, to prosecute, file and maintain any patent applications or patents relating to any Licensed Patent Rights that claim or are otherwise directed to Deliverables, Deimmunised Plasmids and Deimmunised Proteins (including compositions comprising same and methods of making or using all of the foregoing. To the extent that Viventia decides not to prosecute, file or maintain any such patents or applications, it shall notify Merck of same and Merck shall have the right, but not the obligation to prosecute, file and maintain them; Viventia shall reasonably cooperate with Merck in such filings.

 

12. INFRINGEMENT .

 

  (a) Each Party shall notify the other promptly after such Party becomes aware of any alleged infringement of any Licensed Patent Rights in any country through the sale of a Licensed Product.

 

  (b) If any of the Licensed Patent Rights under which Viventia holds a license is infringed by a third party through the sale of a Licensed Product, Viventia and/or its Affiliates and sublicensees shall have the right and option, but not the obligation, to bring an action for infringement, at its sole expense, against such third party in the name of Viventia and/or in the name of Merck, and to join Merck as a plaintiff if required. Viventia shall promptly notify Merck of any such action and shall keep Merck informed as to the prosecution of any action for such infringement. Viventia shall control the conduct of such litigation, including settlement thereof, but shall not settle without the prior consent of Merck, such consent not to be unreasonably delayed or withheld. In the event Viventia exercises the right to sue herein conferred, any recoveries shall first be used reimburse it for costs and expenses of suit, including attorneys’ fees, and if after such reimbursement any funds remain they shall be treated as Net Sales and Viventia shall promptly pay to Merck the royalty due on same. In the event that Viventia does not institute an infringement proceeding against an infringing third party within one hundred twenty (120) days after becoming aware or receiving notice of any alleged infringement through the sale of a Licensed Product for which it has a right and option to bring an action under this Section 12(b), then Merck shall have the right and option, but not the obligation, to institute such an action and to retain any recovered damages. If by statute or regulation, a delay of one hundred twenty (120) days would result in a diminishment of rights, including by way of example but not limitation loss of the opportunity for a stay of approval of an infringing product, then the one hundred twenty (120) day period above shall be shorted to the extent required to end ten (10) days before the date on which the diminishment of rights would occur.

 

  (c) In any infringement suit either Party may institute to enforce any rights pursuant to this Agreement, the other Party hereto shall, at the request of the Party initiating such suit, cooperate in all respects and, to the extent reasonably possible (without adversely affecting the other Party’s normal business operations), have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the Party requesting cooperation.

 

  (d) The costs and expenses of any action instituted pursuant to this Section 12 including reasonable fees of attorneys and other professionals) shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action, such costs and expenses shall be borne by the Parties in such proportions as they may agree in writing. Each Party shall execute all necessary and proper documents and take such actions as shall be appropriate to allow the other Party to institute and prosecute such infringement actions (if such other Party has the right to institute and prosecute such infringement actions pursuant to this Section 12).

 

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13. INSURANCE .

Viventia shall maintain comprehensive general liability insurance in the amount of five million U.S. dollars (U.S. $5,000,000) per occurrence during the term of this Agreement and Product Liability Insurance in the amount of five million U.S. dollars (U.S. $5,000,000) per occurrence for all periods during which it has a Licensed Product for sale. Viventia shall list Merck as an “Additional Insured” under its insurance policies described above and shall provide a certificate of insurance to Merck reflecting the same.

 

14. NOTICES .

 

  (a) All notices and statements to either Party required under this Agreement shall be made in writing delivered via certified mail, return receipt requested, courier, provided that evidence of delivery is made, or facsimile with confirmation of such transmission addressed to such Party at the following addresses or faxed to the appropriate numbers set forth below (with the copies to other parties set forth below) or to such other address as may be designated from time to time:

 

To Merck    With a copy to:
Merck KGaA    Merck KGaA
Frankfurter Str. 250    Frankfurter Str. 250
64293 Darmstadt    64293 Darmstadt
Germany    Germany
Attention: Arno Hartmann,    Attention: Jens Eckhardt,
Patent Department (PS-P)    Legal Department (LE-HE)
Tel: +49 6151 72-7669    Tel: +49 6151 72-2398
Fax: +49 6151 72-94158    Fax: +49 6151 72-2373
To Viventia:    With a copy to:
Viventia Bio, Inc.    Life Sciences Law Group, LLC
147 Hamelin Street    12 Terry Drive
Winnipeg MB, R3T 3Z1, CANADA    Suite 203
Attention: Stephen Hurly    Newtown, PA 18940
President & CEO    Attn: Manya S. Deehr, Esq.
Tel: 1 204-478-1023    Tel: 1 215-944-8112
Fax: 1 204-452-7721   

 

  (b) All notices and statements provided to a Party hereunder shall be deemed to have been given as of the date received, or at the time of delivery of a facsimile to the relevant facsimile number above.

 

  (c) Each Party hereto may change its address and contact information set forth above for the purpose of this Agreement by providing written notice to the other Party of the same from time to time.

 

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15. TREATMENT OF CONFIDENTIAL INFORMATION .

For purposes of this Agreement, “Confidential Information” shall mean with respect to a Party (the “Receiving Party”), all information, including without limitation, any Technology disclosed by the other Party (the “Disclosing Party”) to the Receiving Party or to any of its employees, consultants, Affiliates, or sublicensees, whether in writing, or by oral or visual disclosure or presentation, provided, however, that “Confidential Information” shall not include information that:

 

  (a) was known to Receiving Party at the time such Confidential Information was received by the Receiving Party or its Affiliates, as shown by written documentation, other than by virtue of a prior confidential disclosure to such Receiving Party or its Affiliates; or

 

  (b) was publicly known when received from Disclosing Party or thereafter becomes publicly known through no fault or omission of Receiving Party; or

 

  (c) is made known to Receiving Party by a third party who did not derive it from Disclosing Party and who has a lawful right to make such disclosure free from any obligation of confidentiality to the Disclosing Party; or

 

  (d) is independently developed by or for the Receiving Party without reference to or reliance upon any Confidential Information; or

 

  (e) is approved for disclosure by prior written consent of Disclosing Party; or

 

  (f) is required to be disclosed by government authority; provided; however, that Receiving Party has provided reasonable advance notice of the impending disclosure to Disclosing Party and will disclose the Confidential Information to the extent necessary and to such authority only.

The Receiving Party agrees that it will hold the Confidential Information received from the Disclosing Party in secrecy and confidence and will not disclose it to any third party, nor use it for any purpose other than for the purpose of the performance of this Agreement (which includes with respect to Viventia the full enjoyment of the license rights granted to it by Merck). Each Party further agrees that it will restrict disclosure of the Confidential Information within its own organization and affiliates to those persons having a need to know it for the purpose of this Agreement, and that such persons will be advised of the obligation set forth in this Agreement and obligated in like fashion. The above obligations of the Receiving Party with respect to its treatment of Confidential Information shall commence as of the Effective Date and continue through the term of this Agreement and for a period of five (5) years thereafter. This Agreement shall not be construed as granting any license rights with respect to the Confidential Information. Except as otherwise required by applicable laws and regulations, the Parties hereby agree that any disclosure of the terms and conditions of this Agreement (including disclosure in connection with potential stock exchange listings, if any) shall be subject to the other Party’s prior written mutual agreement; provided, however, that each Party may disclose the terms and conditions of this Agreement to a prospective investor, and Viventia may disclose the terms of this Agreement to a prospective sublicensee or marketing partner for a Licensed Product, pursuant to a written confidentiality agreement.

 

16. WAIVER .

The waiver by Merck of any breach, default or omission the performance or observance of any of the terms of this Agreement by Viventia shall not be deemed to be a waiver of any other such breach, default or omission.

 

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17. FORCE MAJEURE .

If the performance of this Agreement or any obligation hereunder (except for the payment of money) is prevented, restricted or interfered with by reason of fire or other casualty or accident, strikes or labour disputes, inability to procure raw materials, power or supplies, war, invasion, civil commotion or other violence, compliance with any order of any governmental authorities or any other act or .conditions whatsoever beyond reasonable control of either Party hereto, the Party so affected upon giving a prompt notice to the other Party shall be excused from such performance to the extent of such prevention, restriction or interference; provided however that the Party so affected shall use commercially reasonable efforts to avoid or remove such causes of non-performance and shall continue performance hereunder with the utmost dispatch whenever such causes are removed, to the extent commercially reasonable.

 

18. ASSIGNMENT .

This Agreement shall not be assigned by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, in the event of a merger, consolidation or similar reorganization of either Party with or into another party, or in the event of a sale of all or substantially all of the assets of a Party, or with respect to Viventia in the event of the sale of the business unit or Licensed Product to which this Agreement pertains, this Agreement shall be assigned to or become the obligation and liability of the acquiring entity, subject to the written notification of such acquisition or merger to the other Party. Any purported assignment in violation of this Section 18 shall be void. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the Parties.

 

19. GOVERNING LAW .

This Agreement shall be governed and interpreted in accordance with the laws of New York without reference to its choice-of-law rules, except that any issue concerning interpretation, infringement, validity, enforceability, term, or effect of a patent shall be governed by national law of the country of such patent.

 

20. ARBITRATION .

All disputes, differences or controversies arising out of or in connection with this Agreement, its interpretation, performance, or termination, which may arise between the Parties arising out of, or related to, this Agreement shall be amicably settled between the Parties. In case of failure of amicable settlement between the Parties, it shall be finally settled by binding arbitration conducted in New York City in accordance with the Rules of Concilliation and Arbitration of the International Chamber of Commerce (Paris, France) (the “ICC”). The arbitration panel shall be composed of three arbitrators, one of whom shall be selected by Merck, one of whom shall be selected by Viventia and the third of whom shall be selected by the two so selected. If both or either of Merck or Viventia fails to select an arbitrator or arbitrators within fourteen (14) days after receiving notice of commencement of arbitration or if the two arbitrators fail to select a third arbitrator within fourteen (14) days after their appointment, the ICC shall, in accordance with said rules, upon the request of both or either of’ the Parties to the arbitration, appoint the arbitrator or arbitrators required to complete the panel. Notwithstanding the terms contained in Section 19 of this Agreement, U.S. patent law shall govern any disputes with respect to inventorship under Sections 4.4, 4.5 and 4.6 of this Agreement.

 

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The Parties shall share the costs of the arbitration, including administrative and arbitrators’ fees equally. Each Party shall bear its own costs and attorneys’ and witnesses’ fees; provided, however, that the prevailing Party, as determined by the arbitration panel, shall be entitled to an award against the other Party in the amount of the prevailing Party’s costs and reasonable attorneys’ fees. If judicial enforcement or review of the arbitrator’s decision is sought, the prevailing Party shall be entitled to costs and reasonable attorneys’ fees in addition to any amount of recovery ordered by the court.

Any dispute between the Parties related to or arising from this Agreement or the Parties’ relationship hereunder that is not arbitrable, including any action to confirm, enforce, modify, or set aside an arbitration award, shall be heard exclusively in the state or federal courts located in New York County, New York, to the exclusion of all other courts, and the parties consent to the jurisdiction and venue of such courts for such purpose.

 

21. MISCELLANEOUS .

 

  21.1 Acknowledgement . Each Party acknowledges that it has negotiated and entered into this Agreement in good faith.

 

  21.2 Severability . In the event any one of the provisions of this Agreement is held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining provisions shall not be affected by such holding. The Parties agree to negotiate and amend in good faith such provision in a manner consistent with the intentions of the Parties as expressed in the Agreement if any invalid or unenforceable provision affects the consideration of either Party.

 

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

 

  21.4 Entirety of Agreement . This Agreement contains the entire understanding of the Parties hereto with respect to the subject matter contained herein. There are no ·restrictions, promises, covenants or understandings other than those expressly set forth herein, and no rights or duties on the part of either Party are to be implied or inferred beyond those expressly herein provided for. The Parties may, from time to time during the term of this Agreement, amend, modify, vary, waive or alter any of the provisions of this Agreement, but only by a written instrument that makes specific reference to this Agreement which is duly executed by each Party, or in the case of waiver, by the Party or Parties waiving compliance.

 

  21.5 Further Assurances . Each Party agrees to duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including, without limitation, the filing of such additional assignments, agreements, documents and instruments, that may be necessary or as the other Party hereto may at any time and from time to time reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes of, or to better assure and confirm unto such other Party its rights and remedies under, this Agreement.

 

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  21.6 No Partnership . For the purposes of this Agreement and all obligations to be performed hereunder, each Party shall be, and shall be deemed to be, an independent contractor and not an agent, partner, joint venturer or employee of the other Party. Neither Party shall have authority to make any statements, representations or commitments of any kind, or to take any action which shall be binding on the other Party, except as may be explicitly provided for herein or authorized in writing.

 

  21.7 Research Agreement . This Agreement supersedes the Research Agreement with respect to any subject matter addressed herein or any inconsistency.

IN WITNESS whereof the Parties have CAUSED this Amended and Restated Agreement to be duly executed in duplicate originals by their respective officers hereunto duly authorized, of which one original is to be held by each Party.

 

Merck KGaA       VIVENTIA BIO, INC.

/s/ Dr. Arno Hartmann

     

/s/ Stephen A. Hurly

By:    Dr. Arno Hartmann       By:    Stephen A. Hurly
Title:    [Omitted in original]       Title:    President & CEO
Date    October 14, 2015       Date    October 14, 2015
Merck KGaA         

/s/ Dr. Jens Eckhardt

        
By:    Dr. Jens Eckhardt         
Title:    Regional General Counsel         
Date    October 14, 2015         

 

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SCHEDULE A

Viventia’s Protein = [**]

DeImmunised Protein = [**]

 

16


SCHEDULE B

JOINT PATENT RIGHTS

 

17


SCHEDULE C

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of two

pages were omitted. [**]

 

18

Exhibit 10.3

AMENDED AND RESTATED LICENSE AGREEMENT

This AMENDED AND RESTATED LICENSE AGREEMENT is made and entered into by and between Protoden Technologies Inc. and Viventia Bio Inc. as of the Effective Date (as defined below).

WITNESSETH

WHEREAS, Licensor (successor of Pangenetics BV (formerly Tanox Pharma BV, successor of Tanox, Inc.)) previously licensed certain technology and patents to Licensee (successor of Viventia Biotechnologies Inc., successor of Viventia Biotech, Inc.) pursuant to that License Agreement dated December 9, 2009, as amended by Amendment No. 1 dated August 23, 2002 (the “First License Agreement”);

WHEREAS, Licensor and Licensee desire to enter into this Amended and Restated License Agreement to fully supersede the First License Agreement;

WHEREAS, Licensor has acquired exclusive rights to certain technology, know-how, trade secrets, and patent rights relating to the compound bouganin;

WHEREAS, Licensee is in the business of developing and marketing drugs for the treatment of diseases in humans, including novel drugs based upon immunotoxin molecules for the treatment of cancer;

WHEREAS, Licensee wants to obtain an exclusive license to make, use and sell, have made, have sold, or import products using Licensor’s technology and protected by Licensor’s patent rights; and

WHEREAS, Licensor is willing to grant to Licensee an exclusive license to utilize Licensor’s technology and patent rights for making, using, and selling immunotoxins incorporating bouganin as the toxin.

NOW, THEREFORE, in consideration of the above premises and the covenants contained herein, the parties agree as follows:

 

1. Definitions

1.1. “Licensor” shall mean Protoden Technologies, Inc. and its Affiliates.

1.2. “Licensee” shall mean Viventia Bio and its Affiliates.

1.3. “Affiliates” shall mean a company or other entity controlling, controlled by, or under common control with the relevant party, where “control” shall mean direct or indirect control by ownership or otherwise of more than fifty percent (50%) of the outstanding voting shares or similar measure of control.

1.4. “Agreement” shall mean this Amended and Restated License Agreement.


1.5. “Annual Maintenance Fee Date” shall mean January 1, 2015.

1.6. “Effective Date” shall mean October 17, 2014.

1.7. “Licensed Technology” shall mean all technology, confidential information, data, inventions, materials, know-how, trade secrets, and all other information or materials relevant to the business or research interests associated with this Agreement, including but not limited to products and product plans, ongoing research and development efforts, and other information of a technical or economic nature made available by Licensor to Licensee in support of the development and marketing of Licensed Products, particularly information and samples relating to the bouganin gene, protein, and their properties and uses. Licensed Technology shall also include any and all bouganin related technology, data, inventions, materials, know-how, trade secrets, and all other information or materials conceived or developed as a result of Licensee’s activities under the terms of this Agreement.

1.8. “Licensed Patents” shall mean EP patent application number 97201725.5, filed Jun 06 1997, entitled Type - 1 Ribosome-Inactivating Protein and all patent applications, issued patents and/or patents issuing from pending patent applications and all continuations, divisions, reissues, continuations-in-part, renewals, extensions, and the like now or hereafter owned or controlled by Licensor containing claims that would be infringed by importing, making, using, or selling Licensed Products, including International Application Number PCT/NL/98/00336 filed Jun 08 1998 and published as WO 98/55623, those set forth in Exhibit A and any other patents owned or controlled by Licensor directed to or claiming Licensed Technology that are required to import, make, use, or sell Licensed Products.

1.9. “Licensed Products” shall mean products imported, made, used, or sold using Licensed Technology or under the claims of Licensed Patents, including immunotoxins comprising antibodies conjugated to bouganin.

1.10. “Field” shall mean all therapeutic and/or diagnostic uses.

1.11. “Territory” shall mean all countries of the world.

1.12. “Dollars” shall mean dollars of the United States of America ($U.S.).

1.13. “Patent Costs” shall mean out-of-pocket expenses incurred in connection with the preparation, filing, prosecution, and maintenance of Licensed Patents, including the fees and expenses of attorneys and patent agents but excluding expenses incurred in connection with patent infringement claims or other adversary proceedings, including but not limited to reexaminations, interferences, oppositions, revocation proceedings, or nullity actions.

1.14. “Third Party” shall mean any party other than the Licensor and/or the Licensee.

 

2. Termination of First License Agreement

2.1. The Parties acknowledge and agree that the First License Agreement is terminated and if no further force or effect. For the avoidance of doubt, no rights or obligations shall arise or result from the termination of such agreement notwithstanding any language to the contrary therein. Both parties acknowledge that they have voluntarily surrendered its rights and agreed to terminate its obligations that were otherwise set forth in the First License Agreement.

 

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3. License Grant

3.1. Licensor grants to Licensee and Licensee accepts an exclusive, perpetual, irrevocable, non-royalty bearing license for using Licensed Technology and Licensed Patents in each country of the Territory to research, develop, import, make, have made, use, offer for sale, and sell Licensed Products for use in the Field.

3.2. Licensor grants Licensee the right to grant sublicenses to Third Parties consistent with the terms of this Agreement. Licensee agrees to notify Licensor in writing of any sublicense granted hereunder within thirty (30) days after granting such sublicense. Licensee agrees to provide Licensor with a copy of any sublicense granted by Licensee along with such notice. Licensor agrees that copies of sublicenses provided to it by Licensee shall be deemed “Confidential Information” of Licensee as defined herein.

3.3. Any sublicense granted by Licensee under this Agreement shall be subject and subordinate to terms and conditions of this Agreement, provided, however, that the sublicense may not grant the sublicensee any sublicensing rights.

3.4. All sublicenses shall include provisions permitting the sublicense to survive the termination of the Agreement and providing for the transfer of all obligations, including the payment of royalties and other compensation required under the sublicense, to Licensor if the Agreement is terminated.

3.5. Licensee agrees to be responsible for overseeing any operations of its sublicensees with respect to this Agreement and for collecting royalties and other payments from sublicensees. Failure by a sublicensee to meet the obligations under a sublicense shall not excuse Licensee from complying with its obligations under this Agreement.

 

4. Consideration

4.1. Licensee agrees to pay to Licensor an annual license maintenance fee of One Hundred Thousand Dollars ($100,000) within thirty (30) days of the Annual Maintenance Fee Date and on or before the anniversary of the Annual Maintenance Fee Date during the Term.

4.2. During the Term, Licensee agrees to pay to Licensor a sublicensing fee of Fifty Thousand Dollars ($50,000) for each and every sublicense agreement the Licensee enters into with a Third Party pursuant to Section 2 between January 1, 2015 and December 31, 2024; provided, however, that Licensee is only obligated to pay such sublicensing fee a maximum of two (2) times within one (1) calendar year and only for sublicense agreements entered into between January 1, 2015 and December 31, 2024.

4.3. For the avoidance of doubt, Licensee is not obligated to pay any royalties to Licensor for using Licensed Technology and/or Licensed Patents to research, develop, import, make, have made, use, offer for sale, and sell Licensed Products for use in the Field.

 

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5. Payments, Reports, and Audits

5.1. If Licensee fails to make any payment required under this Agreement on or before the due date, Licensee agrees to pay interest on such amount at an annual rate of two (2%) more than the greatest prime rate announced by Citibank NA or its successor as published in the Wall Street Journal at any time during the period when such payment is due. Such interest shall accrue from the date the payment was due until the date such payment is paid in full. If such rate exceeds the rate allowed by applicable law, then the highest rate allowed by law shall apply.

 

6. Transfer of Licensed Technology

6.1. Licensor shall prepare and deliver or authorize delivery to Licensee promptly after the Effective Date any Licensed Technology that Licensor deems useful for the research, development and marketing of Licensed Product, including samples of bouganin. Licensee acknowledges and agrees that Licensee may be required to obtain bouganin from Licensor’s collaborators and that there may be a nominal cost for obtaining bouganin.

6.2. Licensor acknowledges and agrees that Licensee may disclose Licensed Technical Information and Licensed Patents to other entities that are contracted to provide services for the development and marketing of Licensed Products. Such disclosure shall be made only under terms consistent with this Agreement, particularly confidentiality obligations at least as restrictive as those in this Agreement.

 

7. Intellectual Property and Grantbacks

7.1. Licensee acknowledges that Licensor shall retain all ownership of Licensed Technology and Licensed Patents and any intellectual property embodied therein.

7.2. Licensor and Licensee agree that any and all rights to developments and improvements in Licensed Technology, including any bouganin conjugates and new uses for bouganin and bouganin conjugates, made by Licensee during the term of this Agreement (“Improvements”) shall belong to Licensee and that Licensee shall own the right to any intellectual property embodied in such Improvements.

 

8. Performance Requirements

8.1. Licensee agrees to prepare and submit semi-annual progress reports to Licensor describing is efforts to develop and market Licensed Product beginning six (6) months after the Annual Maintenance Fee Date.

 

9. Term and Termination

9.1. This Agreement shall become effective as of the Effective Date and shall remain in effect (1) until terminated as provided for below or (2) for a term often (10) years from the Annual Maintenance Fee Date (the “Term”). Upon expiration of this Agreement, the licenses granted hereunder shall become fully paid-up and no further payments hereunder shall be required.

 

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9.2. This Agreement may be terminated by Licensee in its entirety by giving ninety (90) days’ written notice to Licensor, provided, however, that such termination shall not affect the payment of any compensation due hereunder that are incurred prior to the date of such termination.

 

10. Post-Termination Rights and Obligations

10.1. As soon as practical but in no event later than three (3) months following termination of this Agreement, Licensee shall cease making, using, or selling Licensed Product. Licensee shall within thirty (30) days of termination pay to Licensor sums which shall have accrued on or prior to the effective date of termination.

10.2. The provisions and obligations contained in this Agreement relating to payments, reports, auditing, confidentiality, indemnification, and any other provisions that by their nature are intended to survive shall survive the expiration or termination of this Agreement.

 

11. Confidentiality

11.1. Licensor and Licensee agree to keep the terms of this Agreement and any information exchanged in furtherance of this Agreement, including but not limited to technical information, regulatory information, manufacturing methods and specifications, product specifications, or other technical or business information, strictly confidential and agree that such information (“Confidential Information”) will not be (1) disclosed to others, (2) published without express written permission of the disclosing party, (3) used for the receiving party’s or any others’ benefit, except as provided for herein, or (4) duplicated in any manner.

11.2. The obligations of confidentiality and limited use shall not apply to Confidential Information that (a) is at the time of receipt public knowledge or after its receipt becomes public knowledge through no act or omission on the part of the receiving party; or (b) was known to the receiving party as shown by written records prior to the disclosure thereof; or (c) is subsequently developed by or on behalf of the receiving party without use of or reliance on Confidential Information; or (d) is received from a Third Party who did not, directly or indirectly, obtain such Confidential Information from the disclosing party; or (e) is submitted to governmental agencies to facilitate marketing approvals for Licensed Product, provided-that reasonable measures have been taken to assure confidential treatment of such Confidential Information; or (f) is provided to third parties for development and marketing of Licensed Products under appropriate terms and conditions intended to protect Confidential Information from misappropriation or public disclosure, including confidentiality provisions at least as restrictive as those in this Agreement, or (g) is required to be disclosed by order of a court of component jurisdiction or in connection with any government investigation, provided, however, that the party who may be required to make such disclosure shall notify the other party in writing of any circumstances of which it is aware that may lead to such a requirement or order so as to allow the other party the opportunity to oppose any such requirement or order.

11.3. The parties agree that, upon written request, the receiving party shall return all Confidential Information to the disclosing party, provided, however, that the receiving party may keep one (1) copy of Confidential Information for purposes of determining its obligations under this Agreement.

 

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12. Indemnification

12.1. Licensee agrees to hold harmless, indemnify, and defend Licensor against all liabilities, demands, costs, claims, suits, damages, expenses, and losses, including reasonable attorney’ fees, resulting from Licensee’s performance of this Agreement or the making, using, selling, or other disposition of Licensed Products by Licensee or any party acting on Licensee’s behalf.

 

13. Regulatory Approvals

13.1. Licensee agrees to obtain all necessary legal and/or regulatory licenses and approvals to test, market, and sell Licensed Products. Licensee agrees to pay all costs associated with obtaining such licenses or approvals.

 

14. Marking

14.1. Licensee agrees to apply in a manner sufficient to give legal notice of the existence of Licensed Patents on any Licensed Product or its packaging, if appropriate, manufactured or sold by Licensee under this Agreement such patent notice as may be required by the laws of the countries where manufactured or sold, or as may reasonably be requested by Licensor.

 

15. Dispute Resolution

15.1. Any controversy, claim, or other dispute arising solely out of the language and interpretation of this Agreement, or to the breach thereof, shall be subjected to good faith negotiations between the parties in an attempt to settle all such disputes before any alternative method of dispute resolution is employed.

 

16. Representations and Warranties

16.1. Licensee represents and warrants that Licensee has the right to enter into this Agreement and that entering into this Agreement will not result in a breach of any agreement or other undertaking to which Licensee is a party.

16.2. Licensor represents and warrants that Licensor is the owner of the entire right, title and interest in and to Licensed Patents and has the right to grant the license as described herein and that the grant of such license will not result in a breach of any agreement or other undertaking to which Licensor is a party.

16.3. Licensor represents and warrants that Licensor has no knowledge as of the Effective Date of this Agreement of patent applications, issued patents, or other intellectual property of any Third Party which may adversely affect any part of this Agreement, Licensed Patents or Licensed Products, and specifically has no actual knowledge that importing, making, selling, or using Licensed Products will constitute an infringement of any Third Party patents.

 

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16.4. EXCEPT AS EXPRESSLY STATED HEREIN, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

16.5. LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SCOPE, ENFORCEABILITY, OR VALIDITY OF LICENSED PATENTS.

16.6. EXCEPT AS EXPRESSLY STATED HEREIN, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, THAT MAKING, USING, IMPORTING, OR SELLING LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER THIRD PARTY RIGHTS.

 

17. Liability and Insurance

17.1. Except as expressly stated herein, each party agrees to be liable for any liability, costs, or damages incurred because of its negligent or willful acts or omissions.

17.2. Licensor shall not be liable for any consequential, special, or other indirect damages incurred by Licensee, sublicensee or other Third Party resulting from making, using, or selling Licensed Products or licensee exercising its rights under this Agreement.

17.3. Licensee agrees to provide occurrence form comprehensive general liability (including products, commercial, and contractual) insurance coverage at a minimum of Five Million Dollars ($5,000,000.00) per occurrence, Five Million Dollars ($5,000,000.00) aggregate, which includes coverage for Licensee’s liability to Licensor under the indemnification provisions of this Agreement (“Licensee Insurance”). Licensee Insurance will (i) be with a U.S. or Canadian based insurance carrier rated by A.M. Best & Co. as A XV or higher or a reasonably equivalent rating by another reputable rating agency, (ii) provide that it can be canceled only with thirty (30) days prior written notice to Licensor, (iii) name Licensor or its respective assignee as an additional insured, (iv) be primary to any other valid or collectable insurance coverage which Licensor, or any of its parents, subsidiaries, affiliates, principals, agents, or assigns, may have or obtain (“Licensor Insurance”), and (v) provide that no Licensor Insurance will become effective in respect to any claim intended by this Agreement to be covered by Licensee Insurance until all Licensee Insurance is fully exhausted. Upon execution of this Agreement, Licensee agrees to provide Licensor with a Certificate of Insurance evidencing such insurance. Licensee agrees to keep such certificate current and on an annual basis, or more frequently if requested by Licensor, mail a current copy to Licensor.

 

18. Prosecution and Maintenance of Licensed Patents

18.1. Licensor agrees to prepare, file, prosecute, and maintain Licensed Patents during the term of this Agreement and to pay all associated Patent Costs. Licensee shall reimburse Licensor for all reasonable Patent Costs within thirty (30) days after receiving a written invoice for such Patent Costs, provided, however, that if Licensor grants licenses under Licensed Patents to any other party, then Licensee shall be required to reimburse Licensor only for Licensee’s proportionate share of Patent Costs.

 

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19. Infringement - Licensed Patents

19.1. Should Licensee become aware that any Third Party is infringing Licensed Patents, Licensee shall give notice of such infringement to Licensor and Licensee shall have the sole right to end such infringement, at Licensee’s sole expense. Licensor agrees to join in and cooperate with any enforcement proceedings at Licensee’s request, and at Licensee’s expense, provided that Licensor may be represented by Licensor’s counsel in any such legal proceedings, at Licensor’s own expense, acting in an advisory, but not controlling, capacity. In addition, Licensee may name Licensor as party plaintiff as required by law. Any recoveries in any action brought by Licensee shall retained by Licensee. Licensor shall have no right to end any infringement of the Licensed Patents.

 

20. Compliance with Law and Export Control

20.1. The parties agree to comply with all applicable laws and regulations while performing under the terms of this Agreement. Anything herein to the contrary notwithstanding, neither party hereto shall be obligated to do any act pursuant to any provision of this Agreement when to do so would be inconsistent with any law or any ruling, regulation, or order of any authoritative governmental body.

20.2. Licensee agrees to comply with all applicable United States and foreign laws with respect to the transfer of Licensed Products and any related technical data or information to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.

 

21. Notices and Communications

21.1. All notices and other communications regarding this Agreement sent from Licensee to Licensor shall be addressed to:

Protoden Technologies Inc.

305 Milner Avenue, Suite 914

Toronto, Ontario M1B 3V4

Attention: Leslie L. Dan

All notices and other communications regarding this Agreement sent from Licensor to Licensee shall be addressed to:

Viventia Bio Inc.

147 Hamelin Street

Winnipeg, MB R3T 3Z1

Attention: Stephen Hurly

21.2. All written notices required or permitted to be given under the terms of this Agreement shall be deemed duly delivered upon receipt if (1) delivered in person, (2) sent by facsimile using a machine that confirms delivery and confirmed by sending the original via certified mail, return receipt requested, or (3) sent certified mail, return receipt requested to the above address. Notwithstanding the foregoing, payments, reports, and other routine communications may be sent by regular or electronic mail.

 

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22. Miscellaneous Provisions

22.1. Amendments in Writing. This Agreement may be amended or modified only by a written instrument duly executed by an appropriate officer of each party.

22.2. Assignments. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective successors and permitted assigns, provided that neither party hereto shall be able to assign any right, license, benefit, option, duty, obligation, or privilege hereunder without the prior consent of the other party (such consent not to be unreasonably withheld), except that assignment shall be permitted in the event of the (1) sale of all or substantially all of the business to which this Agreement relates by an assigning party or (2) sale or assignment of rights in or to a Licensed Product. In the event of such assignment upon the sale of all or substantially all of the business to which this Agreement relates, due written notice of such assignment shall be provided to the other party.

22.3. Choice of Law. This Agreement shall be deemed to have been made in and construed in accordance with the laws of the State of Delaware, United States of America, excluding any choice of law rules that may direct the application of the laws of any other jurisdiction. Any dispute related to or arising out of this Agreement or any aspect of the parties’ relationship hereunder shall be heard exclusively in the courts located in Delaware.

22.4. Implementation. Each party shall, at the request of the other party, execute any document reasonably necessary to implement the provisions of this Agreement.

22.5. Independent Contractors . Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or a joint venture relationship between the parties. The respective activities of the parties hereunder shall be provided as independent contractors. Neither party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

22.6. Integration. This written Agreement embodies the entire understanding between the parties and supersedes and replaces any and all prior negotiations, understandings, arrangements, and/or agreements, whether written or oral, relating to the subject matter hereof.

22.7. Publicity . Each party agrees not to use the mime of the other party in any commercial activity, advertisement, sales brochures, or otherwise without written permission.

22.8. Severability. This Agreement is divisible and separable. If any provision of this Agreement is held to be or becomes invalid, illegal or unenforceable, such provision shall be reformed to approximate as nearly as possible the intent of the parties and shall remain valid and enforceable to the greatest extent permitted by law.

22.9. Waiver. The terms of this Agreement may be waived only by a written instrument expressly waiving such term or terms and executed by the party waiving compliance. The waiver of any term or condition of this Agreement by either party hereto shall not constitute a modification of this Agreement, nor prevent a party hereto from enforcing such term or condition in the future with respect to any subsequent event, nor shall it act as a waiver of any other right accruing to such party hereunder.

 

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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly executed by their duly authorized representatives.

 

PROTODEN TECHNOLOGIES INC.     VIVENTIA BIO INC.
By:  

/s/ Leslie L. Dan

    By:  

/s/ Stephen Hurly

Name: Leslie L. Dan     Name: Stephen Hurly
Title: Director & Officer     Title: CEO
Date: October 17, 2014     Date: October 17, 2014

 

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EXHIBIT A

LICENSED PATENTS

EP Patent Application No. 97201725.5 filed Jun 06 1997

International Application No. PCT/NL/98/00336 filed Jun 08 1998

Canadian Patent No. 2295189

European Patent No. 0 975 762

U.S. Patent No. 6,680,296

U.S. Patent No. 7,479,552

Exhibit 10.4

THIS INDENTURE made as of the 31st day of March, 2000

BETWEEN:

ALMAD INVESTMENTS LIMITED

(hereinafter called the “Landlord”),

OF THE FIRST PART,

-and-

VIVENTIA BIOTECH INC.,

(hereinafter called the “Tenant”),

OF THE SECOND PART

WITNESSETH that in consideration of the rents, covenants and agreements hereinafter reserved and contained on the part of the Tenant to be paid, observed and performed, the Landlord has demised and leased, and by these presents does demise and lease unto the Tenant approximately Twenty One Thousand Five Hundred (21,500) square feet of Rentable Area (the “Leased Premises”) commonly known as 136-147 Hamelin Street, in the City of Winnipeg, in the Province of Manitoba forming part of the property (the “Property”), commonly known as 131-147 Hamelin Street in the City of Winnipeg, in the Province of Manitoba;

TO HAVE AND TO HOLD the Leased Premises for a term of Three (3) years commencing on the 1st day of April, 2000 and from thenceforth next ensuing and fully to be completed and ended on the 31st day of March, 2003, (hereinafter called the “Term”), and for the minimum rent and additional rent set forth in Section 1.01 hereof.

 

1.00 TENANT’S COVENANTS

The Tenant hereby covenants with the Landlord as follows:

 

1.01 Rent —The Tenant shall pay rent as follows:

 

  (a) Minimum Rent —The Tenant shall pay to the Landlord or as the Landlord may direct in writing, in lawful money of Canada, without set-off, compensation or deductions except as may otherwise be provided for in this agreement, yearly in each and every year, Minimum Rent for the Leased Premises in the amount of One Hundred Thirty Nine Thousand and Seven Hundred and Fifty Dollars ($139,750.00) per annum, plus goods and service tax thereon, payable in monthly installments of Eleven Thousand Six Hundred and Forty Five Dollars and Eighty Three Cents ($11,645.83) plus goods and service tax thereon, on or before the 1st day of each and every month of the Term. The Minimum Rent is calculated at a rate of Six Dollars and Fifty ($6.50) per square foot of Rentable Area.


  (b) Additional Rent —The Tenant shall pay additional rent as set forth in Section 1.02 hereof. The Additional Rent is estimated at $7.65 per square foot of Rentable Area plus goods and service tax thereon for the fiscal year 2000. The Tenant shall pay the Additional Rent to the Landlord in equal monthly installments together with the monthly installments of the minimum rent. At the end of the fiscal year, the Tenant shall be advised of the actual amount required to be paid and if necessary, an adjustment shall thereupon be made between the parties within (15) days of the Landlord so advising.

 

1.02 Additional Rent —The Tenant shall pay to the Landlord as Additional Rent:

 

  (a) its Proportionate Share of all taxes, rates, charges, local improvements and assessments whatsoever whether municipal, provincial or federal that may be levied during the Term hereof upon the Leased Premises or upon the Landlord on account thereof to the entire exoneration of the said Landlord save and except as for personal or corporate income taxes and capital taxes whether assessed by the Provincial or Federal Government and all Estate and Succession Duties or Taxes whether assessed by the Federal or Provincial Government, and save and except for any separate school taxes which may be levied as a result of any election by the Landlord, without limiting the generality of the foregoing, the taxes, rates, charges and assessments to be paid by the Tenant shall include taxes for local improvements or works assessed upon the Leased Premises, business taxes arising from the use or occupancy of the Leased Premises by the Tenant or any subtenant holding under the Tenant, provided that if any taxes, rates, charges, local improvements and assessments whatsoever as aforesaid are levied separately in respect of the Leased Premises to pay the full amount as Additional Rent;

 

  (b) its Proportionate Share of all Operating Costs. Operating Costs means the total amount paid or payable, whether by the Landlord, for public utilities, building services, replacement of the Property and maintenance equipment (excluding additions to the building and provided that capital costs are amortized in accordance with generally accepted accounting principles), maintenance and janitorial services for the Property or any part or parts thereof, such as are in keeping with maintaining the standard of a first-class building having regard for its age, location and use, including all repairs and replacements required for such maintenance, including, without limiting the generality of the foregoing, repairs and non-structural replacements to the roof, structure of the Property and the land adjoining the Property (including the parking area), the cost of providing hot and cold water, the cost of heating, the cost of window cleaning, insurance costs (the types and amounts of insurance being at the Landlord’s sole discretion), service contracts with independent contractor’s engineers’ wages and all wages, salaries, costs and expenses incurred in connection with the maintenance and operation of the Property, and all other wages, salaries, costs and expenses paid or payable by the Landlord in connection with the cleaning, operating, servicing and maintaining the Property and its appurtenances or any part or parts thereof, plus a further sum of fifteen percent (15%) of the above costs (excluding Building depreciation and mortgage interest) as an administration charge.

 

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  (c) all other sums of money payable by the Tenant to the Landlord hereunder;

provided that if and so often as the Tenant neglects or omits to pay taxes, rates, charges and assessments as aforesaid, when the same become due and payable, the Landlord shall be entitled to pay the same and collect the same from the Tenant as rent hereby reserved and in arrears; provided, however, that the Tenant shall have the right at its own expense to take proceedings in the name of the Landlord to contest the legality of any such taxes, rates, charges and assessments, the amount thereof and the time or manner of payment sought to be enforced and in the event that the Tenant takes any such proceedings in the name of the Landlord, the Tenant hereby agrees to indemnify and save harmless the Landlord from all costs and expenses whatsoever with respect to or arising from such proceedings.

In this section, “Proportionate Share” means the proportion that the floor space of the Leased Premises bears to the aggregate of the floor space, measured in square feet, of the premises located on the Property (including the Leased Premises).

 

1.03 Maintenance of Premises —The Tenant shall at all times during the Term of this Lease, at its sole cost and expense, well, properly and sufficiently repair, maintain and keep the Leased Premises with the appurtenances (including, without restricting the generality of the foregoing, signs and inside and outside plate glass windows and doors, including all overhead or exterior doors to be installed) in good and substantial repair and shall repair, maintain and replace all fixtures and things which at any time during the Term of this Lease are located or erected in or upon the Lease Premises, such repair, maintenance and replacement to be made by the Tenant when, where and so often as need shall be, except for:

(a) repairs required to be made by the Landlord pursuant to the provisions of Clause 4.01 hereof; and

(b) reasonable wear and tear;

Unless such excepted repairs are necessitated by the acts or omissions of the Tenant, its agents, employees, invitees or licensees. The cost of any repair or replacement required to be made of the Leased Premises as a result of any act or omission of the Tenant, its employees, servants, agents or licensees shall be paid in full by the Tenant. Provided further, notwithstanding anything to the contrary herein contained, the Tenant shall make all repairs and replacements to the Leased Premises made necessary by reason of burglary or attempted burglary.

(c) It is understood that the Tenant will organize maintenance for the grounds and maintenance to keep all sidewalks, roadways and parking areas bordering on the Building free of ice and snow and the grass, if any, fronting the Building, cut and properly cared for. All contracts for this maintenance are to be approved by the Landlord in writing and the Tenant will be charged back their proportionate share of these costs as Operating Costs.

 

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Any maintenance costs which are shared with other tenants must have prior written approval from the Landlord.

 

1.04 Leasehold Improvements —Prior to the commencement of any improvements to the Leased Premises by the Tenant, plans for same shall be submitted by the Tenant to the Landlord, which plans shall be subject to the Landlord’s written approval, not to be unreasonably withheld. No other leasehold improvements or alterations shall be made to the Leased Premises by the Tenant, except in accordance with the provisions of section 1.08 hereof. The Landlord shall not be responsible for any costs of leasehold improvements made to the Leased Premises during the Term. The Tenant shall pay or cause to be paid and satisfied promptly, as same shall become due and payable, all costs and claims for work and labour done and material supplied and other work and expenses incurred or suffered in connection with or arising out of any of the leasehold improvements made by the Tenant.

The leasehold estate or interest of the Landlord in the Leased Premises shall be free and clear of any and all liens for work done, labour performed or material supplied or other work or services furnished in connection with or arising out of any leasehold improvements or other construction made by the Tenant. The Tenant shall do all things necessary to prevent, to the extent it is able, the filing of any builders’ liens against the title to the Leased Premises.

 

1.05 Condition of Leased Premises —The Tenant shall keep the Leased Premises and every part thereof in a clean and tidy condition and not to permit waste paper, garbage, ashes or water or objectionable material to accumulate thereon. The Tenant covenants that it has satisfied itself prior to the execution of this Lease that its intended use of the Leased Premises complies with all applicable zoning by-laws. The Tenant acknowledges having fully inspected the Leased Premises and agrees to accept the Leased Premises in their present state of condition and repairs.

 

1.06 Inspection and Repair —The Tenant shall permit the Landlord at all reasonable times, upon reasonable prior written notice, unless in the case of an emergency, to enter the Leased Premises to inspect the condition thereof and where such inspection reveals that the repairs are necessary to make such repairs in a good and workmanlike manner within one (1) calendar month from the date of delivery of notice from the Landlord requiring such repair; provided that in the event that the Tenant does not effect the said repairs within one month, or such longer period as may be reasonable in the circumstances and agreed to by the Landlord and Tenant in writing within one week of the delivery of notice requiring such repairs, the Landlord may effect such repairs and charge the cost thereof to the Tenant as additional rent.

 

1.07 Overloading Floors —The Tenant shall not bring upon the Leased Premises or any part thereof any machinery, equipment, article or thing that by reason of its weight, size or use might damage the Leased Premises, and not at any time to overload the floors of the Leased Premises, and if any damage is caused to the Leased Premises by any machinery, equipment, article or thing or by overloading or by any act, neglect or misuse on the part of the Tenant or any of its servants, agents or employees or any person having business with the Tenant, forthwith to repair or pay to the Landlord the cost of making good such damage.

 

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1.08 Alterations Involving Change —The Tenant shall not make any alterations involving structural changes without securing the Landlord’s prior written consent, which consent may be withheld by the Landlord in its sole discretion, it being understood that upon obtaining such consent, plans for such structural changes must be submitted by the Tenant to the Landlord before commencement of the work, which plans shall be subject to the Landlord’s written approval. It is understood between the parties that the Tenant shall have the right to make any and all non-structural alterations in and additions to the Leased Premises that may be deemed necessary for the proper carrying on of its business or that of any sub-tenant, provided however:

(a) that nothing shall be done to weaken the building;

(b) that the Tenant shall be responsible for any damage caused to the Leased Premises thereby. It is further understood and agreed between the parties hereto that the costs of any and all renovations herein referred to shall be borne by the Tenant.

(c) that the Tenant shall indemnify and save harmless the Landlord from and against all liens and from and against all damage and injury to the Leased Premises or to the property of others and against all liability of the Landlord to any person or persons which may arise by reason of all such repairs, alterations, improvements, removals or additions; and

(d) that prior to making any non-structural alterations or additions to the Leased Premises, the Tenant shall submit detailed plans to the Landlord and obtain the Landlord’s written approval, such approval not to be unreasonably withheld.

 

1.09 Heating —The Tenant shall use the heating equipment supplied by the Landlord or such other equipment installed by the Tenant, to heat the Leased Premises at all reasonable times and shall maintain such heat at a temperature to prevent damage of any nature or kind whatsoever to the Leased Premises, and if damage does occur to the Leased Premises due to the Tenant’s failure to heat, the Tenant agrees to pay for the repairs arising thereby, other than for damages caused as a result of a failure by the utility to provide gas or electricity, which failure is beyond the control of the Tenant, to the extent not covered by insurance which the Landlord is required to maintain hereunder.

 

1.10 Use of the Premises

The Tenant shall:

(a) Subject to the right of the Tenant to assign this lease or sublet a portion of premises as herein provided, not use or occupy or suffer or permit the Leased Premises or any part thereof, to be used or occupied for any purpose other than for research, development and pilot scale production of human pharmaceuticals or such other uses which comply with municipal by-laws and are approved in writing by the Landlord, acting reasonably;

 

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(b) conduct its business upon the Leased Premises in such a manner as to comply with the statutes, by-laws, rules and regulations as any Federal, Municipal or other competent authority for the time being in force and shall not do anything upon the Leased Premises in contravention of any of them or which will be a nuisance; provided that nothing contained in this paragraph 1.10(b) shall prohibit the Tenant from opening for business on such Sundays and holidays as it sees fit;

(c) at all times promptly comply with all rules, orders, regulations and requirements of the Insurance Advisory Organization and any Governmental or Municipal authority from time to time in effect for the prevention of fires or the correction of hazardous conditions, to the extent such hazardous condition was caused by the Tenant or for whom the Tenant is in law responsible.

 

1.11 (a)  Assignment —The Tenant will not, and will not permit a subtenant to, assign this Lease in whole or in part, or sublet all or a part of the Leased Premises or any part thereof, without the prior written consent of the Landlord in each case, which consent shall not be unreasonably withheld. The consent by the Landlord to an assignment or subletting will not constitute a waiver of its consent to a subsequent assignment or subletting, or a waiver of the obligation of the Guarantor as set forth in paragraph 1.11(b) herein. Any such assignment, transfer or subleasing, or otherwise shall be subject to all the terms and conditions of this lease, and the Tenant will remain jointly and severally liable with any such transferee, whether such joint and several responsibility be mentioned or not in any consent to such transfer, assignment or sub-leasing. An assignment or sub-letting of this lease or the Leased Premises if consented to by the Landlord will be prepared by the Landlord’s solicitors together with such additional documents as reasonably required by the said solicitors and all reasonable legal costs of its preparation will be paid by the Tenant. If the Tenant or any sub-tenant or assignee of this Lease is a corporation, then any sale or other disposition resulting in a substantial sale of its assets or change in the shareholders controlling such corporation at any time during the Term or any renewal thereof shall be and be deemed to be an assignment of this Lease and, accordingly, the prior written consent of the Landlord to any such sale or disposition shall be required. A change in control of shareholdings of the Tenant as between the existing shareholders upon execution of the Lease, shall not be deemed an assignment of the lease as aforesaid.

(b) Guarantee —In the event that the Tenant assigns this Lease or sublets all or part of the Leased Premises during the initial term with the consent of the Landlord, in consideration of the premises and other valuable consideration, the receipt whereof and the sufficiency whereof is hereby acknowledged by the Tenant, the Tenant as Guarantor does hereby unconditionally guarantee all obligations of the then Tenant under this Lease and accordingly covenants with the Tenant that all the covenants, agreements and other obligations of the then Tenant herein shall be fully performed, the guarantee being upon the following terms:

 

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(i) The liability of the Guarantor to the Landlord is for all purposes as if the Guarantor was primary obligor herein, and not only sureties for the obligations of the then Tenant, and the Landlord is not obliged to resort to or exhaust any recourse which it has against the then Tenant or any other person before being entitled to claim against the Guarantor;

(ii) Any account settled or stated or any other settlement made between the Tenant and the Landlord, and any determination made pursuant to the provisions of this Lease which is expressed to be binding upon the then Tenant is binding upon the Guarantor;

(iii) The Guarantor shall make payment to the Landlord of any amount properly payable by the then Tenant to the Landlord but unpaid upon demand, and shall upon demand perform any other obligations under this Lease which the then Tenant has failed to perform, and any demand made by the Landlord upon the Guarantor is deemed to have been effectually made if notice thereof is sent as provided in paragraph 4.07;

(iv) No assignment of the Lease, sublease or any other dealings therewith by the then Tenant, whether with or without the consent of the Landlord, affects the guarantee;

(v) Nothing except the performance in full of all the obligations of the then Tenant under this Lease throughout the Term shall, except as provided in paragraph 1.11(c), discharge the Guarantor of this guarantee;

(vi) If during the Term the then Tenant makes an assignment for the general benefit of its creditors, or an order is made for the winding up of the then Tenant, or a receiving order in bankruptcy is made by or against the Landlord, and the assignee, liquidator or trustee surrenders possession of the Premises or any part of them or disclaims the lease, the Guarantor shall forthwith upon the demand of the Landlord at the Guarantor’s expense, accept from the Tenant a lease of the Premises (the “New Lease”) for a period equal in duration to the residue of the term remaining unexpired from the date of surrender or disclaimer at the same Minimum Rent and Additional Rent and with the same covenants and provisos as are reserved and contained in the Lease.

(c) This guarantee and all the liabilities and obligations of the Guarantor hereunder shall forthwith cease and terminate upon the completion of the Initial or Renewal Term.

 

1.12 Nuisance —The Tenant shall not do or omit to do or permit to be done or omitted anything upon or in respect of the Leased Premises the doing or omission or which (as the case may be) shall be or result in a nuisance.

 

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1.13 Indemnity —The Tenant shall keep the Landlord indemnified against all claims, demands, costs, counsel fees, expenses and liabilities whatsoever by any person, firm or firms, corporation or corporations and whether in respect of damage to person or property arising out of or occasioned by the maintenance, use or occupancy of the Leased Premises, or the subletting or assignment of the same or any part thereof, except where same is caused by the failure of the Landlord to repair pursuant to paragraph 2.02 hereof or by the willful acts or negligence of the Landlord, and except to the extent covered by insurance which the Landlord is required to maintain under this Lease.

 

1.14 Prospective Purchasers —The Tenant shall permit the Landlord to show the Leased Premises to prospective purchasers at reasonable times, upon 24 hours prior notice.

 

1.15 Interest on Overdue Amounts —On all rents, payments and charges which the Tenant herein covenants to pay or which the Landlord shall pay on behalf of the Tenant, the Landlord shall be entitled to receive interest at the rate of prime plus three (3) percentage points per annum from the date all such amounts are due. Such interest charges shall be payable by the Tenant to the Landlord within ten (10) days of receipt of demand from the Landlord and shall be treated as Additional Rent due by the Tenant hereunder; provided however that the payment of interest by the Tenant shall not operate or be deemed to operate to waive or excuse breach of any covenant by the Tenant.

 

2.00 LANDLORD’S COVENANTS

The Landlord hereby covenants with the Tenant as follows:

 

2.01 Quiet Enjoyment —The Tenant, by paying the rent hereby reserved and observing and performing the several covenants and stipulations herein on its part contained, shall peacefully hold and enjoy the Leased Premises during the Term without any interruption by the Landlord or by any person rightfully claiming under or in trust for it. The Tenant shall have uninhibited ingress and egress to the docking facilities of the Leased Premises subject only to any necessary repairs to the roadway and asphalt services as completed from time to time by the Landlord, which repairs, if necessary, shall be completed by the Landlord as expeditiously as possible, and after reasonable prior written notice to the Tenant.

 

2.02 Trade Fixtures of Tenant —All trade fixtures installed by the Tenant and or its directly related predecessor companies on the Leased Premises shall remain the property of the Tenant at its sole risk during the Term hereof. At the termination of the Term by the effluxion of time, the Tenant shall remove the same; provided however that where such removal is undertaken, the Tenant shall make good any damage occasioned by such removal, thereby returning the Leased Premises to their original state as at the time of the commencement of the original term (January 1993), reasonable wear and tear excepted.

 

2.03 Parking —The Tenant shall be entitled to the use of 24 energized parking stalls at no additional cost located in or near the front of the Leased Premises and such additional parking spaces along side the Leased Premises as the Landlord in its sole discretion shall determine. If such additional parking spaces shall be provided, the use thereof shall be such as will not interfere with loading at the rear of the premises.

 

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2.04 Landlord’s Obligations —The Landlord in the same manner and to the same extent as prudent and reputable owner and operator of a similar property shall:

 

  (a) keep or cause the Property to be kept in good repair and in a clean, orderly and safe condition;

 

  (b) keep or cause to be kept in good repair the base building equipment installed by the Landlord to heat, ventilate and air-condition the Property and for the distribution of utilities (any additional equipment installed by or on behalf of the Tenant, for the Tenant’s sole benefit is the responsibility of the Tenant to maintain); and

 

  (c) effect as expeditiously as possible all repairs which it is required to make.

 

2.05 Access —The Tenant shall be permitted to access the Leased Premises 24 hours per day, 7 days per week throughout the Term, as same may be renewed or extended, and the Landlord shall provide, upon request by the Tenant and at the Tenant’s sole cost, after hours lighting, heating, ventilation and air conditioning.

 

3.00 INSURANCE

 

3.01 Tenant’s Insurance

(a) The Tenant shall take out and maintain the following insurance at the Tenant’s sole expense, in such form and with such companies as the Landlord may reasonably approve:

(i) comprehensive general liability insurance against claims for bodily injury, including death, property damage or loss arising out of the use and/or occupation of the Leased Premises, or the Tenant’s business on or about the Leased Premises; such insurance shall identify the Landlord as an additional insured so as to indemnify and protect both the Tenant and the Landlord and shall contain a “cross liability” or “severability of interests” clause so that the Landlord and the Tenant may be insured in the same manner and to the same extent as if individual policies had been issued to each, and shall be for an amount of not less than Two Million ($2,000,000.00) Dollars in respect of any one accident and not less than Two Hundred Thousand ($200,000.00) Dollars in respect of property damage for any one accident;

(ii) all risks insurance upon its merchandise, stock-in-trade, furnitures, fixtures and improvements and upon all other property in the Leased Premises owned by the Tenant or for which the Tenant is legally liable, and insurance upon all glass and plate glass in the Leased Premises against breakage and damage from any cause, all in an amount equal to the full replacement value thereof, which amount in the event of a dispute shall be determined by the decision of the Landlord, acting reasonably;

 

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(iii) boiler and machinery insurance on such boilers and pressure vessels as may be installed by, or under the exclusive control of, the Tenant in the Leased Premises; and

(b) The policies of insurance referred to above shall contain the following:

(i) provisions such that the Landlord is protected notwithstanding any act, neglect, or misrepresentation of the Tenant which might otherwise result in the avoidance of a claim under such policies and such that such policies shall not be affected or invalidated by any act, omission or negligence of any third party which is not within the knowledge or control of the insured(s);

(ii) provisions that such policies and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by the Landlord and that any coverage carried by the Landlord shall be excess coverage;

(iii) all property and boiler insurance referred to above shall provide for waiver of the insurer’s rights of subrogation as against the Landlord;

(iv) policies of insurance shall not be cancelled without the insurer providing the Landlord thirty (30) days written notice stating when such cancellation shall be effective.

 

3.02 Landlord’s Insurance —the Landlord shall take out or cause to be taken out and keep or cause to be kept in full force and effect:

(a) standard fire, extended coverage, riot, vandalism, and malicious mischief insurance, on the buildings and improvements located on the Property, on a replacement cost basis, in an amount such as would be carried by a prudent owner, subject to such deductions and exceptions as the Landlord may determine; such insurance shall be in a form or forms normally in use from time to time for buildings and improvements of a similar nature similarly situated, including, should the Landlord so elect, insurance to cover any loss of rental income which may be sustained by the Landlord;

(b) boiler and machinery insurance on such boilers and pressure vessels as may be installed by, or under the exclusive control of, the Landlord on the Property (other than such boilers and pressure vessels to be insured by the Tenant hereunder);

The Landlord’s and Tenant’s insurance policies shall contain a waiver by the insurer of any rights of subrogation or indemnity or any other claim over which such insurer might otherwise be entitled against the Landlord/Tenant and for those for whom in law they are responsible. Provided that nothing herein shall prevent the Landlord from providing or maintaining such broader coverage as the Landlord may determine. The Tenant shall pay

 

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to the Landlord as Additional Rent the Tenant’s Proportionate Share of insurance premiums paid by the Landlord. The Landlord’s Proportionate Share shall be calculated on the basis set out under Section 1.02 of this Lease provided that if the Leased Premises are insured separately from any other premises located on the Property the Tenant shall pay to the Landlord as Additional Rent the full insurance premiums paid by the Landlord in respect of the Leased Premises.

 

3.03 Increase in Insurance Rate —the Tenant will not do or permit to be done upon the Leased Premises anything which shall result in a nuisance or which shall cause the rate of insurance upon the Leased Premises to be increased, and if the insurance rate shall be increased as aforesaid, the Tenant shall pay to the Landlord the amount by which the insurance premium shall be so increased. If notice of cancellation shall be given respecting any insurance policy or if any insurance policy upon the Leased Premises or any part thereof shall be cancelled or refused to be renewed by the insurer by reason of the Tenant’s use other than the permitted use provided for herein or occupation of the Leased Premises or any part thereof, the Tenant shall remedy or rectify such use or occupation upon being requested to do so in writing by the Landlord, and if the Tenant shall fail to do so within fifteen (15) days of receipt of such writing, the Landlord, at its option, may terminate this lease forthwith by leaving upon the Leased Premises notice in writing of its intention to do so, and thereupon rent and any other payments for which the Tenant is liable under the Lease shall be apportioned and paid in full to the date of such termination of the Lease and the Tenant shall immediately deliver up possession of the Leased Premises to the Landlord.

 

4.00 PROVISOES

Provided always, and it is hereby agreed between the parties as follows:

 

4.01 Destruction or Damage of Leased Premises —If and whenever during the Term of this Lease the Leased Premises shall be destroyed or damaged by fire, lightning or tempest or any other perils, then and in every such event:

(a) if the damage or destruction is such that the Leased Premises are rendered wholly unfit for occupancy, or it is impossible or unsafe to use and occupy them, and if in either event the damage cannot be repaired with reasonable diligence within 120 days from the happening of such damage, then either party may within thirty (30) days of the happening of such damage or destruction terminate this Lease by giving to the other notice in writing of such termination in which event this Lease shall cease and be at an end as of the date of such damage and the rent and all other payments for which the Tenant is liable under the terms of this Lease shall be apportioned and paid in full to the date of such damage. If neither the Landlord nor the Tenant so terminates this Lease, then the Landlord shall repair the building with all reasonable speed and the rent hereby reserved shall abate from the date of the happening of the damage until the damage shall be made good and the Tenant can again use and occupy the Leased Premises;

 

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(b) if the damage be such as the Leased Premises are wholly unfit for occupancy, or if it is impossible or unsafe to use or occupy them, but in either event the damage can be repaired with reasonable diligence within 90 days from the happening of such damage, then the rent hereby reserved shall abate from the date of the happening of such damage until the damage shall be made good and the Tenant can again use and occupy the Leased Premises and the Landlord shall repair the damage with all reasonable speed;

(c) if the damage can be made good as aforesaid within 90 days of the happening of such damage and the damage is such that the Leased Premises are capable of being partially used for the purposes for which they are hereby demised, then until such damage has been repaired the rent shall be reduced by the fraction that the part of the Leased Premises which is rendered unfit for occupancy is of the whole of the Leased Premises and the Landlord shall repair the damage with all reasonable speed.

(d) In the event that the Landlord and Tenant shall be unable to agree as to the state of fitness of the Leased Premises and its condition, the question in dispute shall be referred to arbitration in accordance with Section 4.23 hereof but the certificate of an Architect selected by the Landlord, duly qualified to practice as such in the Province of Manitoba, shall bind the parties as to the length of time reasonably required to make any necessary repairs.

 

4.02 Expropriation —If the whole or any part of the Lease Premises shall be taken by any public authority under the power of eminent domain, the Term hereby granted shall cease from the day possession shall be taken for such public purposes insofar as the premises so taken comprise part of the Leased Premises; and the Tenant shall be liable only for rent in respect of the Leased Premises or part thereof so taken to the day of the taking, and if less than the whole be so taken, the Landlord or Tenant may at its option cancel and terminate this agreement with respect to the remainder of the Leased Premises, but notice of such cancellation must be given to the other within thirty (30) days after notice of such taking has been received by the Landlord; but if the Landlord or Tenant shall not elect to cancel the said Lease, the Tenant shall remain in possession of the remainder of the Leased Premises and the rent thereof shall be reduced in proportion that the space remaining possessed of the Landlord bears to the total ground floor space of the Leased Premises at the date of the commencement of this Lease. All compensation or damages awarded in respect of such taking of the Leased Premises and any diminution in value of the remainder thereof shall be the property of the Landlord but the Tenant shall be entitled to receive such compensation or damages as it may be able to establish against such public authority in respect to loss of its business, depreciation of and cost of removal of stock and fixtures.

 

4.03

Holding Over —If the Tenant shall remain in possession of the Leased Premises after termination of the Term hereby granted, or any renewal thereof as herein provided, without other special agreement, a tenancy from year to year shall not be created by implication of law, but the Tenant shall be deemed to be a monthly tenant only at a rent payable monthly in advance at a rate of One Hundred and Fifty (150%) percent of the

 

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annual rent payable immediately prior to such termination, and otherwise upon and to the same terms and conditions as are herein contained, except provisions for renewal, and nothing, including acceptance of any rent by the Landlord, operates to extend any tenancy except a specific agreement in writing between the Landlord and Tenant.

 

4.04 Re-entry —If the Tenant shall default in making payment of the rents hereby reserved or any part thereof, when due and fails to pay same within five (5) days after notice to do so is provided by the Landlord or if the Tenant shall default in performance of observance of any of its other covenants herein contained, the Landlord, after ten (10) days written notice to the Tenant of such default and any default not being cured within the said period or such longer period as may reasonably be required in the circumstances (such period to be agreed upon in writing by the Landlord within the 10 days), may at its option at any time thereafter re-enter upon the Leased Premises or any part thereof in the name of the whole, and thereupon this Lease shall absolutely determine but without prejudice to the right of action of the Landlord in respect of any breach of the Tenant’s covenants herein contained.

 

4.05 Waiver —No condoning, excusing or overlooking by the Landlord of any default, breach or non-observance by the Tenant at any time or times in respect of any covenant, proviso or condition herein contained shall operate as a waiver of the Landlord’s rights hereunder in respect of any covenant, proviso or condition hereunder in respect of any continuing or subsequent default, breach or non-observance, or so as to defeat or affect in any way the right of the Landlord herein in respect of any such continuing or subsequent default or breach, and no waiver shall be inferred from or implied by anything done or omitted by the Landlord save only express waiver in writing. All rights and remedies of the Landlord in this Lease contained shall be cumulative and not alternative.

 

4.06 Remedies of Landlord as in the Case of Default of Rent —The Landlord shall have (in addition to any other right or remedy of the Landlord) the same rights and remedies in the event of default by the Tenant in payment of any amount payable by the Tenant hereunder, as the Landlord would have in the case of default in payment of rent.

 

4.07 Notice —Any notice required or contemplated by this Lease shall be sufficiently given if mailed by prepaid registered mail addressed to the proper party as follows:

 

  The Landlord at:   

305 Milner Ave., Suite 309

Toronto, Ontario

M1B 3V4

  The Tenant at:   

147 Hamelin Street

Winnipeg, Manitoba

R3T 3Z1

The date of the giving of any such notice shall be deemed conclusively to be two (2) days following the date upon which it was mailed. The above address may be changed by either party at any time hereafter by giving fifteen (15) days written notice to the other Party.

 

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4.08 Unavoidable Delays —In the event that either the Landlord or the Tenant shall be delayed, hindered or prevented from the performance of any act or covenant required hereunder, by reasons of any Unavoidable Delay (as herein defined) not the fault of the party delayed, then performance or such act or covenant shall be excused for the period during which such performance is rendered impossible, and the time for the performance thereof shall be extended accordingly, but this shall not operate to excuse the Tenant from the prompt payment of rent or any other payments required under this Lease. “Unavoidable Delay” means a delay caused by fire, strike or other casualty or contingency beyond the reasonable control of a party who is, by reason thereof, delayed in the performance of such party’s covenants and obligations under this Lease in circumstances where it is not within the reasonable control of such party to avoid such delay (but does not include any insolvency, lack of funds or other financial cause of delay).

 

4.09 Execution by Creditor of Tenant/Bankruptcy of Tenant —The Tenant covenants and agrees that if at any time during the Term, any of the goods and chattels of the Tenant on the Leased Premises are seized or taken in execution or attachment by any creditor of the Tenant, or if the Tenant shall make any assignment for the benefit or creditors or any bulk sale or becomes bankrupt or insolvent, it shall take the benefit of any Act now or hereafter in force for bankrupt or insolvent debtors, or if any order shall be made for the winding up of the Tenant, or if the Leased Premises shall be used for any other purpose than as permitted under the terms of this Lease, or if the Tenant shall without the written consent of the Landlord abandon the Leased Premises, then and in every such case the then current month’s Minimum Rent and Additional Rent and the next ensuring three (3) months Minimum Rent and Additional Rent shall immediately become due and be paid and the Landlord may re-enter and take possession of the Leased Premises as though the Tenant or the servants of the Tenant or any other occupant of the Leased Premises were holding over after the expiration of the said term, and the said term shall, at the option of the Landlord forthwith become forfeited and determined, and in every one of the cases above such accelerated rent shall be recoverable by the Landlord in the same manner as the rent hereby reserved and as if the rent were in arrears and the said option shall be deemed to have been exercised if the Landlord or its agents shall give notice to such effect to the Tenant.

 

4.10

Non-Liability of Landlord —Provided the Landlord and those for whom in law the Landlord is liable are not negligent, the Landlord shall not be liable nor responsible in any way for any personal or consequential injury of any nature whatsoever that may be suffered or sustained by the Tenant or any employee, agent or customer of the Tenant or any other person who may be upon the Leased Premises, or for any loss of or damage or injury to any property belonging to the Tenant or its employees or to any person while such property is on the Leased Premises and in particular (but without limiting the generality of the foregoing) the Landlord shall not be liable for any damage or damages of any nature whatsoever to any such property caused by the failure, by reason of breakdown or other cause, to supply adequate drainage, snow or ice removal or by reason of the interruption of any public utility or service or in the event of steam, water, rain or snow which may leak into, issue or flow from any part of the said building, or from the water, steam, gas, sprinkler or drainage pipes of plumbing works of the same or from any

 

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  other place or quarter or for any damage caused by anything done or omitted by any tenant, but the Tenant shall use all reasonable diligence to remedy such condition, failure or interruption of service when not directly or indirectly attributable to the Tenant, after notice of same, when it is within its power and obligation to do so. Nor shall the Tenant be entitled to any abatement of rent in respect of any such condition, failure or interruption of service as aforesaid.

 

4.11 Inspection of Premises —The Tenant shall examine the Leased Premises before taking possession hereunder and such taking of possession shall be conclusive evidence against the Tenant that at the time thereof the Leased Premises were in good order and satisfactory condition except for defects not apparent on inspection; and that the Tenant shall make no claim for nor hold the Landlord liable for or bound by any promise, representation or undertaking with respect to any alteration, remodelling or redecorating of or installation of equipment or fixtures in the Leased Premises, except such, if any, as is expressly set forth in this Lease; and that in case of any such express provision, unless same provides for completion of alteration, remodelling or decorating, or such installation after the Tenant’s taking of possession hereunder, such taking of possession shall constitute conclusive evidence as against the Tenant that said alteration, remodelling, or decorating, or installation of equipment or fixtures has been satisfactorily completed.

 

4.12 Signs —The Tenant may, at its sole cost and expense, manufacture, maintain and install an exterior facia sign on the Leased Premises, subject to the Landlord’s approval as to size, location and suspension of said sign, which said approval shall not be unreasonably or arbitrarily withheld, provided that the said sign complies with all of the regulations and/or by-laws of the City of Winnipeg or any other governing authority in force at the time of this demise, or which may come into force, and the Tenant hereby agrees, firstly: to indemnify and save harmless the Landlord from any and all causes of action which might arise from the erection and maintenance of such sign, and secondly: to pay to the Landlord upon written demand for same any Encroachment License fee that may be assessed against the Landlord by the City of Winnipeg or any other governing authority in force at the same time of this demise, in connection with the erection and maintenance of said sign. The Tenant shall, with respect to any signs painted on the Leased Premises, repaint or remove any such signage upon the termination of the Lease at its own expense. The Landlord will co-operate with the Tenant in obtaining any necessary consents from the said City. The Tenant shall repair any and all damage to the Leased Premises resulting from removal of the signage.

 

4.13 Place for Payments —All payments required to be made by the Tenant herein shall be made to the Landlord at the Landlord’s office at 305 Milner Ave., Suite 309 Toronto, ON, M1B 3V4 or to such agent or agents of the Landlord or at such other place as the Landlord shall hereafter from time to time direct in writing.

 

4.14 “For Sale” Sign —The Landlord may place upon the Leased Premises, a notice of reasonable dimensions and reasonably placed so as to not interfere with the Tenant’s business, stating that the Leased Premises are for sale or, during the last six (6) months of the Term, to let, which notice the Tenant shall not remove or permit to be removed.

 

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4.15 Subordination of Lease —Subject to the provisoes hereinafter contained, upon the request of the Landlord, the Tenant shall subordinate its rights hereunder to the charge of any mortgage or mortgages or the charges resulting from any other method of financing or refinancing, declaration of trust, debenture issue or any such method of financing or refinancing, now or hereafter in force against the land and building, and to all advances made or hereafter to be made upon the security thereof. Notwithstanding the foregoing, the Landlord shall not at any time encumber the title to the Leased Premises and the Tenant shall not be required to subordinate its rights hereunder as aforesaid without the Landlord first obtaining a non-disturbance agreement from the encumbrancer, mortgagee, chargee or trustee, as the case may be, in favour of the Tenant whereby the encumbrancer, mortgagee, chargee or trustee agrees that so long as the Tenant is not in default under the terms of this Lease, the Tenant shall be entitled to remain undisturbed in its possession of the Leased Premises and to enjoy peaceful possession thereof pursuant to the terms of this Lease notwithstanding the exercise of any or all rights of any such encumbrancer, mortgagee, chargee or trustee, as the case may be, under their security documents.

 

4.16 Acknowledgment by Tenant —The Tenant or the Landlord shall promptly, whenever requested by the other from time to time, execute and deliver to the Landlord (and if required by the other, to any mortgagee, including any trustee under Deed of Trust and mortgage designated by the Landlord) a certificate in writing as to the then status of this Lease, including as to whether it is in full force and effect, is modified or unmodified, confirming the rental payable hereunder and the state of the accounts between the Landlord and the Tenant, the existence or nonexistence of default or any other reasonable matters pertaining to this Lease as to which the other shall request a certificate.

 

4.17 Modification of Lease —This Lease may not be modified or amended excepting only by an instrument in writing signed by the parties hereto.

 

4.18 Renewal —Provided that the Tenant has not been and is not currently in default of any of its obligations herein contained for which it has received notice and failed to remedy within the applicable cure period and provided this Lease shall not have terminated for any cause whatsoever, the Tenant shall have the right to renew this Lease for a further period of one (1) year as and from the expiration of the Term, on the same terms and conditions as herein contained subject, however, to the following:

(a) The Tenant shall notify the Landlord in writing at least 180 days prior to the expiration of the Term that it elects to renew the Lease for a further one year period.

(b) The Minimum Rent payable for the Renewal Term shall be determined by mutual agreement by no later than 90 days prior to the expiration of the current Term, but in any event shall not be less than the minimum rental payable during the current Term.

 

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(c) In the event that the parties are unable to agree as to the Minimum Rent payable for the Renewal Term at least 90 days prior to the expiration of the current Term, the Minimum Rent payable shall be determined by arbitration pursuant to clause 4.23 hereof.

 

4.19 “GST” —The Tenant will pay to the Landlord (acting as agent for the taxing authority if applicable) or directly to the taxing authority (if required by the applicable legislation) the full amount of all goods and services taxes, sales taxes, value added taxes, multi-stage taxes, business transfer taxes, and other taxes imposed on the Tenant in respect of the Rent and any other consideration payable by the Tenant under this Lease, or in respect of the rental of premises by the Tenant under this Lease (collectively and individually “GST”). GST is payable by the Tenant whether it is characterized as a good and services tax, sales tax, value-added tax, multi-stage tax, business transfer tax or otherwise. GST so payable by the Tenant will be: (i) calculated and paid in accordance with the applicable legislation; (ii) paid by the Tenant at the same time as the amounts to which the GST apply is payable to the Landlord under the terms of this Lease (or upon demand at such other time or times as the Landlord from time to time determines); and (iii) considered not to be Rent, despite anything else in this Lease, but the Landlord will have all of the same remedies for and rights of recovery with respect to such amounts as it has for non-payment of Rent under this Lease or at law and any other consideration of any nature or kind.

 

4.20 Caveats —Subject to the provisions of clause 4.15 herein, the Tenant agrees with the Landlord not to file a caveat under The Real Property Act (Manitoba) against the land in respect of this lease unless it be in such form as the Landlord shall have approved in writing, which approval shall not be unreasonably withheld.

 

4.21 Partial Invalidity —If a term, covenant or condition of this Lease or the application thereof to any person or circumstances is held to any extent to be invalid or unenforceable, the remainder of this Lease or the application of the said term, covenant or condition to persons or circumstances other than those to which or to whom it is held invalid or unenforceable will not be effected.

 

4.22 Net Lease —The Lease shall be deemed and construed to be a “net lease” and, except as herein otherwise expressly provided, the Landlord shall receive all Minimum Rent and Additional Rent and all other payments hereunder to be made by the Tenant free from any charges, assessments, impositions, expenses or deductions of any and every kind or nature whatsoever except as otherwise herein expressly provided.

 

4.23

Arbitration —If at any time a dispute, difference of question shall arise among the parties hereby concerning any question relating to this Lease, the right or liabilities of any of the parties hereof, or any other dispute involving either the interpretation of this Lease or anything contained herein, then any such dispute, difference or question shall be decided by arbitration, such arbitration to be initiated by one (1) party serving written notice to the other party of his desire to have the matter arbitrated. The matter requiring arbitration shall be referred to a single arbitrator if one can be mutually agreed upon by the parties within seven (7) days of the notice of desire for arbitration being served. In the

 

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  event that the parties cannot agree upon a single arbitrator, then each party shall name one arbitrator within a further period of seven (7) days therefrom and the arbitrators so named shall appoint one more arbitrator. If one of the parties refuses or neglects to appoint an arbitrator within the period herein set out, then the arbitrator appointed by the other party together with the additional arbitrator appointed by the arbitrator so named as above provided, shall sit and hear the arbitration. In the event that the arbitrators named by the parties to the arbitration cannot agree upon the additional arbitrator as above provided within seven (7) days of the date of appointment of the last of them, then after the expiry of such seven (7) day period, any one of the parties may apply to a Judge of the Court of Queen’s Bench of Manitoba or its successor to appoint the additional arbitrator to sit and hear the arbitration. The decision arrived at by a single arbitrator or a majority of the arbitrators, as the case may be, shall be binding upon all the parties and no appeal shall lie therefrom. The provisions of this section shall be deemed to be a submission to arbitration within the provisions of The Arbitration Act (Manitoba) and any statutory modification or re-enactment thereof.

 

4.24 Headings and Captions —The headings herein are inserted for the convenience of reference only and are not to be considered when interpreting this Lease.

 

4.25 Time —Time shall be of the essence hereof.

 

4.26 Lease Contains Entire Agreement —This Lease contains the entire agreement between the parties and it is admitted, so that they shall be forever estopped from asserting to the contrary, that there is no condition precedent or warranty of any nature whatsoever and no collateral condition or covenant whatsoever to the within Lease.

 

4.27 Enurement It is further agreed and declared that this lease shall extend to, be binding upon and enure to the benefit of the parties hereto, and their respective successors and assigns.

 

4.28 Governing Law —This Lease will be interpreted under and is governed by the laws of the Province of Manitoba.

 

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IN WITNESS WHEREOF the parties hereto executed this Agreement as of the day and year first above written.

 

    ALMAD INVESTMENTS LIMITED
  )    
  )    
  )   Per:  

/s/ [Illegible]

  )    
  )    
  )    
  )   Per:  

[Illegible]

    I/We have the authority to bind the corporation.
    VIVENTIA BIOTECH INC.
  )    
  )   Per:  

/s/ Michael A. Byrne

  )     Michael A. Byrne, Chief Financial Officer
  )    
  )    
  )   Per:  

/s/ A. Schimich

    I/We have the authority to bind the corporation.

 

-19-


LEASE AMENDING AGREEMENT

THIS AGREEMENT made as of the 26th day of June, 2003

B E T W E E N:

131 - 149 HAMELIN STREET LEASEHOLDS LIMITED

(the “Landlord”)

OF THE FIRST PART,

A N D:

VIVENTIA BIOTECH INC.

(the “Tenant”)

OF THE SECOND PART,

WHEREAS:

A. By a Lease dated the 31st day of March, 2000 between Almad Investments Limited, the Landlord and Viventia Biotech Inc., the Tenant, the Landlord leased to the Tenant the premises at 131-147 Hamelin Street, Winnipeg, Manitoba, namely 136-147 Hamelin Street comprising of Twenty One Thousand Five Hundred (21,500) square feet of Rentable Area, and more particularly described in the Lease (the “LEASED PREMISES”);

B. And whereas Almad Investments Limited transferred legal title to the property to 131-149 Hamelin Holdings Limited;

C. And whereas 131-149 Hamelin Holdings Limited entered into a building lease with 131-149 Hamelin Street Leaseholds Limited pursuant to which all existing leases were assigned to 131-149 Hamelin Street Leaseholds Limited, as Landlord;

D. And Whereas 131-149 Hamelin Street Leaseholds Limited has agreed to enter into this Lease Amending Agreement on the terms and conditions set forth herein.

E. And Whereas the Tenant has been in overhold from April 1, 2003 through to June 30, 2003 on the same terms and conditions as contained in the Lease dated the 31st day of March, 2000.

NOW THEREFORE in consideration of the mutual covenants contained herein and in the Lease, the parties hereby agree as follows:

 

1. The execution of this Agreement shall constitute an extension of the Lease between the parties hereto and extend the termination date of the Lease to June 30, 2008. The term July 1, 2003 through June 30, 2008 shall be referred to as the renewal Term (the “Renewal Term”). This Renewal Term shall be governed on all the terms and conditions contained in the Lease, except as follows:


(a) Premises shall consist of approximately Twenty Seven Thousand Five Hundred (27,500) square feet of Rentable Area, as shown on the attached floor plan, Schedule “A”. For further clarification the Premises will consist of approximately 21,500 square feet of Rentable Area known as 147 Hamelin Street and approximately 6,000 square feet of Rentable Area known as 133 Hamelin Street.

(b) The annual Minimum Rent for the Renewal Term shall be based as follows:

On the Premises known as 147 Hamelin Street:

Years 1-3:     $ 6.50 per square foot of Rentable Area per annum

Years 4-5:     $ 7.00 per square foot of Rentable Area per annum

On the Premises known as 133 Hamelin Street:

Years 1-2:     $ 4.50 per square foot of Rentable Area per annum

Year 3: $ 5.00 per square foot of Rentable Area per annum

Years 4-5:     $ 5.50 per square foot of Rentable Area per annum

Payable in equal monthly installments plus any additional charges, without deductions, in advance on the first day of each month during the Renewal Term.

(c) There shall be no tenant inducements or special conditions under the Renewal Term, including but not limited to free rent and tenant improvements, unless otherwise stated herein.

(d) The Landlord shall grant the Tenant the months of July 2003 and August 2003 Minimum Rent free on 133 Hamelin Street.

(e) The following is added to Article 1.01 (b) of the Lease. “It is understood and agreed by the Tenant and the Landlord that the Tenant is currently paying gas and water directly to the utilities and that the Landlord is billing the Tenant for the entire Hydro usage for the Building. The Landlord will issue quarterly credits to the Tenant for any Hydro usage consumed by 131 Hamelin Street. The usage for 131 Hamelin Street is determined by the reading of two electrical panels and an electrician’s estimate of a third electrical panel. All three panels provide electrical power to 131 Hamelin Street.”

(f) The following is added to Article 1.02 (b) of the Lease. “It is agreed that the consumption of utilities by the Tenant is in excess of normal usage and therefore the Tenant will pay for utilities based on consumption and not on Proportionate Share.”

(g) The Premises known as 133 Hamelin Street are to be taken in “as is” condition. It is acknowledge that the Tenant in 131 Hamelin Street has use of 100 amps of the 200 amps currently available in 133 Hamelin Street.

 

2. This Agreement shall be attached to the Lease and shall become a part thereof as if originally included therein.


3. The Landlord and the Tenant covenant and agree with each other that, save and except as specifically provided herein, this Lease Amending Agreement shall be on the same terms, conditions, covenants, agreements, obligations and provisos contained in the Lease insofar as the same shall be deemed to be incorporated herein and shall be binding upon the Landlord and the Tenant as though the “Landlord” and “Tenant” referred to in the Lease were the Landlord and the Tenant respectively herein, and that the Landlord and the Tenant will respectively duly observe and perform the same. If there shall be any conflict between the terms of the Lease and the terms hereof, the terms hereof shall apply.

 

4. The parties hereto covenant and agree that they have good right, full power and authority to enter into this Agreement in the manner as aforesaid.

IN WITNESS WHEREOF the parties hereto executed this Agreement as of the day and year first above written.

 

SIGNED, SEALED AND DELIVERED    )          131-149 HAMELIN STREET
   )          LEASEHOLDS LIMITED
in the presence of:    )          Landlord
   )         
   )         
   )         
/s/ B. McCarthy    )       Per:   

/s/ Aubrey Dan

   )          Aubrey Dan, President
   )          I/We have the authority to bind the corporation.
SIGNED, SEALED AND DELIVERED    )          VIVENTIA BIOTECH INC.
   )         
in the presence of:    )          Tenant
   )         
   )         
   )         
   )       Per:   

/s/ Michael A. Byrne

   )          Michael A. Byrne, Chief Financial Officer
   )          I/We have the authority to bind the corporation.


LEASE AMENDING AGREEMENT

THIS AGREEMENT made as of the 26th day of January, 2004

B E T W E E N:

131 - 149 HAMELIN STREET LEASEHOLDS LIMITED

(the “Landlord”)

OF THE FIRST PART,

A N D:

VIVENTIA BIOTECH INC.

(the “Tenant”)

OF THE SECOND PART,

WHEREAS:

A. By a Lease dated the 31st day of March, 2000 between Almad Investments Limited, the Landlord and Viventia Biotech Inc., the Tenant, the Landlord leased to the Tenant the premises at 131-147 Hamelin Street, Winnipeg, Manitoba, namely 136-147 Hamelin Street comprising of Twenty One Thousand Five Hundred (21,500) square feet of Rentable Area, and more particularly described in the Lease (the “LEASED PREMISES”);

B. And whereas Almad Investments Limited transferred legal title to the property to 131-149 Hamelin Holdings Limited;

C. And whereas 131-149 Hamelin Holdings Limited entered into a building lease with 131-149 Hamelin Street Leaseholds Limited pursuant to which all existing leases were assigned to 131-149 Hamelin Street Leaseholds Limited, as Landlord;

D. And Whereas 131-149 Hamelin Street Leaseholds Limited has agreed to enter into this Lease Amending Agreement on the terms and conditions set forth herein.

E. And Whereas the Tenant has been in overhold from April 1, 2003 through to June 30, 2003 on the same terms and conditions as contained in the Lease dated the 31st day of March, 2000.

F. And Whereas by a Lease Amending Agreement dated the 26th of June, 2003 the Landlord leased to the Tenant an additional Six Thousand (6,000) square feet and the Landlord and Tenant agreed to extend the termination date of the Lease to June 30, 2008.


NOW THEREFORE in consideration of the mutual covenants contained herein and in the Lease, the parties hereby agree as follows:

 

1. The execution of this Agreement shall constitute an expansion of leased space. The Landlord agrees to lease to the Tenant and the Tenant agrees to lease from the Landlord an additional Three Thousand Six Hundred (3,600) square feet, commonly known as 131 Hamelin Street, in the City of Winnipeg (the “Expansion Premises”) The Expansion Premises shall be governed on all the terms and conditions contained in the Lease, except as follows:

(a) The Expansion Premises shall consist of approximately Three Thousand Six Hundred (3,600) square feet of Rentable Area.

(b) The annual Minimum Rent for the Expansion Premises shall be based as follows:

February 1, 2004 through June 30, 2005:

$ 4.50 per square foot of Rentable Area per annum

July 1, 2005 through June 30, 2006:

$ 5.00 per square foot of Rentable Area per annum

July 1, 2006 through June 30, 2008:

$ 5.50 per square foot of Rentable Area per annum

Payable in equal monthly installments plus any additional charges, without deductions, in advance on the first day of each month during the Renewal Term.

(c) There shall be no tenant inducements or special conditions for the Expansion Premises, including but not limited to free rent and tenant improvements, unless otherwise stated herein.

(d) The following is deleted from Article 1.01 (b) of the Lease. “The Landlord will issue quarterly credits to the Tenant for any Hydro usage consumed by 131 Hamelin Street. The usage for 131 Hamelin Street is determined by the reading of two electrical panels and an electrician’s estimate of a third electrical panel. All three panels provide electrical power to 131 Hamelin Street.”

(e) The Premises known as 131 Hamelin Street are to be taken in “as is” condition.

 

2. This Agreement shall be attached to the Lease and shall become a part thereof as if originally included therein.

 

3. The Landlord and the Tenant covenant and agree with each other that, save and except as specifically provided herein, this Lease Amending Agreement shall be on the same terms, conditions, covenants, agreements, obligations and provisos contained in the Lease insofar as the same shall be deemed to be incorporated herein and shall be binding upon the Landlord and the Tenant as though the “Landlord” and “Tenant” referred to in the Lease were the Landlord and the Tenant respectively herein, and that the Landlord and the Tenant will respectively duly observe and perform the same. If there shall be any conflict between the terms of the Lease and the terms hereof, the terms hereof shall apply.


4. The parties hereto covenant and agree that they have good right, full power and authority to enter into this Agreement in the manner as aforesaid.

IN WITNESS WHEREOF the parties hereto executed this Agreement as of the day and year first above written.

 

SIGNED, SEALED AND DELIVERED    )          131-149 HAMELIN STREET
   )          LEASEHOLDS LIMITED
in the presence of:    )          Landlord
   )         
   )         
   )         
/s/ B. McCarthy    )       Per:   

/s/ Aubrey Dan

   )          Aubrey Dan, President
   )          I/We have the authority to bind the corporation.
SIGNED, SEALED AND DELIVERED    )          VIVENTIA BIOTECH INC.
   )         
in the presence of:    )          Tenant
   )         
   )         
   )         
March 5, 2004    )       Per:   

/s/ Michael A. Byrne

   )          Michael A. Byrne, Chief Financial Officer
   )          I/We have the authority to bind the corporation.
   )       Per:   

/s/ Nick Glover

   )          Nick Glover, President & CEO
   )          I/We have the authority to bind the corporation


LOGO


LOGO


LOGO


LEASE AMENDING AGREEMENT

This agreement is made as of the 16th day of September, 2015

B E T W E E N:

131-149 HAMELIN STREET LEASEHOLDS

LIMITED

(the “ Landlord ”)

OF THE FIRST PART

- and –

VIVENTIA BIO INC.

(the “ Tenant ”)

OF THE SECOND PART

WHEREAS by a lease dated the 31 st day of March, 2000 (the “ Lease ”) between Almad Investments Limited (“ Almad ”) as landlord and Viventia Biotech Inc.(“ Biotech ”) as tenant, Almad leased to Biotech the premises known as 136-147 Hamelin Street in the City of Winnipeg in the Province of Manitoba, comprising approximately 21,500 square feet of rentable area (the “Leased Premises”);

AND WHEREAS Almad transferred legal title to, inter alia , the Leased Premises to 131-149 Hamelin Holdings Limited, which entered into a building lease with the Landlord, pursuant to which all existing leases for the property known as 131-149 Hamelin Street were assigned to the Landlord;

AND WHEREAS the Landlord entered into a Lease Amending Agreement made as of the 26 th day of June, 2003 with Biotech to, inter alia , expand the Leased Premises by approximately 6,000 square feet of rentable area known as 133 Hamelin Street, and to extend the term of the Lease to June 30, 2008;

AND WHEREAS the Landlord and Biotech entered into a further Lease Amending Agreement made as of the 26 th of January, 2004 to expand the Leased Premises by an additional 3,600 square feet of rentable area known as 131 Hamelin Street;

AND WHEREAS Biotech entered into a letter agreement with the property manager acting on behalf of the Landlord dated June 25, 2008 confirming that the Lease would become a month-to-month tenancy effective July 1, 2008, on the same terms and conditions, including, without limitation, minimum annual rent payable, as specified in the Lease, as amended;

AND WHEREAS Biotech and Viventia Biotechnologies Inc. (“ Biotechnologies ”) entered into an asset purchase agreement made as of the lst day of November, 2008 pursuant to which Biotechnologies acquired all of the assets and undertaking of Biotech and agreed, inter alia , to assume all obligations of Biotech as the tenant pursuant to the Lease;


AND WHEREAS pursuant to an asset purchase agreement made as of the 2nd day of January, 2013 between Biotechnologies and the Tenant, the Tenant acquired all of the assets and undertaking of Biotechnologies and agreed, inter alia , to assume all obligations of Biotechnologies as the tenant pursuant to the Lease;

AND WHEREAS the Landlord and the Tenant have entered into this Lease Amending Agreement in order to extend and confirm all of the terms and conditions of the Lease;

NOW THEREFORE in consideration of the mutual covenants contained herein and in the Lease, the parties hereby agree as follows:

 

1. The execution of this Lease Amending Agreement shall constitute an extension of the term of the Lease to u , 2020 (the “ Termination Date ”). The period of time commencing the date hereof and up to and including the Termination Date shall be referred to as the “ Extended Term ”, which shall be governed by all of the terms and conditions contained in the Lease, as amended.

 

2. The Landlord hereby acknowledges and confirms the Tenant as the rightful tenant of the Leased Premises for the Extended Term, as the successor to Biotechnologies and Biotech, as outlined above.

 

3. By notice in writing to the Landlord given not less than 60 days prior to the expiry of the Extended Term, the Tenant shall be entitled to renew the Lease for one further term of 5 years (the “ Renewal Term ”), provided that the Tenant is not then in default under the Lease. The Renewal Term shall be governed by all of the terms and conditions contained in the Lease, as amended, except that the annual minimum rental for the Renewal Term shall be determined by mutual agreement no later than 30 days prior to the expiration of the Extended Term, but in no event shall be less than the annual minimum rental payable during the Extended Term. In the event that the parties are unable to agree as to the annual minimum rent payable for the Renewal Term, the annual minimum rent shall be determined by arbitration pursuant to clause 4.23 of the Lease.

 

4. This Lease Amending Agreement shall be attached to the Lease and shall become a part thereof as if originally included therein.

 

5. The Landlord and the Tenant covenant and agree with each other that, save and except as specifically provided herein, this Lease Amending Agreement shall be on the same terms, conditions, covenants, agreements, obligations and provisos contained in the Lease insofar as the same shall be deemed to be incorporated herein and shall be binding upon the Landlord and the Tenant as though the “Landlord” and “Tenant” referred to in the Lease were the Landlord and Tenant respectively herein and that the Landlord and the Tenant shall respectively duly observe and perform the same. If there shall be any conflict between the terms of the Lease and the terms hereof, the terms hereof shall apply.


6. The parties hereto covenant and agree that they have good right, full power and authority to enter into this agreement in the manner as aforesaid.

IN WITNESS WHEREOF the parties hereto have executed this Lease Amending Agreement as of the date first written above.

 

131-149 HAMELIN STREET LEASEHOLDS LIMITED
Per:  

/s/ Leslie Dan

Name: Leslie Dan
Title:   Director - Owner
I have authority to bind the Corporation
VIVENTIA BIO INC.
Per:  

/s/ Stephen Hurly

Name: Stephen Hurly
Title:   Chief Executive Officer
I have authority to bind the Corporation

Exhibit 10.5

 

LOGO

VIA HAND DELIVERY

September 20, 2016

Abbie C. Celniker, Ph.D.

560 Chestnut Street

Newton, MA 02468

Dear Abbie:

As we have discussed, your employment with Eleven Biotherapeutics (the “Company”) will end effective immediately following the closing (such closing date, the “Separation Date”) of the acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant to a Share Purchase Agreement (the “Agreement”) by and among the Company, Viventia, the shareholders of Viventia named on the signature pages thereto and, for certain limited purposes, Clairmark Investments Ltd., pursuant to which Agreement the Company will acquire all of the outstanding equity interests in Viventia and Viventia will become a wholly-owned subsidiary of the Company (the “Transaction”). If you sign and return this letter agreement to me on or before November 7, 2016 but no earlier than the Separation Date and do not revoke your agreement (as described below), you will be eligible to receive the severance benefits described in paragraph 1 below. By signing and returning this letter agreement and not revoking your acceptance, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 3. Therefore, you are advised to consult with an attorney before signing this letter agreement and you have been given at least forty-five (45) days to do so. If you sign this letter agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it (the “Revocation Period”) by notifying me in writing. If you do not so revoke, this letter agreement will become a binding agreement between you and the Company upon the expiration of the Revocation Period.

Although your receipt of the severance benefits is expressly conditioned on this letter agreement becoming binding between you and the Company, the following will apply regardless of whether you enter into this letter agreement:

 

    You will receive payment for your final wages and any unused vacation time accrued through the Separation Date. As of the Separation Date, all salary payments from the Company will cease and any benefits you had as of the Separation Date under Company-provided benefit plans, programs, or practices will terminate, except as required by federal or state law.

 

    You may, if eligible and available, elect to continue receiving group medical, dental and vision insurance at your own cost pursuant to COBRA. Please consult the COBRA materials to be provided under separate cover for details regarding these benefits.

 

    You must keep confidential and not use or disclose any and all non-public information concerning the Company that you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 11 below (your “non-disclosure obligations”). Further, your continuing obligations set forth in the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment of Inventions Agreement, which you previously executed for the benefit of the Company, remain in full force and effect.


    You must return to the Company all Company property on or before the Separation Date, or immediately upon request by the Company.

Additionally, the following numbered paragraphs set forth the terms and conditions that will apply if you timely sign and return this letter agreement and do not revoke your acceptance within the Revocation Period:

1. Severance Benefits – The Company will provide you with the following severance benefits (the “severance benefits”) in full satisfaction of its obligations under Section 11 of your employment letter dated December 20, 2013 (the “Employment Letter”):

 

  a. Severance Pay . The Company will pay to you an amount equal to twelve (12) months of your current base salary. This severance pay will be paid in a lump sum pursuant to the Company’s regular payroll practices, but in no event later than the next regular payroll date following the expiration of the Revocation Period.

 

  b. COBRA Benefits . Should you timely elect and be eligible to continue receiving group medical, dental and vision insurance pursuant to COBRA, and provided that the Company continues to offer medical, dental and vision plans, the Company will, until the earlier of (x) the date that is one (1) month following the Separation Date, and (y) the date on which you become eligible for coverage after commencing new employment (as applicable, the “COBRA Continuation Period”), continue to pay the same share of the premiums for such coverage as it pays for active and similarly situated employees receiving the same type of coverage (the “COBRA Benefits”). The remaining balance of any premium costs during the COBRA Continuation Period, and all premium costs thereafter, shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You agree that, should you become eligible for medical, dental, and/or vision insurance coverage in connection with new employment prior to the date that is one (1) month following the Separation Date, you will so inform the Company in writing within five (5) business days prior to beginning such new employment. You agree that you shall not be entitled to any further COBRA Benefits pursuant to Section 11.A.(ii) of your Employment Letter, and you hereby waive your right to such benefits, except as described in this paragraph 1(b).

 

  c. Equity Acceleration.   Except as described in paragraph 2 below, all of your outstanding unvested equity grants shall be accelerated, such that all unvested equity grants shall vest and become fully exercisable or non-forfeitable as of the effective date of this letter agreement.

 

  d. Bonus . The Company will pay to you an amount equal to your annual target bonus payment, as described in Section 5 of your Employment Letter, in one lump sum in accordance with the Company’s regular payroll practices, but in no event later than the next regular payroll date following the expiration of the Revocation Period.

 

  e.

Board Service and Stock Options.   As of the Separation Date, you shall continue to serve as a member of the Company’s Board of Directors (the “Board”). The Company and you agree that the Incentive Stock Option Agreements between the Company and you dated March 15, 2013 and October 31, 2013 (the “Amended Stock Options”) are

 

- 2 -


  hereby amended to provide that all references to “employment” in Section 9 thereof shall refer to “service as an employee, officer or director of, or consultant or advisor (as such terms are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended) to, the Company or any other entity the employees, officers, directors, consultants or advisors of which are eligible to receive option grants under the Company’s 2014 Stock Incentive Plan.” All other provisions of the Amended Stock Options and any other stock option agreement or restricted stock unit agreement between the Company and you shall remain in full force and effect, except as specifically modified by this letter agreement (including paragraph 2 below).

Notwithstanding the foregoing or the provisions of any stock option agreement between the Company and you, you acknowledge that: (1) the Amended Stock Options will be treated as nonstatutory stock options beginning as of the date of this letter agreement and (2) any other outstanding stock options that were granted in connection with your employment with the Company and that were intended to be incentive stock options at the time of grant will be treated as nonstatutory stock options beginning three (3) months after the Separation Date.                

2. Modified Section 280G Cutback – You acknowledge that you have been notified by the Company pursuant to Section 13.D of your Employment Letter that the Company has determined that certain payments or benefits due to you constitute Contingent Compensation Payments (as defined in Section 13.C(ii) of your Employment Letter) and that a portion of such Contingent Compensation Payments shall be treated as Eliminated Payments pursuant to Section 13.A of your Employment Letter. You hereby acknowledge that you agree with the Company’s determination. Pursuant to Section 13 of your Employment Letter, the number of shares subject to the Incentive Stock Option Agreement between the Company and you dated February 25, 2016 evidencing the grant to you of an option to purchase 180,000 shares shall be reduced by 69,595 shares, such shares coming from the latest vesting tranches of the time-based vesting portion of such option grant (the “Eliminated Options”). The Eliminated Options are hereby cancelled and you forfeit any rights to such Eliminated Options.

3. Release – In consideration of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that you ever had or now have against any or all of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or relating to your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Rehabilitation Act, Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, and the Employee Retirement Income Security Act, all as amended; all claims arising out of the Massachusetts Fair Employment Practices Act, Mass. Gen. Laws ch. 151B, § 1 et seq. , the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148 et seq. (Massachusetts law regarding payment of wages and overtime), the Massachusetts Civil Rights Act, Mass. Gen. Laws ch. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, Mass. Gen. Laws. ch. 93, § 102 and Mass. Gen. Laws ch. 214, § 1C, the Massachusetts Labor and Industries Act, Mass. Gen.

 

- 3 -


Laws ch. 149, § 1 et seq. , Mass. Gen. Laws ch. 214, § 1B (Massachusetts right of privacy law), the Massachusetts Maternity Leave Act, Mass. Gen. Laws ch. 149, § 105D, and the Massachusetts Small Necessities Leave Act, Mass. Gen. Laws ch. 149, § 52D, all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation, fraud, wrongful discharge, and breach of contract (including, without limitation, any claims arising out of or related to the Employment Letter); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of your employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this letter agreement prevents you from filing a charge with, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment practices agency (except that you acknowledge that you may not recover any monetary benefits in connection with any such claim, charge or proceeding, and you further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such claim, charge or proceeding).

4. Continuing Obligations You acknowledge and reaffirm your non-disclosure obligations discussed in this letter agreement, as well as the obligations set forth in the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment of Inventions Agreement, which survive your separation from employment with the Company. You further agree that following the Separation Date, you will make yourself available by telephone (or otherwise, if mutually agreeable) for consultation from time to time, upon reasonable notice, to provide information the Company may request concerning your former duties and responsibilities and/or knowledge or information you may possess that is related to the Company’s business. You acknowledge and agree that the severance benefits described in paragraph 1 are being provided to you as consideration for your compliance with all terms and conditions set forth in this letter agreement including, but not limited to, the post-employment consultation obligations described in this paragraph, and that you are not entitled to any additional compensation or benefits for such consultations.

5. Non-Disparagement – You understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 12 below, you will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of the other Released Parties, or regarding the Company’s business affairs, business prospects, or financial condition.

6. Return of Company Property Upon the Company’s request, you agree to return any Company keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, flash drives and storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company-owned property in your possession or control that you will not need to serve as a member of the Board. You confirm that you have left intact all electronic Company documents, including but not limited to those that you developed or helped to develop during your employment. You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts, unless needed to serve as a member of the Board.

 

- 4 -


7. Cooperation You agree that, to the extent permitted by law, you shall cooperate fully with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. Your full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. You agree that, to the extent permitted by law, you will notify the Company promptly in the event that you are served with a subpoena (other than a subpoena issued by a government agency), or in the event that you are asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

8. Business Expenses and Final Compensation – You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you. You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company, including payment for all wages (including overtime), bonuses, and accrued, unused vacation time, and that no other compensation is owed to you except as explicitly provided herein.

9. Amendment and Waiver This letter agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto. This letter agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators. No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

10. Validity – Should any provision of this letter agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this letter agreement.

11. Confidentiality – You understand and agree that, to the extent permitted by law and except as otherwise provided by paragraph 12 below, the terms and contents of this letter agreement, and the contents of the negotiations and discussions resulting in this letter agreement, shall be maintained as confidential by you and your agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

12. Scope of Disclosure Restrictions – Nothing in this letter agreement or elsewhere prohibits you from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies or participating in government agency investigations or proceedings. You are not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information you obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding your confidentiality and nondisclosure obligations, you are hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in

 

- 5 -


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

13. Nature of Agreement You understand and agree that this letter agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

14. Eligibility for Severance Program – Attached to this letter agreement as Attachment A is a description of (i) any class, unit or group of individuals covered by the program of severance benefits that the Company has offered to you, and any applicable time limits regarding such severance benefit program; and (ii) the job title and ages of all individuals eligible or selected for such severance benefit program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or who were not selected for such severance benefit program.

15. Acknowledgments and Voluntary Assent You acknowledge that you have been given at least forty-five (45) days to consider this letter agreement, including Attachment A, that the Company is hereby advising you to consult with an attorney of your own choosing prior to signing this letter agreement, and that you have had an opportunity to do so. You understand that you may revoke this letter agreement for a period of seven (7) days after you sign this letter agreement by notifying me in writing, and the letter agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period. You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this letter agreement, and that you fully understand the meaning and intent of this letter agreement. You understand and agree that by entering into this letter agreement, you are waiving any and all rights or claims you might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled. You further state and represent that you have carefully read this letter agreement, including Attachment A, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

16. Applicable Law – This letter agreement and its Attachment A shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts or, if appropriate, a federal court located in the Commonwealth of Massachusetts (which courts, for purposes of this letter agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this letter agreement or the subject matter hereof.

17. Entire Agreement – This letter agreement, including Attachment A, contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, and commitments in connection therewith.

18. Tax Acknowledgement – In connection with the severance benefits provided to you pursuant to this letter agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law. You acknowledge that you are not relying upon the advice or representation of the Company with respect to the tax treatment of any of the severance benefits set forth in paragraph 1 of this letter agreement or with respect to the matters described in paragraph 2 of this letter agreement.

 

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If you have any questions about the matters covered in this letter agreement, please call me at (617)-871-9911.

 

Very truly yours,
By:  

/s/ Daniel Lynch

  Daniel Lynch
  Board Member and Chairman of Eleven Biotherapeutics, Inc.

I hereby agree to the terms and conditions set forth above and in Attachment A. I have been given at least forty-five (45) days to consider this letter agreement and I have chosen to execute this on the date below. I intend that this letter agreement become a binding letter agreement between me and the Company if I do not revoke my acceptance in seven (7) days.

 

/s/ Abbie C. Celniker

Abbie C. Celniker

    

September 20, 2016

Date

To be returned in a timely manner as set forth on the first page of this letter agreement.

 

- 7 -

Exhibit 10.6

 

LOGO

VIA HAND DELIVERY

September 19, 2016

Karen L. Tubridy

41 Oak Cliff Road

Newton, MA 02460

Dear Karen:

As we have discussed, your employment with Eleven Biotherapeutics (the “Company”) will end effective immediately following the closing (such closing date, the “Separation Date”) of the acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant to a Share Purchase Agreement (the “Agreement”) by and among the Company, Viventia, the shareholders of Viventia named on the signature pages thereto and, for certain limited purposes, Clairmark Investments Ltd., pursuant to which Agreement the Company will acquire all of the outstanding equity interests in Viventia and Viventia will become a wholly-owned subsidiary of the Company (the “Transaction”). If you sign and return this letter agreement to me on or before November 7, 2016 but no earlier than the Separation Date and do not revoke your agreement (as described below), you will be eligible to receive the severance benefits described in paragraph 1 below. By signing and returning this letter agreement and not revoking your acceptance, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 2. Therefore, you are advised to consult with an attorney before signing this letter agreement and you have been given at least forty-five (45) days to do so. If you sign this letter agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it (the “Revocation Period”) by notifying me in writing. If you do not so revoke, this letter agreement will become a binding agreement between you and the Company upon the expiration of the Revocation Period.

Although your receipt of the severance benefits is expressly conditioned on this letter agreement becoming binding between you and the Company, the following will apply regardless of whether you enter into this letter agreement:

 

    You will receive payment for your final wages and any unused vacation time accrued through the Separation Date. As of the Separation Date, all salary payments from the Company will cease and any benefits you had as of the Separation Date under Company-provided benefit plans, programs, or practices will terminate, except as required by federal or state law.

 

    You may, if eligible and available, elect to continue receiving group medical, dental and vision insurance at your own cost pursuant to COBRA. Please consult the COBRA materials to be provided under separate cover for details regarding these benefits.

 

    You will have three (3) months following the Separation Date to exercise any stock options under the Company’s Amended and Restated 2009 Stock Incentive Plan or its 2014 Stock Incentive Plan that were vested as of the Separation Date. After that three (3) month period, your stock options will expire and you will no longer have any rights with respect thereto.


    You must keep confidential and not use or disclose any and all non-public information concerning the Company that you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 11 below (your “non-disclosure obligations”). Further, your continuing obligations set forth in the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment of Inventions Agreement, which you previously executed for the benefit of the Company, remain in full force and effect.

 

    You must return to the Company all Company property on or before the Separation Date, or immediately upon request by the Company.

Additionally, the following numbered paragraphs set forth the terms and conditions that will apply if you timely sign and return this letter agreement and do not revoke your acceptance within the Revocation Period:

1. Severance Benefits – The Company will provide you with the following severance benefits (the “severance benefits”) in full satisfaction of its obligations under Section 8 of your Employment Letter dated December 20, 2013 (the “Employment Letter”):

 

  a. Severance Pay . The Company will pay to you an amount equal to twelve (12) months of your current base salary. This severance pay will be paid in a lump sum pursuant to the Company’s regular payroll practices, but in no event later than the next regular payroll date following the expiration of the Revocation Period.

 

  b. COBRA Benefits . Should you timely elect and be eligible to continue receiving group medical, dental and vision insurance pursuant to COBRA, and provided that the Company continues to offer medical, dental and vision plans, the Company will, until the earlier of (x) the date that is twelve (12) months following the Separation Date, and (y) the date on which you become eligible for coverage after commencing new employment (as applicable, the “COBRA Continuation Period”), continue to pay the same share of the premiums for such coverage as it pays for active and similarly situated employees receiving the same type of coverage. The remaining balance of any premium costs during the COBRA Continuation Period, and all premium costs thereafter, shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You agree that, should you become eligible for medical, dental, and/or vision insurance coverage in connection with new employment prior to the date that is twelve (12) months following the Separation Date, you will so inform the Company in writing within five (5) business days prior to beginning such new employment.

 

  c. Equity Acceleration.   All of your outstanding unvested equity grants shall be accelerated, such that all unvested equity grants shall vest and become fully exercisable or non-forfeitable as of the effective date of this letter agreement.

2. Release – In consideration of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages,

 

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executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that you ever had or now have against any or all of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or relating to your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Rehabilitation Act, Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, and the Employee Retirement Income Security Act, all as amended; all claims arising out of the Massachusetts Fair Employment Practices Act, Mass. Gen. Laws ch. 151B, § 1 et seq. , the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148 et seq. (Massachusetts law regarding payment of wages and overtime), the Massachusetts Civil Rights Act, Mass. Gen. Laws ch. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, Mass. Gen. Laws. ch. 93, § 102 and Mass. Gen. Laws ch. 214, § 1C, the Massachusetts Labor and Industries Act, Mass. Gen. Laws ch. 149, § 1 et seq. , Mass. Gen. Laws ch. 214, § 1B (Massachusetts right of privacy law), the Massachusetts Maternity Leave Act, Mass. Gen. Laws ch. 149, § 105D, and the Massachusetts Small Necessities Leave Act, Mass. Gen. Laws ch. 149, § 52D, all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation, fraud, wrongful discharge, and breach of contract (including, without limitation, any claims arising out of or related to the Employment Letter); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of your employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this letter agreement prevents you from filing a charge with, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment practices agency (except that you acknowledge that you may not recover any monetary benefits in connection with any such claim, charge or proceeding, and you further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such claim, charge or proceeding).

3. Continuing Obligations You acknowledge and reaffirm your non-disclosure obligations discussed in this letter agreement, as well as the obligations set forth in the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment of Inventions Agreement, which survive your separation from employment with the Company. You further agree that following the Separation Date, you will make yourself available by telephone (or otherwise, if mutually agreeable) for consultation from time to time, upon reasonable notice, to provide information the Company may request concerning your former duties and responsibilities and/or knowledge or information you may possess that is related to the Company’s business. You acknowledge and agree that the severance benefits described in paragraph 1 are being provided to you as consideration for your compliance with all terms and conditions set forth in this letter agreement including, but not limited to, the post-employment consultation obligations described in this paragraph, and that you are not entitled to any additional compensation or benefits for such consultations.

4. Non-Disparagement – You understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 11 below, you will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of the other Released Parties, or regarding the Company’s business affairs, business prospects, or financial condition.

 

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5. Return of Company Property You confirm that you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, flash drives and storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company-owned property in your possession or control and have left intact all electronic Company documents, including but not limited to those that you developed or helped to develop during your employment. You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts.

6. Cooperation You agree that, to the extent permitted by law, you shall cooperate fully with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. Your full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. You agree that, to the extent permitted by law, you will notify the Company promptly in the event that you are served with a subpoena (other than a subpoena issued by a government agency), or in the event that you are asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

7. Business Expenses and Final Compensation – You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you. You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company, including payment for all wages (including overtime), bonuses, and accrued, unused vacation time, and that no other compensation is owed to you except as explicitly provided herein.

8. Amendment and Waiver This letter agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto. This letter agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators. No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

9. Validity – Should any provision of this letter agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this letter agreement.

10. Confidentiality – You understand and agree that, to the extent permitted by law and except as otherwise provided by paragraph 11 below, the terms and contents of this letter agreement, and the contents of the negotiations and discussions resulting in this letter agreement, shall be maintained as confidential by you and your agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

 

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11. Scope of Disclosure Restrictions – Nothing in this letter agreement or elsewhere prohibits you from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies or participating in government agency investigations or proceedings. You are not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information you obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding your confidentiality and nondisclosure obligations, you are hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

12. Nature of Agreement You understand and agree that this letter agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

13. Eligibility for Severance Program – Attached to this letter agreement as Attachment A is a description of (i) any class, unit or group of individuals covered by the program of severance benefits that the Company has offered to you, and any applicable time limits regarding such severance benefit program; and (ii) the job title and ages of all individuals eligible or selected for such severance benefit program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or who were not selected for such severance benefit program.

14. Acknowledgments and Voluntary Assent You acknowledge that you have been given at least forty-five (45) days to consider this letter agreement, including Attachment A, that the Company is hereby advising you to consult with an attorney of your own choosing prior to signing this letter agreement, and that you have had an opportunity to do so. You understand that you may revoke this letter agreement for a period of seven (7) days after you sign this letter agreement by notifying me in writing, and the letter agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period. You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this letter agreement, and that you fully understand the meaning and intent of this letter agreement. You understand and agree that by entering into this letter agreement, you are waiving any and all rights or claims you might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled. You further state and represent that you have carefully read this letter agreement, including Attachment A, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

15. Applicable Law – This letter agreement and its Attachment A shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts or, if appropriate, a federal court located in the Commonwealth of Massachusetts (which courts, for purposes of this letter agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this letter agreement or the subject matter hereof.

 

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16. Entire Agreement – This letter agreement, including Attachment A, contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, and commitments in connection therewith.

17. Tax Acknowledgement – In connection with the severance benefits provided to you pursuant to this letter agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law. You acknowledge that you are not relying upon the advice or representation of the Company with respect to the tax treatment of any of the severance benefits set forth in paragraph 1 of this letter agreement.

If you have any questions about the matters covered in this letter agreement, please call me at (617) 871-9911.

 

Very truly yours,
By:  

/s/ John McCabe

  John McCabe
  Chief Financial Officer

I hereby agree to the terms and conditions set forth above and in Attachment A. I have been given at least forty-five (45) days to consider this letter agreement and I have chosen to execute this on the date below. I intend that this letter agreement become a binding letter agreement between me and the Company if I do not revoke my acceptance in seven (7) days.

 

/s/ Karen L. Tubridy

Karen L. Tubridy

    

September 20, 2016

Date

To be returned in a timely manner as set forth on the first page of this letter agreement.

 

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Exhibit 10.7

 

LOGO

September 19, 2016

John McCabe

17 Brookside Farm Lane

Sudbury, MA 01776

 

  Re: Severance and Retention Incentives

Dear John:

Eleven Biotherapeutics (the “Company”) recognizes and appreciates the contributions you have made to the Company during your employment and wants you to remain committed and focused following the closing (the “Closing”) of the proposed acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant to a Share Purchase Agreement (the “Agreement”) by and among the Company, Viventia, the shareholders of Viventia named on the signature pages thereto and, for certain limited purposes, Clairmark Investments Ltd., pursuant to which Agreement the Company will acquire all of the outstanding equity interests in Viventia and Viventia will become a wholly-owned subsidiary of the Company. Although the Company had earlier contemplated terminating your employment upon or shortly following the Closing, we have decided that we would like you to stay on and continue guiding the Company forward in your role as Chief Financial Officer.

We recognize that you would have been eligible to receive certain benefits under the employment letter agreement between you and the Company dated August 28, 2015 (the “Employment Agreement”) had your employment been terminated as earlier contemplated, and that we are asking you to remain employed by us during a time of change and challenge. We also recognize that your preference may have been to pursue other opportunities, had you had more of an opportunity to fully evaluate the opportunity that remaining presents to you and therefore want to offer that, if you voluntarily terminate your employment for any reason during the six (6) month period following the Closing, you will be eligible to receive the same severance benefits that you would have been eligible to receive pursuant to the Employment Agreement had your employment been involuntarily terminated without Cause (as defined in the Employment Agreement) upon the Closing (including, without limitation, vesting of 100% of your then outstanding unvested equity awards that were granted prior to the Closing). Such severance benefits will be payable in the same manner and subject to the same conditions as set forth in the Employment Agreement (including, without limitation, your timely entering into a separation and release of claims agreement that will be provided to you by the Company should you voluntarily resign during the six (6) month period following the Closing). For the avoidance of doubt, you acknowledge that portion of the severance benefits under your Employment Agreement comprised of (i) the 12 months of base salary and (ii) the delivery of the shares subject to the outstanding restricted stock units granted to you prior to Closing will be subject to the six-month delay required by Section 409A of the Internal Revenue Code.

 

 

   1
215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911
   FAX: 617-858-0911


LOGO

 

Further, in order to reward you for your contributions prior to and in connection with the Viventia transaction and to provide an extra incentive for you to remain enthusiastically employed by the Company during this period of transition, you will be eligible to receive the following retention incentives:

 

  1. A special transaction bonus in the amount of $75,000, less applicable taxes and withholdings, payable in a lump sum on the next regular payroll date following the Closing.

 

  2. A special retention bonus in the amount of $75,000, less applicable taxes and withholdings, if (a) during the six (6) month period following the Closing (the “Bonus Eligible Period”) the Company involuntarily terminates your employment without Cause or you voluntarily resign from employment for Good Reason (with each of Cause and Good Reason as defined in the Employment Agreement), or (b) you remain actively employed with the Company for the duration of the Bonus Eligible Period. If your employment is terminated involuntarily without Cause or you terminate your employment for Good Reason, in either case during the Bonus Eligible Period, your eligibility to receive such bonus will be subject to your timely entering into a separation and release of claims agreement that will be provided to you by the Company upon termination. If you are actively employed on the last day of the Bonus Eligible Period, you will not be required to execute a release in order to receive the special retention bonus. The special retention bonus will be paid to you, if payable, on the next payroll date following the end of the Bonus Eligible Period, or, if earlier, when the release becomes effective following your termination without Cause or resignation for Good Reason.

 

  3. Subject to the approval of the Board of Directors of the Company, and effective on the next business day following the date of the Closing, you will be granted an option to purchase 100,000 shares of the Company’s common stock at a price per share equal to the fair market value of common stock on the date of grant of the option (the “Post-Closing Option”). Subject to your continued service to the company on the vesting dates, the stock option will vest over four (4) years with 25% of the option vesting on the first anniversary of the date of the award and 6.25% of the option vesting at the end of each successive three-month period thereafter. This option grant shall be subject to all terms, vesting schedules, limitations, restrictions and termination provisions set forth in the Company’s 2014 Stock Incentive Plan and in a separate option agreement that shall be executed by you and the Company to evidence the grant of the options (collectively, the “Equity Documents”). For the avoidance of doubt, the vesting of the Post-Closing Option will not accelerate at Closing nor on your termination for any reason following the Closing, except that if there is a Change in Control Transaction following the closing of the August 16, 2016 exclusive licensing deal with F. Hoffmann-La Roche Ltd. and Hoffmann-La Roche Inc., then the Post-Closing Option will be subject to the general severance provisions of the Employment Agreement.

 

 

   2
215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911
   FAX: 617-858-0911


LOGO

 

John, we very much appreciate your service to the Company during this time of transition and are grateful for the assistance you have provided.

Please note that nothing in this letter alters your status as an employee at will, and that the Employment Agreement remains in full force and effect.

Please sign where indicated below to acknowledge your receipt of this letter and your understanding of, and agreement, with the terms hereof.

 

Sincerely,
By:  

/s/ Daniel Lynch

Daniel Lynch
Board Member and Chairman of Eleven Biotherapeutics, Inc.

Received, read, acknowledged and agreed:

 

/s/ John McCabe

   

September 20, 2016

John McCabe     Date

 

 

   3
215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911
   FAX: 617-858-0911

EXHIBIT 10.8

 

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September 20, 2016

Personal & Confidential

Stephen Hurly

411 Washington Ave.

Haddonfield, NJ 08033

Dear Stephen:

It is my pleasure to offer you the position of President and Chief Executive Officer for Eleven Biotherapeutics, Inc. (“the Company” or “Eleven Bio”) reporting to the Board of Directors (the “Board”). This letter summarizes important details about your employment, should you accept this offer. This letter agreement shall be effective only upon the date of the closing (such closing date, the “Effective Date”) of the acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant to a Share Purchase Agreement (the “ Agreement ”), by and among the Company, Viventia, the shareholders of Viventia named on the signature pages thereto and, for certain limited purposes, Clairmark Investments Ltd, pursuant to which Agreement, the Company will acquire all of the outstanding equity interests in Viventia and Viventia will become a wholly-owned subsidiary of the Company (the “Transaction”). If the Transaction does not occur by September 23, 2016, this letter agreement shall be null and void.

1. Title, Position and Duties : You will hold the position of President and Chief Executive Officer with the Company, and you will report to the Board. You will have such duties and responsibilities as are usually performed by the President and Chief Executive Officer of a Delaware corporation, including such duties as are reasonably and appropriately delegated to you from time to time by the Board, consistent with your position as President and Chief Executive Officer, and you will have the authority and resources consistent with such positions, subject to adjustments in resources consistent with normal operating decisions of a board of directors in the event of changes in strategy or programs or any other changes to resources that are reasonable in light of the Company’s then current financial condition. The Company will not assign any position, title, duties, or responsibilities to you that are inconsistent with the position of President and Chief Executive Officer.

2. Full-Time and Best Efforts : As Eleven Bio’s President and Chief Executive Officer, which is a full-time position, we expect that you will devote substantially all of your working time to the performance of your Company duties in a satisfactory manner and to the best of your abilities at all times. You may continue to serve on the board of PHusis Therapeutics, as long as such activity does not pose an actual or apparent conflict of interest and does not interfere with the performance of your duties to the Company. You shall not engage in any other business or occupation during your employment here, including, without limitation, any activity that conflicts with the interests of the Company, interferes with the proper and efficient performance of your duties for the Company, or interferes with your exercise of judgment in the Company’s

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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best interests. Approval of the Board will be required for you to serve on other outside boards while you are employed by the Company, including any outside for-profit boards , which approval shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, you will be permitted to serve as an officer, director or trustee of any charitable, educational or non-profit organization, without the Company’s prior consent, provided that such services do not interfere with the performance of your duties to the Company or represent an actual or apparent conflict of interest with your role at the Company.

3. Board : During the term of your service as Chief Executive Officer of the Company, you shall be nominated for election to the Board. Your service as a member of the Board, which is subject to Board election and removal provisions under the Company’s charter and Delaware law, will terminate automatically upon the termination of your employment with the Company for any reason. You agree to tender your written resignation from the Board, effective as of the date of termination of your employment, within 10 days following the date of such termination of employment.

4. Compensation : You shall receive an annualized salary of $425,000, paid in accordance with the Company’s standard payroll practices, and subject to all applicable tax reporting and withholding. Your salary will be reviewed not less frequently than annually and shall be subject to increase (but not decrease) from time to time, as determined by the Board.

5. Annual Bonus : You will be eligible for an annual target bonus of up to 50% of your base salary, based upon achievement of both corporate and individual goals, as agreed to between you and the Board. The determination of whether a bonus will be granted, and the amount of any such bonus, will be determined by the Company in its reasonable good faith discretion. All annual bonuses, if any, will be payable no later than March 15 of the year following the year in which they were earned. Please note that you must be employed on the date bonuses, if any, are paid, in order to be eligible for such a payment, as such bonuses also serve as retention incentives.

6. Stock Option : Subject to and upon approval by the Board, you will be granted a nonstatutory stock option to purchase 350,000 shares of Common Stock, $0.001 par value per share, of the Company (the “Common Stock”), which option is granted pursuant to the inducement grant exception under Nasdaq Rule 5635(c)(4) and not pursuant to the Company’s 2014 Stock Incentive Plan (the “Plan”) or any other equity incentive plan of the Company, as an inducement that is material to your employment with the Company (the “Inducement Grant”). The Inducement Grant shall have an exercise price equal to the closing price of the Common Stock on the NASDAQ Global Market on the date of such grant and shall vest as to 25% of the shares subject to such option on the first anniversary of the date of grant of the option and as to an additional 6.25% of the shares underlying the option at the end of each successive three-month period thereafter until the fourth anniversary of the date of grant of the option. The Inducement Grant shall be subject to such other terms as are customary for the Company’s options under the Plan and the previously approved form of stock option agreement under the Plan. The Board will consider annually whether to grant additional equity awards to its employees and you will be eligible to be considered for such additional annual equity grants.

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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7. Employee Benefits; Expenses : The Company offers a comprehensive benefit package that includes group health, dental and vision plans as well as life and disability and time-off benefits. Your eligibility to participate in these plans and receive benefits thereunder is subject to the plan documents governing such benefits. Notwithstanding the foregoing, you understand and agree that nothing contained herein will require the Company to establish or maintain any fringe benefits and any such benefits may be modified, amended, terminated or cancelled at any time by the Company in its sole and absolute discretion.

During your employment, the Company shall pay (or promptly reimburse you) for documented, out-of-pocket expenses reasonably incurred by you in performing your job, which are consistent with the Company’s policies in effect from time to time with respect to business expenses, subject to the Company’s requirements with respect to reporting of such expenses.

Please also note that all in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by you during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

8. Vacation Time : As a full time employee of the Company, you are eligible for up to fifteen (15) paid vacation days that are accrued on a monthly basis at a rate of 1.25 days (10 hours) per month of full time employment. The use of vacation is governed by the Company’s vacation pay policy.

9. Term of Employment; Restrictive Covenant Agreement : It is important for you to understand that you are an employee “at will”. This means that you have the right to terminate your employment relationship with Eleven Bio at any time for any or no reason. Similarly, the Company has the right to terminate its employment relationship with you at any time for any or no reason. As a condition of your employment with the Company, you will be required to execute the enclosed Employee Non-Competition, Non-Solicitation, Confidentiality, and Assignment Agreement. Your employment and this letter will be governed by the laws of Massachusetts.

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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10. Severance Benefits : Notwithstanding the foregoing, in the event that Eleven Bio terminates your employment without “Cause” or you resign with “Good Reason” (each term as defined below and in either case a “Qualifying Termination”), you will be eligible for the benefits outlined in sub-paragraphs A or B (the “Severance Benefits”), subject to the terms set forth in this letter:

 

  A. If a Qualifying Termination occurs: (i) Eleven Bio will pay you severance in the form of (1) continuation of your base salary for a total of twelve (12) months, such amount to be paid in accordance with the Company’s then current payroll practices, except as otherwise specified in this letter, beginning on the Company’s first regular payroll date that occurs after the Payment Date (as defined below) and (2) an amount equal to your annual target bonus payment (as described in section 5) for the year in which the termination of employment occurs, prorated for the portion of the year in which you are employed, to be paid on the first regular payroll date that occurs after the Payment Date and (ii) subject to the terms and conditions provided for in COBRA, and subject to your timely election of COBRA and copayment of premium amounts at the active employee’s rate, the Company shall pay its then current share of premium payments for group health and dental insurance after the termination date through (1) your severance period as outlined above, or (2) the date you become employed with benefits substantially comparable to the benefits provided under the corresponding Company plan, or (3) the date you become ineligible for COBRA benefits; provided, however , that such Company-paid premiums may be recorded as additional income pursuant to Section 6041 of the Internal Revenue Code of 1986, as amended (the “Code”) and not entitled to any tax qualified treatment to the extent necessary to comply with or avoid the discriminatory treatment prohibited by the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Code. You shall be responsible for the entire COBRA premium should you elect to maintain this coverage after the earlier of the dates specified in sections 10.A.(ii)(1)-(3) above.

 

  B. If a Qualifying Termination occurs within eighteen (18) months after a Change in Control Transaction (as defined below), then: (i) you will be eligible for the same severance payments and COBRA premium assistance as set forth in sections 10.A.i-A.ii above, subject to the same terms, conditions, and limitations as described therein; (ii) in lieu of the prorated annual target bonus payment for which you are eligible under section 10.A.i above, Eleven Bio will pay to you an amount equal to your annual target bonus payment (as described in section 5) for the year in which termination occurs, to be paid on the Company’s first regular payroll date that occurs after the Payment Date; and (iii) the vesting of 100% of your then outstanding unvested equity grants shall be accelerated, such that all unvested equity grants vest and become fully exercisable or non-forfeitable as of the termination date.

 

 

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For the sake of clarity, it shall not be a “Qualifying Termination” if your employment terminates because of your death or due to your suffering a Disability (as defined below).

 

  C. The Severance Benefits will be subject to the following terms:

i. Solely for purposes of Section 409A of the Code, each salary continuation payment is considered a separate payment.

ii. Any severance or other benefits under this offer letter will begin only upon the date of your “separation from service” (as defined under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h)) which occurs on or after the date of termination of the employment. To the extent that the termination of your employment does not constitute a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by you to the Company, or any of its parents, subsidiaries or affiliates, at the time your employment terminates), any severance benefits payable that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this section shall not cause any forfeiture of benefits on your part, but shall only act as a delay until such time as a “separation from service” occurs.

Further, if you are a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date your separation from service becomes effective, any severance benefits payable hereunder that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (i) the business day following the six-month anniversary of the date your separation from service becomes effective, and (ii) the date of your death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the business day following the six-month anniversary of the date your separation from service becomes effective, and (B) your death, the Company shall pay you in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid you prior to that date as described above. Neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code. The Company makes no representation or warranty and shall have no liability to you or any other person if any provision of this Agreement is determined to constitute deferred compensation subject to Section 409A of the Code, but do not satisfy an exemption from, or the conditions of, Section 409A of the Code.

iii. Eleven Bio’s obligations to make the above payments and provide the above benefits will be contingent upon your execution of and compliance with a release of claims (the “Release”), which Release must be signed and any applicable revocation period with respect thereto must have expired by the sixtieth (60 th ) day following your termination of employment. The severance payments and benefits shall be paid or commence on the first payroll period following the date the waiver and release becomes effective (the “Payment Date”). Notwithstanding the foregoing, if the 60 th day following the date of termination occurs in the calendar year following the termination, then the

 

 

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Payment Date shall be no earlier than January 1 of such subsequent calendar year. In addition, you must comply with all post-employment obligations, including those in the Employee Non-Competition, Non- Solicitation, Confidentiality and Assignment Agreement that you shall sign as a condition of employment.

iv. The Company’s obligations to pay or provide the Severance Benefits will be contingent upon your having tendered your resignation from the Board (and any other boards on which you serve at the request of the Company), effective as of the date of termination.

v. You agree to give prompt written notice of any reemployment during the Severance Period that results in eligibility for comparable medical and dental benefits. If the Company makes any overpayment of COBRA Benefits, you agree to promptly return any such overpayment to the Company. The foregoing shall not create any obligation on your part to seek reemployment after the date of termination of your employment.

11. Definitions : For purposes of this letter agreement, “for Cause” shall mean the Company has complied with the “Cause Process”, as defined below, following your committing one or more of the following (each a “Cause Condition”): (i) an act of material dishonesty involving the Company, embezzlement, or misappropriation of assets or property of the Company; (ii) gross negligence or willful misconduct in connection with the performance of your duties, theft, fraud or breach of fiduciary duty to the Company; (iii) your willful, sustained, or repeated failure to substantially perform the duties or obligations of your position (other than due to illness or injury); (iv) a violation of federal or state securities law; (v) the conviction of a felony or any crime involving moral turpitude, including a plea of nolo contendere; (vi) a material breach of any of the Company’s written policies related to conduct or ethics; or (vii) a material breach of your Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement.

“Cause Process” shall mean that (i) the Company reasonably determines, in good faith, that one of the Cause Conditions has occurred; (ii) the Company notifies you in writing of the first occurrence of the Cause Condition within thirty (30) days of the Board becoming aware of such condition; (iii) the Company cooperates in good faith with your efforts, for a period not less than thirty (30) days following such notice (the “Cause Cure Period”), to remedy the Cause Condition; (iv) notwithstanding such efforts, the Cause Condition continues to exist; and (v) the Company terminates your employment within thirty (30) days after the end of the Cause Cure Period, provided that the Company will not be required to provide a Cause Cure Period in the event that a Cause Condition (x) is of the type described in clauses (iv) or (v) of the first sentence of this Section 11; (y) is incapable of being cured; or (z) is required to be publicly disclosed under applicable securities law.

If you cure to the Company’s satisfaction any Cause Condition during the applicable Cause Cure Period, Cause shall be deemed not to have occurred. If the Company is not required to provide a Cause Cure Period, the Cause Process will be satisfied if the Company notifies you in writing of the first occurrence of the Cause Condition within thirty (30) days of the Board becoming aware of such condition and terminates your employment within thirty (30) days of such notice. You are eligible for no more than two “cure” opportunities during your employment.

 

 

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“Change in Control Transaction” shall mean (i) a merger or consolidation of the Company with or into another corporation under circumstances where the stockholders of the Company immediately prior to such merger or consolidation do not own after such merger or consolidation shares representing at least fifty percent (50%) of the voting power of the Company or the surviving, resulting or parent corporation, as the case may be, (ii) a transfer of shares representing fifty percent (50%) or more of the voting power of the Company to any person who was not, on the Effective Date, a holder of stock of any class or preference or any stock option of the Company, (iii) a liquidation of the Company, or (iv) a sale or other disposition of all or substantially all of the Company’s assets.

“Good Reason” shall mean you have complied with the “Good Reason Process” as defined below, following the occurrence of one or more of the following events: (i) any material diminution in your duties, authority or responsibilities, (ii) any material diminution in your base compensation; (iii) the relocation of your primary place of work more than fifty (50) miles from your primary place of work for the Company on the Effective Date of this Agreement, or (iv) the material breach by the Company of any provision of this letter agreement or any other employment-related agreement between the Company and you (as defined below).

“Good Reason Process” shall mean that (i) you reasonably determine in good faith that one of the foregoing “Good Reason” conditions has occurred; (ii) you notify the Company in writing of the first occurrence of the Good Reason condition within thirty (30) days of the first occurrence of such condition; (iii) you cooperate in good faith with the Company’s efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”) to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) you terminate your employment within thirty (30) days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

“Disability” shall mean your inability (as determined by the Company in good faith) to perform the essential functions of your position due to physical or mental disability (after taking into account the Company’s obligation to provide reasonable accommodations in accordance with the Americans with Disabilities Act of 1990 or analogous state law), which continues for a period of 90 days (whether or not consecutive) during any 12-month period. In connection with any determination regarding your possible Disability, you shall have the right to provide to the Company, and the Company shall consider in good faith, any physical or mental evaluation performed by a competent physician of your selection.

12. Modified Section 280G Cutback : Notwithstanding any other provision of this Agreement, except as set forth in Section 12.B, in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply:

 

  A. The Company shall not be obligated to provide to you any portion of any “Contingent Compensation Payments” (as defined below) that you would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for you. For purposes of this Section 12, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

 

 

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  B. Notwithstanding the provisions of Section 12.A, no such reduction in Contingent Compensation Payments shall be made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) 100% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by you if the Eliminated Payments (determined without regard to this sentence) were paid to you (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of your “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 12.B shall be referred to as a “Section 12.B Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

 

  C. For purposes of this Section 12 the following terms shall have the following respective meanings:

i. “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

ii. “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

 

  D.

Any payments or other benefits otherwise due to you following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”)

 

 

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  shall not be made until the dates provided for in this Section 12.D. Within 30 days after each date on which you first become entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify you (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 12.B Override is applicable. Within 30 days after delivery of such notice to you, you shall deliver a response to the Company (the “Executive Response”) stating either (A) that you agree with the Company’s determination pursuant to the preceding sentence or (B) that you disagrees with such determination, in which case you shall set forth (x) which Potential Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 12.B Override is applicable. In the event that you fail to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final. If you state in the Executive Response that you agree with the Company’s determination, the Company shall make the Potential Payments to you within three (3) business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If you state in the Executive Response that you disagree with the Company’s determination, then, for a period of sixty (60) days following delivery of the Executive Response, you and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Cambridge, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the Executive Response, make to you those Potential Payments as to which there is no dispute between the Company and you regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute.

 

  E.

The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined by the Company by determining the “Contingent Compensation Payment Ratio” (as defined below) for each Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the Contingent Compensation Payment with the highest Contingent Compensation Payment Ratio. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be reduced based on the time of

 

 

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  payment of such Contingent Compensation Payments with amounts having later payment dates being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term “Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the value of the applicable Contingent Compensation Payment that must be taken into account by you for purposes of Section 4999(a) of the Code, and the denominator of which is the actual amount to be received by you in respect of the applicable Contingent Compensation Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the payment is made or the payment vests is accelerated, the denominator shall be determined by reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of accelerated payments set forth in Treasury Regulation Section 1.280G-1Q/A-24(b) or (c)).

 

  F. The provisions of this Section 12 are intended to apply to any and all payments or benefits available to you under this Agreement or any other agreement or plan of the Company under which you receive Contingent Compensation Payments.

13. General : By signing below, you represent that you are not bound by any employment contract, restrictive covenant or other restriction preventing or limiting you from entering into employment with or carrying out your responsibilities for the Company, or which is in any way inconsistent with the terms of this letter. You also agree that you will not disclose to anyone at the Company, bring onto Company premises, or use in the course of your employment at the Company, any confidential information or trade secrets belonging to any former employer (with the exception of Viventia) or to any other entity.

After the Effective Date, this letter (and the plans, documents, and policies referenced herein) shall constitute our entire agreement regarding the terms and conditions of your employment with the Company and shall supersede any prior agreements or other promises or statements (whether oral or written) regarding the terms of your employment, including, without limitation, your Employment Agreement with Viventia Bio USA Inc. dated December 11, 2014. The terms described herein cannot be modified except in writing by you and the Company. Failure of either party to this letter agreement to insist upon strict compliance with any of the terms, covenants or conditions hereof will not be deemed a waiver of such terms, covenants or conditions. In the event of any inconsistency between this letter agreement and any other contract between the Company and you, including the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement, the provisions of this letter agreement will prevail.

We are thrilled to have you join the leadership team at Eleven. Please contact me if you have any questions or need more information.

 

 

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Sincerely,

Daniel Lynch

Board Member and Chairman of Eleven Biotherapeutics, Inc.

I accept the above terms of employment as stated:

 

/s/ Stephen Hurly

   

September 20, 2016

Stephen Hurly     Date

Enclosure:

 

  Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

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EXHIBIT 10.9

 

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September 20, 2016

Personal & Confidential

Arthur P. DeCillis, M.D.

80 Devonshire Lane

Madison, CT 06443

Dear Arthur:

It is my pleasure to offer you the position of Chief Medical Officer for Eleven Biotherapeutics, Inc. (“the Company” or “Eleven Bio”) reporting to Stephen Hurly, President and CEO. This letter agreement summarizes important details about your employment, should you accept this offer. This letter agreement shall be effective only upon the date of the closing (such closing date, the “Effective Date”) of the acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant to a Share Purchase Agreement (the “ Agreement ”), by and among the Company, Viventia, the shareholders of Viventia named on the signature pages thereto and, for certain limited purposes, Clairmark Investments Ltd, pursuant to which Agreement, the Company will acquire all of the outstanding equity interests in Viventia and Viventia will become a wholly-owned subsidiary of the Company (the “Transaction”). If the Transaction does not occur by September 23, 2016, this letter agreement shall be null and void.

1. Full-Time and Best Efforts : As Eleven Bio’s Chief Medical Officer, which is a full-time position, we expect that you will devote substantially all of your working time to the performance of your Company duties in a satisfactory manner and to the best of your abilities at all times. You shall not engage in any other business or occupation during your employment here, including, without limitation, any activity that conflicts with the interests of the Company, interferes with the proper and efficient performance of your duties for the Company, or interferes with your exercise of judgment in the Company’s best interests. Approval of the CEO and/or Board will be required for you to serve on other outside boards while you are employed by the Company, including any outside for-profit boards , which approval shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, you will be permitted to serve as an officer, director or trustee of any charitable, educational or non-profit organization, without the Company’s prior consent, provided that such services do not interfere with the performance of your duties to the Company or represent an actual or apparent conflict of interest with your role at the Company.

2. Compensation : You shall receive an annualized salary of $417,011, paid in accordance with the Company’s standard payroll practices, and subject to all applicable tax reporting and withholding. You will be considered for a merit review in conjunction with your performance review (which generally is conducted annually) and consistent with the Company’s compensation practices, as determined by the Board in its sole discretion.

3. Annual Bonus : You will be eligible for an annual target bonus of up to 30% of your base salary, based upon achievement of both corporate and individual goals, and contingent upon your

 

 

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individual and our Company performance. The determination of whether a bonus will be granted, and the amount of any such bonus, will be determined by the Company in its reasonable good faith and sole discretion. All annual bonuses, if any, will be payable no later than March 15 of the year following the year in which they were earned. Please note that you must be employed on the date bonuses, if any, are paid, in order to be eligible for such a payment, as such bonuses also serve as retention incentives.

4. Stock Option: Subject to and upon approval by the Board, you will be granted a nonstatutory stock option to purchase 100,000 shares of Common Stock, $0.001 par value per share, of the Company (the “Common Stock”), which option is granted pursuant to the inducement grant exception under Nasdaq Rule 5635(c)(4) and not pursuant to the Company’s 2014 Stock Incentive Plan (the “Plan”) or any other equity incentive plan of the Company, as an inducement that is material to your employment with the Company (the “Inducement Grant”). The Inducement Grant shall have an exercise price equal to the closing price of the Common Stock on the NASDAQ Global Market on the date of such grant and shall vest as to 25% of the shares subject to such option on the first anniversary of the date of grant of the option and as to an additional 6.25% of the shares underlying the option at the end of each successive three-month period thereafter until the fourth anniversary of the date of grant of the option. The Inducement Grant shall be subject to such other terms as are customary for the Company’s options under the Plan and the previously approved form of stock option agreement under the Plan. The Board will consider annually whether to grant additional equity awards to its employees and you will be eligible to be considered for such additional annual equity grants.

5. Employee Benefits; Expenses : The Company offers a comprehensive benefit package that includes group health, dental and vision plans as well as life and disability and time-off benefits. Your eligibility to participate in these plans and receive benefits thereunder is subject to the plan documents governing such benefits. Notwithstanding the foregoing, you understand and agree that nothing contained herein will require the Company to establish or maintain any fringe benefits and any such benefits may be modified, amended, terminated or cancelled at any time by the Company in its sole and absolute discretion.

During your employment, the Company shall pay (or promptly reimburse you) for documented, out-of-pocket expenses reasonably incurred by you in performing your job, which are consistent with the Company’s policies in effect from time to time with respect to business expenses, subject to the Company’s requirements with respect to reporting of such expenses.

Please also note that all in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by you during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

 

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6. Vacation Time : As a full time employee of the Company, you are eligible for up to fifteen (15) paid vacation days that are accrued on a monthly basis at a rate of 1.25 days (10 hours) per month of full time employment. The use of vacation is governed by the Company’s vacation pay policy.

7. Term of Employment; Restrictive Covenant Agreement : It is important for you to understand that you are an employee “at will”. This means that you have the right to terminate your employment relationship with Eleven Bio at any time for any or no reason. Similarly, the Company has the right to terminate its employment relationship with you at any time for any or no reason. As a condition of your employment with the Company, you will be required to execute the enclosed Employee Non-Competition, Non-Solicitation, Confidentiality, and Assignment Agreement. Your employment and this letter will be governed by the laws of Massachusetts.

8. Severance Benefits : Notwithstanding the foregoing, in the event that Eleven Bio terminates your employment without “Cause” or you resign with “Good Reason” (each term as defined below and in either case a “Qualifying Termination”), you will be eligible for the benefits outlined in sub-paragraphs A or B (the “Severance Benefits”), subject to the terms set forth in this letter agreement:

 

  A. If a Qualifying Termination occurs: (i) Eleven Bio will pay you severance in the form of continuation of your base salary for a total of twelve (12) months, such amount to be paid in accordance with the Company’s then current payroll practices, except as otherwise specified in this letter, beginning on the Company’s first regular payroll date that occurs after the Payment Date (as defined below) and (ii) subject to the terms and conditions provided for in COBRA, and subject to your timely election of COBRA and copayment of premium amounts at the active employee’s rate, the Company shall pay its then current share of premium payments for group health and dental insurance after the termination date through (1) your severance period as outlined above, or (2) the date you become employed with benefits substantially comparable to the benefits provided under the corresponding Company plan, or (3) the date you become ineligible for COBRA benefits; provided, however , that such Company-paid premiums may be recorded as additional income pursuant to Section 6041 of the Internal Revenue Code of 1986, as amended (the “Code”) and not entitled to any tax qualified treatment to the extent necessary to comply with or avoid the discriminatory treatment prohibited by the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Code. You shall be responsible for the entire COBRA premium should you elect to maintain this coverage after the earlier of the dates specified in sections 8.A.(ii)(1)-(3) above.

 

  B. If a Qualifying Termination occurs within twelve (12) months after a Change in Control Transaction (as defined below), then: (i) you will be eligible for the same severance payments and COBRA premium assistance as set forth in sections 8.A.i-A.ii above, subject to the same terms, conditions, and limitations as described therein; and (ii) the vesting of 100% of your then outstanding unvested equity grants shall be accelerated, such that all unvested equity grants vest and become fully exercisable or non-forfeitable as of the termination date.

 

 

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For the sake of clarity, it shall not be a “Qualifying Termination” if your employment terminates because of your death or due to your suffering a Disability (as defined below).

 

  C. The Severance Benefits will be subject to the following terms:

i. Solely for purposes of Section 409A of the Code, each salary continuation payment is considered a separate payment.

ii. Any severance or other benefits under this offer letter will begin only upon the date of your “separation from service” (as defined under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h)) which occurs on or after the date of termination of the employment. To the extent that the termination of your employment does not constitute a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by you to the Company, or any of its parents, subsidiaries or affiliates, at the time your employment terminates), any severance benefits payable that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this section shall not cause any forfeiture of benefits on your part, but shall only act as a delay until such time as a “separation from service” occurs.

Further, if you are a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date your separation from service becomes effective, any severance benefits payable hereunder that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (i) the business day following the six-month anniversary of the date your separation from service becomes effective, and (ii) the date of your death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the business day following the six-month anniversary of the date your separation from service becomes effective, and (B) your death, the Company shall pay you in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid you prior to that date as described above. Neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code. The Company makes no representation or warranty and shall have no liability to you or any other person if any provision of this Agreement is determined to constitute deferred compensation subject to Section 409A of the Code, but do not satisfy an exemption from, or the conditions of, Section 409A of the Code.

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

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iii. Eleven Bio’s obligations to make the above payments and provide the above benefits will be contingent upon your execution of and compliance with a release of claims (the “Release”), which Release must be signed and any applicable revocation period with respect thereto must have expired by the sixtieth (60 th ) day following your termination of employment. The severance payments and benefits shall be paid or commence on the first payroll period following the date the waiver and release becomes effective (the “Payment Date”). Notwithstanding the foregoing, if the 60 th day following the date of termination occurs in the calendar year following the termination, then the Payment Date shall be no earlier than January 1 of such subsequent calendar year. In addition, you must comply with all post-employment obligations, including those in the Employee Non-Competition, Non- Solicitation, Confidentiality and Assignment Agreement that you shall sign as a condition of employment.

iv. The Company’s obligations to pay or provide the Severance Benefits will be contingent upon your having tendered your resignation from the Board (and any other boards on which you serve at the request of the Company), effective as of the date of termination.

v. You agree to give prompt written notice of any reemployment during the Severance Period that results in eligibility for comparable medical and dental benefits. If the Company makes any overpayment of COBRA Benefits, you agree to promptly return any such overpayment to the Company. The foregoing shall not create any obligation on your part to seek reemployment after the date of termination of your employment.

9. Definitions : For purposes of this letter agreement, “for Cause” shall mean the Company has complied with the “Cause Process”, as defined below, following your committing one or more of the following (each a “Cause Condition”): (i) an act of material dishonesty involving the Company, embezzlement, or misappropriation of assets or property of the Company; (ii) gross negligence or willful misconduct in connection with the performance of your duties, theft, fraud or breach of fiduciary duty to the Company; (iii) your willful, sustained, or repeated failure to substantially perform the duties or obligations of your position (other than due to illness or injury); (iv) a violation of federal or state securities law; (v) the conviction of a felony or any crime involving moral turpitude, including a plea of nolo contendere; (vi) a material breach of any of the Company’s written policies related to conduct or ethics; or (vii) a material breach of your Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement.

“Cause Process” shall mean that (i) the Company reasonably determines, in good faith, that one of the Cause Conditions has occurred; (ii) the Company notifies you in writing of the first occurrence of the Cause Condition within thirty (30) days of the Board becoming aware of such condition; (iii) the Company cooperates in good faith with your efforts, for a period not less than thirty (30) days following such notice (the “Cause Cure Period”), to remedy the Cause

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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Condition; (iv) notwithstanding such efforts, the Cause Condition continues to exist; and (v) the Company terminates your employment within thirty (30) days after the end of the Cause Cure Period, provided that the Company will not be required to provide a Cause Cure Period in the event that a Cause Condition (x) is of the type described in clauses (iv) or (v) of the first sentence of this Section 9; (y) is incapable of being cured; or (z) is required to be publicly disclosed under applicable securities law.

If you cure to the Company’s satisfaction any Cause Condition during the applicable Cause Cure Period, Cause shall be deemed not to have occurred. If the Company is not required to provide a Cause Cure Period, the Cause Process will be satisfied if the Company notifies you in writing of the first occurrence of the Cause Condition within thirty (30) days of the Board becoming aware of such condition and terminates your employment within thirty (30) days of such notice. You are eligible for no more than two “cure” opportunities during your employment.

“Change in Control Transaction” shall mean (i) a merger or consolidation of the Company with or into another corporation under circumstances where the stockholders of the Company immediately prior to such merger or consolidation do not own after such merger or consolidation shares representing at least fifty percent (50%) of the voting power of the Company or the surviving, resulting or parent corporation, as the case may be, (ii) a transfer of shares representing fifty percent (50%) or more of the voting power of the Company to any person who was not, on the Effective Date, a holder of stock of any class or preference or any stock option of the Company, (iii) a liquidation of the Company, or (iv) a sale or other disposition of all or substantially all of the Company’s assets.

“Good Reason” shall mean you have complied with the “Good Reason Process” as defined below, following the occurrence of one or more of the following events: (i) any material diminution in your duties, authority or responsibilities, (ii) any material diminution in your base compensation; (iii) the relocation of your primary place of work more than fifty (50) miles from your primary place of work for the Company on the Effective Date of this Agreement, or (iv) the material breach by the Company of any provision of this letter agreement or any other employment-related agreement between the Company and you (as defined below).

“Good Reason Process” shall mean that (i) you reasonably determine in good faith that one of the foregoing “Good Reason” conditions has occurred; (ii) you notify the Company in writing of the first occurrence of the Good Reason condition within thirty (30) days of the first occurrence of such condition; (iii) you cooperate in good faith with the Company’s efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”) to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) you terminate your employment within thirty (30) days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

“Disability” shall mean your inability (as determined by the Company in good faith) to perform the essential functions of your position due to physical or mental disability (after taking into

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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account the Company’s obligation to provide reasonable accommodations in accordance with the Americans with Disabilities Act of 1990 or analogous state law), which continues for a period of 90 days (whether or not consecutive) during any 12-month period. In connection with any determination regarding your possible Disability, you shall have the right to provide to the Company, and the Company shall consider in good faith, any physical or mental evaluation performed by a competent physician of your selection.

10. Modified Section 280G Cutback : Notwithstanding any other provision of this Agreement, except as set forth in Section 10.B, in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply:

 

  A. The Company shall not be obligated to provide to you any portion of any “Contingent Compensation Payments” (as defined below) that you would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for you. For purposes of this Section 10, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

 

  B. Notwithstanding the provisions of Section 10.A, no such reduction in Contingent Compensation Payments shall be made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) 100% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by you if the Eliminated Payments (determined without regard to this sentence) were paid to you (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of your “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 10.B shall be referred to as a “Section 10.B Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

 

  C. For purposes of this Section 10 the following terms shall have the following respective meanings:

i. “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

ii. “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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  D.

Any payments or other benefits otherwise due to you following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 10.D. Within 30 days after each date on which you first become entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify you (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 10.B Override is applicable. Within 30 days after delivery of such notice to you, you shall deliver a response to the Company (the “Executive Response”) stating either (A) that you agree with the Company’s determination pursuant to the preceding sentence or (B) that you disagrees with such determination, in which case you shall set forth (x) which Potential Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 10.B Override is applicable. In the event that you fail to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final. If you state in the Executive Response that you agree with the Company’s determination, the Company shall make the Potential Payments to you within three (3) business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If you state in the Executive Response that you disagree with the Company’s determination, then, for a period of sixty (60) days following delivery of the Executive Response, you and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Cambridge, Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the Executive Response, make to you those Potential Payments as to which there is no dispute between the Company and you regarding whether they should be made (except for any such Potential Payments which are not due to be made until after

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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  such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute.

 

  E. The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined by the Company by determining the “Contingent Compensation Payment Ratio” (as defined below) for each Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the Contingent Compensation Payment with the highest Contingent Compensation Payment Ratio. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be reduced based on the time of payment of such Contingent Compensation Payments with amounts having later payment dates being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term “Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the value of the applicable Contingent Compensation Payment that must be taken into account by you for purposes of Section 4999(a) of the Code, and the denominator of which is the actual amount to be received by you in respect of the applicable Contingent Compensation Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the payment is made or the payment vests is accelerated, the denominator shall be determined by reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of accelerated payments set forth in Treasury Regulation Section 1.280G-1Q/A-24(b) or (c)).

 

  F. The provisions of this Section 10 are intended to apply to any and all payments or benefits available to you under this Agreement or any other agreement or plan of the Company under which you receive Contingent Compensation Payments.

11. General : By signing below, you represent that you are not bound by any employment contract, restrictive covenant or other restriction preventing or limiting you from entering into employment with or carrying out your responsibilities for the Company, or which is in any way inconsistent with the terms of this letter. You also agree that you will not disclose to anyone at the Company, bring onto Company premises, or use in the course of your employment at the Company, any confidential information or trade secrets belonging to any former employer (with the exception of Viventia) or to any other entity.

After the Effective Date, this letter (and the plans, documents, and policies referenced herein) shall constitute our entire agreement regarding the terms and conditions of your employment

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911


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with the Company and shall supersede any prior agreements or other promises or statements (whether oral or written) regarding the terms of your employment, including, without limitation, your Employment Agreement with Viventia Bio USA Inc. dated August 10, 2015. The terms described herein cannot be modified except in writing by you and the Company. Failure of either party to this letter agreement to insist upon strict compliance with any of the terms, covenants or conditions hereof will not be deemed a waiver of such terms, covenants or conditions. In the event of any inconsistency between this letter agreement and any other contract between the Company and you, including the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement, the provisions of this letter agreement will prevail.

We are thrilled to have you join the leadership team at Eleven. Please contact me if you have any questions or need more information.

 

Sincerely,

 

John McCabe

Chief Financial Officer

I accept the above terms of employment as stated:

 

/s/ Arthur P. DeCillis

   

September 20, 2016

Arthur P. DeCillis, M.D.     Date

Enclosure:

 

  Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement

 

 

215 First Street, Suite 400, Cambridge, MA 02142 PHONE: 617-871-9911

FAX: 617-858-0911

Exhibit 99.1

 

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Eleven Biotherapeutics Acquires Viventia Bio to Create Targeted Protein Therapeutics Oncology Company

-Viventia’s Lead Product Candidate, Vicinium TM , being developed for high-grade non-muscle invasive bladder cancer, with topline Phase 3 data expected in 1H 2018-

-Proxinium TM being developed for late-stage squamous cell carcinoma of the head and neck with Phase 2 initiation planned for early 2017-

-Stephen Hurly to Serve as President and Chief Executive Officer of Combined Company-

-Company to Host Conference Call and Webcast Today September 21, 2016 at 8:30 AM ET-

Cambridge, MA and Toronto, Canada – September 21, 2016 – Eleven Biotherapeutics, Inc. (NASDAQ: EBIO) and Viventia Bio Inc., today announced that the two companies and the shareholders of Viventia entered into a definitive share purchase agreement under which Eleven Biotherapeutics agreed to, and simultaneously completed, the acquisition of Viventia. Under the agreement, Eleven purchased all of the outstanding capital stock of Viventia in exchange for the issuance of 4,013,431 newly issued shares of Eleven common stock, which represented approximately 19.9% of the voting power of Eleven as of immediately prior to the issuance of such shares, and the agreement by Eleven to pay to the selling shareholders certain post-closing contingent cash payments upon the achievement of specified milestones and based upon net sales related to Viventia’s lead product candidate, Vicinium.

The acquisition creates a NASDAQ-listed company focused on the development of novel therapies based upon antibody fragments genetically fused to cytotoxic proteins, or targeted protein therapeutics (TPTs), as new treatments in areas of oncology with significant unmet need. The combined company will continue to be named Eleven Biotherapeutics, and Stephen Hurly, formerly Viventia’s chief executive officer, was appointed President and Chief Executive Officer of Eleven in connection with the acquisition. Abbie C. Celniker, Eleven’s former President and Chief Executive Officer, will remain a director of Eleven Biotherapeutics.

Eleven’s pipeline now includes Viventia’s lead product candidates Vicinium and Proxinium. Vicinium is in a Phase 3 clinical trial for high grade non-muscle invasive bladder cancer (NMIBC), with topline data expected in the first half of 2018. To date, Vicinium has been evaluated in more than 100 patients. In a Phase 2 clinical trial, Vicinium demonstrated a complete response rate of 40% at three months with no drug-related serious adverse events observed in the trial.

Proxinium is expected to enter Phase 2 development in early 2017 for the treatment of late-stage squamous cell carcinoma of the head and neck. In previous clinical trials, Proxinium was


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generally safe and well-tolerated and showed signs of anti-tumor activity. Proxinium has received Orphan Drug Designation from the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA), and Fast Track designation from the FDA. Both product candidates are anti-EpCAM (epithelial cell adhesion molecule) fusion proteins that have been optimized for local tumor administration.

Eleven’s pipeline now also includes Viventia’s earlier stage pipeline of next generation TPT candidates that are designed and optimized for systemic administration for the potential treatment of a broader spectrum of cancer types.

“We are excited to join with Eleven to create a company with extensive experience in engineering and developing novel protein therapeutics for local delivery that we believe may maximize efficacy and reduce toxicity. Our TPTs combine specific tumor targeting with a protein based tumor killing payload, and will be developed to serve cancer patients in areas of high unmet need. Together we have a strong Board of Directors, management team, product pipeline and technology platform, and the capital needed to support the Company’s development plans into 2018,” said Stephen Hurly, Chief Executive Officer of Eleven Biotherapeutics.

“As previously announced, Eleven performed an extensive review of our strategic alternatives, and our Board of Directors believes that the acquisition of Viventia offers Eleven shareholders a compelling opportunity for enhancing long-term value,” said Abbie Celniker, Ph.D., former President and Chief Executive Officer of Eleven Biotherapeutics and current member of Eleven’s Board of Directors. “Our combined company will continue to support Roche as they develop EBI-031, and will benefit from the capital contributed by this partnership, which provides the necessary funding to enable further development of Vicinium and Proxinium.”

About Targeted Protein Therapeutics (TPTs)

Viventia’s drug development is currently focused on locally administered targeted protein therapeutics (TPTs) for the treatment of cancer. Viventia’s TPTs are expressed as a single fusion protein with a differentiated payload mechanism, eliminating the need for payload conjugation and multi-step manufacturing. We believe TPTs have a dual action of both directly killing the cancer cell and enhancing the local immune response.

License Agreement with Roche

On August 16, 2016, Eleven announced the effectiveness of its exclusive license agreement with F. Hoffman-La Roche Ltd. and Hoffman-La Roche Inc. (Roche) for Eleven’s IL-6 antagonist antibody technology, including EBI-031. Eleven granted Roche an exclusive, worldwide license to develop and commercialize EBI-031 and all other IL-6 antagonist antibody technology owned by Eleven. Eleven has received $30 million in payments from Roche, including a $7.5 million upfront payment in connection with the effectiveness of the license agreement, and a $22.5


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million milestone payment based on the Investigational New Drug (IND) application for EBI-031 becoming effective. Under the terms of the agreement, Eleven could receive up to an additional $240 million upon the achievement of certain future regulatory, development and commercialization milestones. In addition, Eleven could be entitled to receive royalties based on net sales of potential future products containing EBI-031 or any other potential future products containing other Eleven IL-6 compounds.

Viventia Acquisition Details

Under the share purchase agreement, Eleven purchased all of the outstanding capital stock of Viventia in exchange for the issuance of 4,031,431 newly issued shares of Eleven common stock, which represented approximately 19.9% of the voting power of Eleven as of immediately prior to the issuance of such shares, and the agreement by Eleven to pay to the selling shareholders certain post-closing contingent cash payments upon the achievement of specified milestones and based upon net sales related to Viventia’s lead product candidate, Vicinium.

The acquisition was approved by the boards of directors of both companies.

Stifel, Nicolaus & Company, Incorporated acted as financial advisor and Wilmer Cutler Pickering Hale and Dorr LLP is acting as legal advisor to Eleven. Hogan Lovells US LLP acted as legal counsel to Viventia.

Management and Organization

In connection with the acquisition, Eleven’s Board of Directors elected Stephen Hurly and Leslie L. Dan, Viventia’s former Executive Chairman and largest beneficial owner prior to the acquisition, to serve as members of Eleven’s Board of Directors, and Cary G. Pfeffer, M.D., resigned from the Eleven’s Board of Directors. Stephen Hurly will serve as President and Chief Executive Officer of Eleven. Also in connection with the acquisition, Arthur P. DeCillis, M.D., Viventia’s Chief Medical Officer, was appointed as Chief Medical Officer of Eleven, and Karen L. Turbidy, Eleven’s Chief Development Officer, resigned from Eleven. In addition, Gregory Adams Ph.D., Chief Development Officer and Glen MacDonald, Ph.D., Chief Scientific Officer, will join Eleven’s management team from Viventia. John McCabe, will continue to serve as Chief Financial Officer of Eleven. Abbie C. Celniker, former President and Chief Executive Officer of Eleven, will remain a member of Eleven’s Board of Directors. Following the acquisition, an entity affiliated with Leslie L. Dan became the second largest shareholder of Eleven.

Conference Call and Webcast

Eleven Biotherapeutics and Viventia will host a conference call and audio webcast today at 8:30 a.m. ET to discuss the acquisition. To access the conference call, please dial (844) 831-3025 (domestic) or (315) 625-6887 (international) at least five minutes prior to the start time and refer to conference ID 85062695.


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An audio webcast of the call will also be available on the Investors & Media section of the Company’s website, www.elevenbio.com. An archived webcast will be available on the Company’s website approximately two hours after the event and will be available for 30 days.

About Eleven Biotherapeutics

Eleven Biotherapeutics, Inc. is a late clinical-stage company advancing a broad pipeline of novel anti-cancer agents based on the Company’s targeted protein therapeutics (TPTs) platform. The Company’s TPTs genetically combine antibody-based fragments with protein immunotoxin payloads to create a single protein molecule through the Company’s proprietary one-step manufacturing process. The Company believes its TPTs can potentially offer significant advantages in treating cancer versus existing antibody drug conjugate technologies. The Company’s approach to drug design creates TPTs that it believes facilitate effective tumor targeting with cancer cell-killing properties unique to protein payloads versus small molecules. The ability of TPTs cancer cell-killing properties to promote an anti-tumor immune response suggest that TPTs will potentially combine well with immune oncology drugs. TPTs fusion protein construction provides enhanced linker stability and an efficient and cost effective manufacturing process. For more information please refer to the Company’s website www.elevenbio.com .

About Non-Muscle Invasive Bladder Cancer (NMIBC)

In the U.S., NMIBC is the second most common malignancy of the genitourinary system, accounting for 70% to 80% of all bladder cancers, and is the sixth most common cancer diagnosed worldwide. The American Cancer Society estimated that approximately 74,000 new cases of bladder cancer were diagnosed in 2015 and that this cancer caused approximately 16,000 deaths in the US in 2015. NMIBC is highly recurrent and requires ongoing, invasive monitoring.

The standard immunotherapy drug for bladder cancer is the Bacillus Calmette-Guérin (BCG) vaccine which was approved by the U.S. Food and Drug Administration (FDA) to treat NMIBC carcinoma in situ in 1990. As a front-line therapy, BCG, with or without transurethral resection of the bladder tumor (TURBT) is associated with high failure rates: 50% of patients experience disease recurrence within one year and 90% relapse within five years.

For more information please visit www.mybladdercancer.com .

About Squamous Cell Carcinoma of the Head and Neck (SCCHN)

Squamous cell carcinoma is the most frequent malignant tumor of the head and neck region. Head and neck cancer is the seventh most common cancer in the world. Head and neck cancers are strongly associated with certain environmental and lifestyle risk factors.


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Existing treatment options for squamous cell carcinoma of the head and neck include surgery, drug agents, radiation or combination therapy. There is no treatment option for patients who progress after receiving these treatments.

Cautionary Note on Forward-Looking Statements

Any statements in this press release about future expectations, plans and prospects for the Company, including statements about benefits of the Acquisition, future management of the Company, Viventia’s business, the Company’s strategy, future operations, advancement or maturation of its product candidates and product pipeline, clinical development of the Company’s product candidates, including expectations regarding timing of regulatory submissions and initiation of clinical trials, regulatory requirements for initiation of clinical trials and registration of product candidates, the sufficiency of its cash resources and other statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties inherent in the initiation and conduct of clinical trials, availability and timing of data from clinical trials, whether results of early clinical trials or preclinical studies will be indicative of the results of future trials, the adequacy of any clinical models, uncertainties associated with regulatory review of clinical trials and applications for marketing approvals and other factors discussed in the “Risk Factors” section of the Company’s report on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission, the “Risk Factors of Viventia’s Business” filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2016 and other reports on file with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent the Company’s views as of the date hereof. The Company anticipates that subsequent events and developments will cause the Company’s views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.

Contact:

Leah Monteiro

Eleven Biotherapeutics

leah.monteiro@elevenbio.com

Exhibit 99.2

Risk Factors of Viventia’s Business

You should carefully consider the following risk factors, in addition to other information described in the Quarterly Report on Form 10-Q of Eleven Biotherapeutics, Inc., or Eleven, for the quarter ended June 30, 2016, and in other filings that Eleven makes with the Securities and Exchange Commission, or SEC, in evaluating Eleven and its business.

Background

On September 20, 2016, Eleven completed its acquisition of Viventia Bio Inc., or Viventia, in accordance with the terms of the Share Purchase Agreement by and among Eleven, Viventia, and Clairmark Investments Ltd., as representative of the selling shareholders of Viventia, or the Share Purchase Agreement, pursuant to which all of the existing shareholders of Viventia, referred to herein as the Selling Shareholders, sold to Eleven, and Eleven purchased from the Selling Shareholders, all of the outstanding common shares of Viventia, referred to herein as the Acquisition. Upon closing of the Acquisition, Eleven issued 4,013,431 shares of its common stock to the Selling Shareholders. Following the closing of the Acquisition, Viventia became a wholly owned subsidiary of Eleven and our business included the business conducted by Viventia immediately prior to the Acquisition, and Viventia’s agreements and arrangements effectively became agreements and arrangements of Eleven. Unless the context otherwise requires, all references in the following risk factors to “Eleven,” “we,” “our” and “us” refer to Eleven Biotherapeutics, Inc. and its wholly owned subsidiaries after the effective time of the Acquisition, and all references to Viventia refer to Viventia Bio Inc. and its wholly owned subsidiaries and predecessor entities prior to the effective time of the Acquisition.

Risks Related to Our Business and Industry

We are dependent on our lead product candidates, Vicinium TM and Proxinium TM . If we are unable to obtain marketing approval for or successfully commercialize either of these lead products, either alone or through a collaboration, or experience significant delays in doing so, our business could be materially harmed.

We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources in the development of Vicinium for the treatment of patients with high-grade non-muscular invasive bladder cancer, or NMIBC, and of Proxinium for the treatment of patients with squamous cell carcinoma of the head and neck, or SCCHN. Our prospects are substantially dependent on our ability to obtain marketing approval for and successfully commercialize Vicinium and Proxinium. The success of these two lead product candidates will depend, among other things, on our ability to design and successfully complete clinical trials for each product candidate. The clinical trial process is uncertain, and failure of one or more clinical trials can occur at any stage of testing. For example, in 2009, Viventia put its development of Vicinium on hold due to the uncertainty of the standard of care for bladder cancer, and in 2008, Viventia terminated its Phase 3 clinical trial of Proxinium due to enrollment and retention reasons that we believe were specific to emerging markets. While we plan to move both of these programs forward in 2016, and believe that we will not have enrollment and retention problems with our Phase 2 clinical trial for Proxinium in the United States and Canada, the general clinical development of product candidates involves a lengthy and expensive process with an uncertain outcome.


In addition to the successful completion of clinical trials, the success of Vicinium and Proxinium will also depend on several other factors, including the following:

 

    receipt of marketing approvals from the United States Food and Drug Administration, or FDA, Health Canada or comparable foreign regulatory authorities;

 

    performance of our future collaborators, if any;

 

    extent of any required post-marketing approval commitments to applicable regulatory authorities;

 

    obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the United States and internationally;

 

    protection of our rights in our intellectual property portfolio;

 

    launch of commercial sales, if and when marking approval is received;

 

    demonstration of an acceptable safety profile prior to and following any marketing approval;

 

    marketplace acceptance, if and when approved, by patients, the medical community and third party payors;

 

    establishing and maintaining pricing sufficient to realize a meaningful return on our investment; and

 

    competition with other therapies.

If we are unable to develop, receive marketing approval for, or successfully commercialize Vicinium or Proxinium, or experience delays as a result of any of these factors or otherwise, our business could be materially harmed.

Our product candidates may not succeed in later clinical trials or receive regulatory approval.

There is no assurance that our planned clinical trials will generate adequate data to demonstrate that our product candidates are safe and effective. Even if early-stage clinical trials suggest that our product candidates may be safe and effective for their intended uses, if later-stage clinical trials do not produce favorable results or if the design of those clinical trials is not deemed adequate by the regulatory agency from which we seek approval, our ability to achieve regulatory approval for our product candidates may be adversely impacted. We have not had formal discussions with the FDA relating to Proxinium since completing our Phase 2 clinical trial in 2007, but we intend to notify the FDA that we intend to enter into discussions with the FDA relating to our proposed Phase 2 clinical trial design. This Phase 2 clinical trial will explore the potential of Proxinium as a monotherapy and, due to its potential immunogenic effect, in combination therapy with a checkpoint inhibitor for the treatment of SCCHN and is planned to commence enrollment in early 2017. We do not know whether Proxinium, Vicinium or any of our other product candidates will demonstrate adequate efficacy and safety to result in regulatory approval. Foreign regulatory agencies may also not approve our product candidates based on clinical trials that were designed to be consistent with the FDA’s feedback.

 

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In addition, our completed and partially completed clinical trials involved small patient populations. Because of the small sample size, the results of these clinical trials may not be indicative of future results in a larger and more diverse patient population. The clinical trial process may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. This failure could cause us to abandon a product candidate and may delay development of other product candidates. Any delay in, or termination of, our clinical trials will delay the filing of a Biologics License Application, or BLA, with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.

Many compounds that initially showed promise in early-stage testing for treating cancer have later been found to not be effective treatments or may cause side effects that prevented further development of the compound. The therapeutic efficacy of our product candidates is unproven in humans, and we may not be able to successfully develop and commercialize our product candidates.

Our product candidates are novel and their potential benefit is unproven. Our ability to generate revenues from our product candidates, which we do not expect will occur in the short term, if ever, will depend heavily on the successful development, approval and commercialization, if achieved. For example, our product candidates may not prove to be effective treatments for the cancer targets they are being designed to act against and may not demonstrate in clinical trial subjects any or all of the pharmacological data points that may have been demonstrated in pre-clinical studies and clinical trials. Our product candidates may interact with human biological systems in unforeseen, ineffective or harmful ways. If our product candidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in early-stage testing for treating cancer have later been found to not be effective treatments or may cause side effects that prevented further development of the compound. As a result of these and other risks described herein that are inherent in the development of novel therapeutic agents, we may never successfully develop, enter into or maintain third party licensing or collaboration transactions with respect to, or successfully commercialize our product candidates, in which case we will not achieve profitability and the value of our common shares may decline.

Clinical development of product candidates involves a lengthy and expensive process with an uncertain outcome.

Clinical testing is expensive, can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and early clinical trials.

We may experience delays in our ongoing or future clinical trials and we do not know whether planned clinical trials will begin or enroll subjects on time, need to be redesigned or be completed on schedule, if at all. We have previously experienced difficulties with clinical trial enrollment and retention and we may experience difficulties in subject enrollment in our clinical

 

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trials in the future. Additionally, there can be no assurance that the FDA or comparable foreign regulatory authorities will not put our ongoing or future clinical trials on clinical hold or that any similar regulatory authority will not implement a similar restriction. Clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as:

 

    delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a trial design that we are able to execute;

 

    delay or failure in obtaining authorization to commence a clinical trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical trial;

 

    delay or failure in reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

 

    delay or failure in obtaining institutional review board approval or the approval of other reviewing entities, including comparable foreign regulatory authorities such as Health Canada, to conduct a clinical trial at each site;

 

    withdrawal of clinical trial sites from our clinical trials for any reason;

 

    delay or failure in recruiting and enrolling suitable subjects to participate in a clinical trial;

 

    delay or failure in subjects completing a clinical trial or returning for post-treatment follow-up;

 

    clinical sites and investigators deviating from clinical trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a clinical trial;

 

    inability to identify and maintain a sufficient number of clinical trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for competing product candidates with the same indication;

 

    failure of our third-party clinical trial managers to satisfy their contractual duties or meet expected deadlines;

 

    delay or failure to add new clinical trial sites;

 

    ambiguous or negative interim results or results that are inconsistent with earlier results;

 

    feedback from the FDA, data safety monitoring boards, or DSMBs, or a comparable foreign regulatory authority, including Health Canada, or results from earlier stage or concurrent pre-clinical studies and clinical trials, that might require modification to the protocol for the clinical trial or performance of additional studies before the clinical trials may continue;

 

    decision by the FDA, a comparable foreign regulatory authority, including Health Canada, or us, or recommendation by a DSMB to suspend or terminate clinical trials at any time for safety issues or for any other reason;

 

    unacceptable risk-benefit profile, unforeseen safety issues or adverse side effects or adverse events;

 

    failure of a product candidate to demonstrate any benefit;

 

    difficulties in manufacturing sufficient quantities of a product candidate for use in clinical trials;

 

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    lack of adequate funding to continue a clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials or increased expenses associated with the services of our CROs and other third parties; or

 

    changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

We rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials, and while we have agreements governing their activities, we have limited influence over their actual performance. Any delays in completing our clinical trials will increase our costs, slow down our development and regulatory submission process for our product candidates and jeopardize our ability to obtain regulatory approval, commence commercial sales and generate revenues, if our product candidates are ultimately approved.

Further, conducting clinical trials in foreign countries, as Viventia has done historically for Vicinium and Proxinium and as we may decide to do in the future, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled subjects in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.

If we encounter difficulties enrolling or retaining subjects in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of subjects who remain in the clinical trial until its conclusion. We have previously experienced difficulties with clinical trial enrollment and retention, which led to the early termination of our Phase 3 trial of Proxinium in 2007, and we may experience difficulties in subject enrollment in our clinical trials in the future for a variety of reasons. The enrollment of subjects depends on many factors, including:

 

    the subject eligibility criteria defined in the protocol;

 

    the size of the subject population required for analysis of the clinical trial’s primary endpoints;

 

    the proximity of subjects to clinical trial sites;

 

    the design of the clinical trial;

 

    our ability to recruit clinical trial investigators with the appropriate competencies and experience;

 

    clinicians’ and subjects’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that are being investigated or that have been approved for the indications we are investigating;

 

    our ability to obtain and maintain subject adherence to clinical trial protocols; and

 

    the risk that subjects enrolled in clinical trials will drop out of the clinical trials before completion.

 

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Further, our ability to successfully initiate, enroll and complete a clinical trial in any foreign country, should we decide to do so, is subject to numerous risks unique to conducting business in foreign countries, including:

 

    difficulty in establishing or managing relationships with CROs and physicians;

 

    different standards for the conduct of clinical trials;

 

    absence in some countries of established groups with sufficient regulatory expertise for review of the protocols associated with our product candidates;

 

    our inability to locate qualified local consultants, physicians and partners; and

 

    the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.

In addition, our clinical trials will compete with other clinical trials for other product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of subjects available to us, because some subjects who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of subjects who are available for our clinical trials in such clinical trial site. Moreover, because our product candidates represent a departure from more commonly used methods for cancer treatment, potential subjects and their doctors may be inclined to use conventional therapies, such as chemotherapy, rather than enroll subjects in any of our future clinical trials.

We will need to obtain FDA approval of any proposed names for our product candidates, and any failure or delay associated with such naming approval may adversely impact our business.

We have not yet submitted our proposed proprietary names, Vicinium and Proxinium, to the FDA or any foreign regulatory authority, including Health Canada, for provisional approval. Any proprietary name we propose to use with our product candidates in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA reviews any proposed product name, including an evaluation of potential for confusion with other product names. The FDA may also object to a product name if it believes the name inappropriately implies medical claims or contributes to an overstatement of efficacy. If the FDA objects to any proposed proprietary product name, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. We may apply for and could possibly obtain provisional approval of our proprietary names by the FDA prior to submission of our BLAs. However, this approval is conditional upon a further and final review by the FDA at the time of BLA review.

Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics for our product candidates could impede development and commercialization.

We have developed a companion diagnostic for use with Proxinium. The FDA and comparable foreign regulatory authorities may require the development and regulatory approval

 

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of a companion diagnostic as a condition to approving Proxinium. Companion diagnostics developed in conjunction with clinical programs for the associated products are subject to regulation by the FDA and comparable foreign regulatory authorities, including Health Canada, as medical devices, and require separate approval prior to their commercialization. Each regulatory body that approves a product will independently need to approve the companion diagnostic before or concurrently with its approval of the product candidate, and before a product can be commercialized. During a Type C meeting with the FDA in 2007, the FDA noted that approval of a companion diagnostic for EpCAM expression would need to coincide with Proxinium approval. We intend to clarify whether the FDA still believes that a companion diagnostic is necessary to receive approval. The FDA may still require that a companion diagnostic for EpCAM expression be approved before or at the time of Proxinium approval. We and any potential future third-party collaborators may encounter difficulties in developing and obtaining approval for any companion diagnostic. Any delay or failure by us or our future third-party collaborators to develop or obtain regulatory approval for a companion diagnostic could delay or prevent approval of Proxinium. We could also incur additional expense if the FDA or comparable regulatory authorities determine that further studies are required before our companion diagnostic may be approved. Even if approved, we may experience delays in developing a sustainable, reproducible and scalable manufacturing process or transferring that process to commercial partners for production, all of which may prevent us from commercializing our product candidates on a timely or profitable basis, if at all. Additionally, we or our collaborators may encounter production difficulties that could constrain the supply of the companion diagnostics, affect the ease of use, affect the price or have difficulties gaining acceptance of the use of the companion diagnostics in the clinical community. If the companion diagnostic for use with Proxinium fails to gain market acceptance, our ability to derive revenues from sales of Proxinium, if approved, could be harmed.

Our commercial success depends upon attaining significant market acceptance of our product candidates, if approved, among physicians, patients, third-party payors and the medical community.

Even if we obtain regulatory approval for our product candidates, our product candidates may not gain market acceptance among physicians, patients, third-party payors or the medical community. The product candidates that we are developing are based on our TPT platform, which is a new technology and therapeutic approach. Market participants with significant influence over acceptance of new treatments, such as physicians and third-party payors, may not adopt a product or treatment based on our TPT platform and technologies, and we may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement for, any product candidates developed by us or any future collaborators. Market acceptance of our product candidates, if we receive approval, depends on a number of factors, including:

 

    the perceived efficacy and safety of our product candidates;

 

    clinical indications for which our product candidates are approved;

 

    availability of alternative effective treatments for the disease indications of our product candidates are intended to treat and the relative risks, benefits and costs of those treatments;

 

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    acceptance by physicians, major operators of cancer clinics and patients of our product candidates as safe and effective treatments;

 

    the success of our physician education programs;

 

    potential and perceived advantages of our product candidates over alternative treatments;

 

    safety of our product candidates seen in a broader patient group, including their use outside the approved indications should physicians choose to prescribe them for such uses;

 

    prevalence and severity of any side effects;

 

    product labeling or patient information requirements imposed by the FDA or other foreign regulatory authorities, including Health Canada;

 

    timing of market introduction of our product candidates as well as competitive products;

 

    the pricing of our treatments, particularly in relation to alternative treatments;

 

    availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities;

 

    relative convenience and ease of administration; and

 

    effectiveness of our sales and marketing efforts.

Moreover, if our product candidates are approved but fail to achieve market acceptance among physicians, patients, third-party payors or the medical community, we may not be able to generate significant revenues, which would compromise our ability to become profitable.

The market opportunities for our product candidates may be limited to those patients who are ineligible for established therapies or for whom prior therapies have failed, and may be small.

Cancer therapies are sometimes characterized as first-line, second-line or third-line. When cancer is detected early enough, first-line therapy, usually chemotherapy, hormone therapy, surgery, radiotherapy or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second-line and third-line therapies are administered to patients when prior therapy is not effective. We expect to seek approval of Vicinium for the treatment of high-grade NMIBC and approval for Proxinium for the treatment of late-stage SCCHN. Subsequently, for those product candidates that prove to be sufficiently beneficial, if any, we would expect to seek approval potentially earlier in the treatment paradigm, but there is no guarantee that our product candidates, even if approved, would be approved for first-line therapy, and, prior to any such approvals, we will have to conduct additional clinical trials.

Our projections of both the number of people who have the cancers we are targeting, as well as the subset of people with these cancers who have previously failed prior treatments, and who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers and the number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates. Even if we receive regulatory approval

 

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for our product candidates and obtain significant market share, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications, including the use of the products as first-line or second-line therapy.

Orphan drug exclusivity may afford limited protection, and if another party obtains orphan drug exclusivity for the drugs and indications we are targeting, we may be precluded from commercializing our product candidates in those indications during that period of exclusivity.

Regulatory authorities in some jurisdictions, including the United States and European Union, may designate drugs and biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition, which is generally defined as one affecting a patient population of fewer than 200,000 individuals in the United States. The first BLA applicant with an orphan drug designation for a particular active moiety to treat a specific disease or condition that receives FDA approval is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication.

Even though we have obtained orphan drug designation for Proxinium to treat SCCHN, and even if we obtain orphan drug designation for our product candidates in other indications or for our future product candidates, the exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug. Moreover, a drug product with an active moiety that is different from that in our drug candidate or, under limited circumstances, the same drug product, may be approved by the FDA for the same indication during the period of marketing exclusivity. The limited circumstances include a showing that the second drug is clinically superior to the drug with marketing exclusivity through a demonstration of superior safety or efficacy or that it makes a major contribution to patient care. In addition, if a competitor obtains approval and marketing exclusivity for a drug product with an active moiety that is the same as that in a product candidate we are pursuing for the same indication, approval of our product candidate would be blocked during the period of marketing exclusivity unless we could demonstrate that our product candidate is clinically superior to the approved product. In addition, if a competitor obtains approval and marketing exclusivity for a drug product with an active moiety that is the same as that in a product candidate we are pursuing for a different orphan indication, this may negatively impact the market opportunity for our product candidate. There have been legal challenges to aspects of the FDA’s regulations and policies concerning the exclusivity provisions of the Orphan Drug Act, and future challenges could lead to changes that affect the protections afforded our product candidates in ways that are difficult to predict.

Our commercial success could depend upon the continued marketing of a regulatory approved product, or the approval of a product candidate, that is administered with our product candidates.

Some of our future clinical trials may involve marketed products or product candidates being developed by other pharmaceutical companies and some of the indications for which we are developing our product candidates may involve their use in combination with these other marketed products and product candidates. These marketed products or product candidates may be administered in a clinical trial in combination with one or more of our product candidates. In

 

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the event that any of these pharmaceutical companies have unforeseen issues that negatively impact their clinical development or marketing approval for their products or product candidates or otherwise negatively affect their ability to continue to clinically develop or market their products or product candidates, our ability to complete our applicable clinical trials and/or evaluate clinical results and, ultimately, our ability to receive regulatory approval for our product candidates for the indications we are pursuing may also be negatively impacted. As a result, this could adversely affect our ability to file for, gain or maintain regulatory approvals on a timely basis, if at all.

Our product candidates may cause undesirable side effects, serious adverse events or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any marketing approval.

Undesirable side effects or serious adverse events caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt respective clinical trials and could result in a restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities, including Health Canada. For example, even though each of our product candidates that have been administered to humans in earlier-stage clinical trials have generally been well-tolerated by subjects, in some cases there were side effects and serious adverse events, some of which were severe.

High-grade NMIBC (Vicinium)

There were no Grade 4 or Grade 5 serious adverse events that were considered by the clinical investigator to be related to Vicinium. However, there was one Grade 5 serious adverse event, or death, which was determined by the clinical investigator to be unrelated to Vicinium. The most common treatment-related Grade 3 serious adverse events were an abnormally frequent passage of small amounts of urine, blood in the urine and painful urination, the majority of which were considered to be mild or moderate in severity. No subjects discontinued treatment due to a Vicinium-related adverse event during the Phase 1 and Phase 2 clinical trials.

SCCHN (Proxinium)

There were no Grade 5 serious adverse events that were considered by the clinical investigator to be related to Proxinium. The Grade 3 and Grade 4 serious adverse events that were reported in the clinical trials of Proxinium and were considered to be possibly, probably or definitely related to treatment consisted of abnormal tumor growth, anorexia, cancer pain, decrease in red blood cells, difficulty swallowing, elevated calcium levels, facial pain, fatigue, high blood sugar, influenza-like illness, injection site pain, liver function abnormalities, low albumin level, low sodium concentration, nausea, rash, swelling, tumor hemorrhage and tumor necrosis.

Seven subjects died during the clinical trials of Proxinium, but none of the deaths were deemed to be related to Proxinium. Eleven subjects discontinued treatment due to liver function test abnormalities; however, the serum levels were transient and they eventually returned to baseline without any evidence of liver damage. Four subjects withdrew from the clinical trials. Three of the four subjects withdrew at their request and one of the four subjects withdrew at the request of the investigator.

 

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Multiple types of EpCAM-positive solid tumors (VB6-845d)

There were no Grade 5 serious adverse events that were considered by the clinical investigator to be related to VB6-845, which is the prior version of VB6-845d. The Grade 3 and Grade 4 serious adverse events that were considered to be possibly, probably or definitely related to treatment consisted of an infusion related reaction and an infusion site reaction.

As a result of these side effects and serious adverse events or further safety or toxicity issues that we may experience in our clinical trials in the future, we may not receive regulatory approval for any of our product candidates, which could prevent us from ever generating revenues or achieving profitability. Results of our clinical trials could reveal an unacceptably high severity and prevalence of side effects or serious adverse events. In such an event, our clinical trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities, including Health Canada, could order us to cease further development or deny approval of any of our product candidates for any or all targeted indications. The clinical trial drug-related side effects or serious adverse events could affect clinical trial subject recruitment or the ability of enrolled subjects to complete the clinical trial or result in potential product liability claims.

Additionally, if our product candidates receive marketing approval, and we or others later identify undesirable side effects or serious adverse events caused by our product candidates, a number of potentially significant negative consequences could result, including:

 

    we may be forced to suspend marketing of our product candidates;

 

    regulatory authorities may withdraw their approvals of our product candidates;

 

    regulatory authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial success of our product candidates;

 

    we may be required to conduct post-marketing studies;

 

    we could be sued and held liable for harm caused to subjects or patients; and

 

    our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates, if approved.

Even if our product candidates receive regulatory approval, we may still face future development and regulatory difficulties.

Even if we obtain regulatory approval for our product candidates, we would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities, including Health Canada, governing, among other things, the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information. The respective safety and efficacy profiles of our product candidates will continue to be closely

 

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monitored by the FDA and comparable foreign regulatory authorities, including Health Canada, if they are approved. If new safety information becomes available after approval of our product candidates, the FDA may require labeling changes or establishment of a Risk Evaluation and Mitigation Strategy, or REMS, and the FDA or comparable foreign regulatory authorities, including Health Canada, may require a similar strategy, impose significant restrictions on our product candidates’ indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP, and other regulations. If we or a regulatory agency discover problems with our manufacturing facility, a regulatory agency may impose restrictions on that product or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we fail to comply with applicable regulatory requirements, the FDA or comparable foreign regulatory agencies, including Health Canada, may:

 

    issue warning letters or untitled letters;

 

    mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;

 

    require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

 

    seek an injunction or impose civil or criminal penalties or monetary fines;

 

    suspend or withdraw regulatory approval;

 

    suspend any ongoing clinical trials for new indications or product candidates;

 

    refuse to approve pending applications or supplements to applications filed by us;

 

    suspend or impose restrictions on operations, including costly new manufacturing requirements; or

 

    seize or detain products, refuse to permit the import or export of products or require us to initiate a product recall.

The occurrence of any event or penalty described above may inhibit or preclude our ability to commercialize our product candidates and generate revenue.

Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by, among others, the FDA, the Department of Justice, or the DOJ, the Office of Inspector General of the Department of Health and Human Services, or HHS, and state attorneys general. Violations, including promotion of our products for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA or other government agencies. Additionally, advertising and promotion of any product candidate that obtains approval outside of the United States may be similarly scrutinized by comparable foreign regulatory authorities, including Health Canada.

In the United States, engaging in impermissible promotion of approved products for off-label uses can also subject a company to false claims litigation under federal and state statutes, and other litigation and/or investigation, which can lead to civil and criminal penalties and fines and agreements that materially restrict the manner in which we promote or distribute our drug

 

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products. These false claims statutes include the federal False Claims Act, which allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid. If the government prevails in the lawsuit, the individual will share in any fines or settlement funds. These False Claims Act lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements based on certain sales practices promoting off-label drug uses. This increasing focus and scrutiny has increased the risk that a pharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations, and be excluded from the Medicare, Medicaid and other federal and state healthcare programs. If we do not lawfully promote our approved products, we may become subject to such litigation and/or investigation and, if we are not successful in defending against such actions, those actions could compromise our ability to become profitable.

Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.

In order to market and sell our products in Canada, the European Union and many other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country and/or to be financially successful or viable. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. If we are unable to obtain approval of our product candidates by regulatory authorities in Canada, the European Union or another jurisdiction, the commercial prospects of our product candidates may be significantly diminished and our business prospects could decline.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of new drug products is highly competitive. We face competition with respect to our product candidates and will face competition with respect to any other product candidates that we may seek to develop or commercialize in the future, from both large and small pharmaceutical, biopharmaceutical and biotechnology companies, academic institutions and other research organizations; specifically with companies, institutions and organizations that are actively researching and developing products that attach proprietary cell-killing payloads to antibodies for targeted delivery to cancer cells. There are a number of large pharmaceutical, biopharmaceutical and biotechnology companies that currently market and sell

 

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products or are pursuing the development of products for the treatment of the respective disease indications for which we are developing our product candidates. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we are currently developing, and may try to develop, product candidates. There is intense and rapidly evolving competition in the biotechnology, biopharmaceutical and antibody fragment and immuno-oncology therapeutics fields. Some of these competitive products and therapies are based on scientific approaches that are similar to our approach, and others are based on entirely different approaches. We are aware of several companies that are developing cancer immunotherapies and ADCs, and we are also aware of several companies developing product candidates that target the same cancer pathways that we are targeting or that are testing product candidates in the same cancer indications that we are testing. For example, there are several companies who have programs that attach proprietary cell-killing payloads to antibodies for targeted delivery to cancer cells.

In addition to competition from alternative treatments, we may also face competition from products that are biosimilar to, and possibly interchangeable with, our product candidates. Biosimilar products are expected to become available over the coming years. Even if our product candidates achieve marketing approval, they may be priced at a significant premium over competitive biosimilar products, and insurers or other third party payors may encourage or even require the use of lower priced biosimilar products. In addition, we may face significant competition upon expiration of our intellectual property protection.

More established companies may have a competitive advantage over us due to their greater size, cash flow and institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may obtain regulatory approval of their product candidates before we are able to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective, more widely used and cheaper than ours, and may also be more successful than us in manufacturing and marketing their products. These appreciable advantages could render our product candidates obsolete or non-competitive before we can recover the expenses of development and commercialization.

If the proposed framework published by the American Society of Clinical Oncology, or ASCO, to assess the value of cancer treatment options is adopted and utilized by payors and physicians and we were to receive low ratings, it could adversely affect the price and reimbursement of our products, if approved, reduce prescriptions and harm our business.

On June 22, 2015, ASCO published a proposed framework to assess the value of cancer treatment options. The framework was developed in response to concern that new, expensive cancer treatments may not be supported by adequate medical evidence. The purpose of the framework is to provide a standardized quantification of cancer treatments and assist oncologists and patients in deciding between new cancer treatments and the standard of care. The framework takes into account a medication’s (i) efficacy, (ii) safety and (iii) cost, to derive an overall treatment value.

This framework is described by ASCO as an initial approach that is not yet suitable for use by doctors and patients. While we believe that the safety and efficacy profiles of our product

 

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candidates are potentially better than that of the standard of care and, if approved, we intend to price our products competitively, we do not know how the data will be assessed by ASCO. It is also unknown whether the framework will change and whether any changes could adversely affect the assessment of any of our product candidates. If this framework were adopted and utilized by payors and physicians, and if our product candidates were to receive low ratings, this could adversely affect the price and reimbursement of our products, if approved, reduce prescriptions and harm our business.

We conduct certain elements of our business internationally, and the decisions of sovereign governments could have a material adverse effect on our business, financial condition and results of operations.

Viventia was founded as a Canadian company and conducted its business internationally. In addition to our clinical trials in the United States, Viventia has historically conducted clinical trials in Russia, Brazil and Canada. We intend to, and may conduct clinical trials in other jurisdictions. Sovereign governments, including Canada, may establish laws or regulations that will be deleterious to our interests or that will affect our ability, to obtain access to regulatory agencies in Russia, Brazil, Canada, and/or other jurisdictions. Governments have also, from time to time, established foreign exchange controls which could have a material adverse effect on our business, financial condition and results of operations. To date, neither our operations nor our financial condition have been materially impacted due to laws or regulations of sovereign governments.

Risks Related To Our Dependence On Third Parties

We rely on third parties to conduct our pre-clinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates.

We rely on domestic and international third-party CROs to monitor and manage data for our ongoing pre-clinical and clinical programs. We rely on these parties for execution of our pre-clinical studies and clinical trials, and we control only some aspects of their activities. Nevertheless, we are responsible for ensuring that each of our pre-clinical studies and clinical trials are conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We also rely on third parties to assist in conducting our pre-clinical studies in accordance with Good Laboratory Practices, or GLP, and the Animal Welfare Act requirements. We and our CROs are required to comply with U.S. federal regulations and current Good Clinical Practices, or GCP, which are international standards meant to protect the rights and health of subjects that are enforced by the FDA, Health Canada, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities, including Health Canada, may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given

 

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regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, our clinical trials must be conducted with product produced under cGMP requirements. Failure to comply with these regulations may require us to repeat pre-clinical studies and clinical trials, which would delay the regulatory approval process.

Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, non-clinical and pre-clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements or for other reasons, our pre-clinical studies and clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Because we have relied and will continue to rely on third parties, our internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated. We currently have a small number of employees, which limits the internal resources we have available to identify and monitor our third-party providers. To the extent we are unable to identify and successfully manage the performance of third-party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

If we lose our relationships with CROs, our product development efforts could be delayed.

We rely on domestic and international third-party vendors and CROs for pre-clinical studies and clinical trials related to our product development efforts. Switching or adding additional CROs would involve additional cost and requires management time and focus. Our CROs generally have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of our CROs have an ability to terminate their respective agreements and/or research projects with us pursuant to such agreements if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination in accordance with the reasonable opinion of the relevant CRO, if we make a general assignment for the benefit of our creditors or if we are liquidated. Identifying, qualifying and managing performance of third-party service providers can be difficult, time consuming and cause delays in our development programs. In addition, there is a natural transition period when a new CRO commences work and the new CRO may not provide the same type or level of services as the original provider. If any of our relationships with our third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms.

 

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Our experience manufacturing our product candidates is limited to our pre-clinical studies and clinical trials. We have no experience manufacturing our product candidates on a commercial scale. We are dependent on third parties for our supply chain, and if we experience problems with any such third parties, the manufacturing of our product candidates could be delayed.

We maintain an approximately 31,400 square foot manufacturing, laboratory, warehouse and office facility in Winnipeg, Manitoba, Canada. We have three 15 liter fermentors, one 150 liter fermentor, one 500 liter fermentor and one 1,500 liter fermentor. Our classified fermentation suite and post-production processing capabilities are currently dedicated to producing our pre-clinical study and clinical trial batches.

Our manufacturing facility has been audited by a third party for compliance with cGMP. The most recent audits were in March 2009 and January 2014. Collectively, these facility audits did not identify any major impediments to the cGMP manufacturing of product candidates up to and including Phase 3 production. Manufacturing of drugs and product candidates, including Vicinium, Proxinium, VB6-845d and VB7-756, must comply with FDA cGMP standards and other regulations. Methods of manufacture as well as validation of manufacturing procedures and quality control systems are reviewed by regulatory authorities, such as the FDA and Heath Canada, to determine their effect on the quality, purity and potency of product candidates. All such manufacturing procedures, validation programs and quality assessment activities must be properly documented in accordance with regulatory requirements. Both the FDA and Health Canada conduct inspections to determine compliance with cGMP to ensure that product candidates used in human testing are adequately characterized in terms of identity, potency and purity. cGMP standards become more stringent as the stage of human testing increases, and material used in pivotal Phase 3 clinical trials is generally required to comport with standards expected of marketed drugs.

Our manufacturing facility is intended to produce multiple product candidates per year, and we believe it will produce sufficient quantities of our product candidates to meet our currently anticipated pre-clinical study and clinical trial needs. In the event we obtain approval from the FDA to market any of our product candidates, we will likely need to outsource our commercial scale manufacturing to contract manufacturing organizations, or CMOs. We do not have experience in manufacturing products at commercial scale. Additionally, the facilities used by any CMO to manufacture any of our product candidates must be the subject of a satisfactory inspection before the FDA and other applicable regulatory authorities to approve a BLA or marketing authorization for each of our product candidates manufactured at that facility. We will depend on these third-party manufacturing partners for compliance with the FDA’s and comparable foreign regulatory authorities’, including Health Canada’s, requirements for the manufacture of our finished products.

Any significant disruption in our supplier relationships could harm our business. Any significant delay in the supply of a product candidate or its key materials for an ongoing pre-clinical study or clinical trial could considerably delay completion of such pre-clinical study or clinical trial, product testing and potential regulatory approval of a product candidate. If our manufacturers or we are unable to purchase these key materials after regulatory approval has been obtained for a product candidate, the commercial launch of such product candidate would be delayed or there would be a shortage in supply, which would impair our ability to generate revenues from the sale of such product candidate.

 

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In the event that manufacturing process changes are necessary for the further development of a product candidate, we may not be able to reach agreement with regulatory agencies on the criteria for demonstrating comparability to the original product, which would require us to repeat clinical trials performed with the original product. This could result in lengthy delays in implementing the new process or site and substantial lost sales as a result of our inability to meet commercial demand. If we reach agreement with regulatory agencies on the criteria for establishing comparability, we may not be able to meet these criteria or may suffer lengthy delays in meeting these criteria. This may result in significant lost sales due to inability to meet commercial demand with the original product. Furthermore, studies to demonstrate comparability, or any other studies on the new process or site such as validation studies, may uncover findings that result in regulatory agencies delaying or refusing to approve the new process or site.

Any contamination in our manufacturing process, shortages of raw materials or failure of any of our key suppliers to deliver necessary components of our TPT platform could result in delays in our clinical development or marketing schedules.

Given the nature of biologics manufacturing, there is a risk of contamination. Any contamination could materially adversely affect our ability to produce our product candidates on schedule and could therefore could halt or delay our clinical development programs.

Some of the raw materials required in our manufacturing process are derived from biological sources. Such raw materials are difficult to procure and may also be subject to contamination or recall. A material shortage, contamination, recall, or restriction on the use of biologically derived substances in the manufacture of our product candidates could halt or delay our clinical development programs or disrupt the commercial manufacturing of our product candidates, which could materially and adversely affect our business.

Risks Related To Our Intellectual Property

We have not yet registered our trademarks in all of our potential markets, and failure to secure those registrations could adversely affect our business.

Our future trademark applications may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections from the U.S. Patent and Trademark Office, or USPTO, or other applicable foreign intellectual property offices. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections, or have to expend additional resources to secure registrations, such as commencing cancellation proceedings against third-party trademark registrations to remove them as obstacles to our trademark applications. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing them against third parties than we otherwise would.

 

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We depend on our license agreements with the University of Zurich and Merck KGaA and if we cannot meet the requirements under the agreements we could lose important rights to Vicinium, Proxinium, VB6-845d or VB7-756, which could have material adverse effect on our business.

We have an exclusive license agreement with the University of Zurich, or Zurich. Pursuant to the agreement, we were granted an exclusive license, with the right to sublicense, under certain patents primarily relating, in part, to our targeting agents, EpCAM chimera and immunoconjugates (including aspects of Vicinium and Proxinium) and methods of use, to make, use, sell and import products that would otherwise infringe such patents in the field of the treatment, stasis and palliation of disease in humans. If we fail to meet our obligations under the license agreement, Zurich may have the right to terminate our license, and upon the effective date of such termination, our right to use the licensed Zurich patent rights would end. To the extent such licensed technology or patent rights relate to our product candidates, we would expect to exercise all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve our rights under the patent rights licensed to us, but we may not be able to do so in a timely manner, at an acceptable cost to us or at all. Any uncured, material breach under the license agreement could result in our loss of rights to practice the patent rights licensed to us under the license agreement, and to the extent such patent rights and other technology relate to our product candidates or other of our compounds, it could have a material adverse effect on our commercialization efforts for our product candidates, including Vicinium and Proxinium.

We also have a license agreement with Merck KGaA, or Merck, which grants us an exclusive license, with the right to sublicense, under certain patents and technology relating to the de-immunization of our cytotoxin Bouganin for therapeutic and in vivo diagnostic purposes in humans. If we fail to meet our obligations under this license agreement, Merck may have the right to terminate our license, and upon the effective date of such termination, our right to use the licensed Merck patent rights and technology would end. To the extent such licensed technology or patent rights relate to our product candidates, we would expect to exercise all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve our rights under the patent rights and technology licensed to us, but we may not be able to do so in a timely manner, at an acceptable cost to us or at all. Any uncured, material breach under the license agreement could result in our loss of rights to practice the patent and technology rights licensed to us under the license agreement, and to the extent such patent rights and other technology relate to our product candidates, it could have a material adverse effect on our commercialization efforts for product candidates.

 

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