Exhibit 10.2

* Portions of this exhibit have been omitted under a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 and filed separately with the Securities and Exchange Commission.

AMENDED AND RESTATED

 

COLLABORATION AND LICENSE AGREEMENT

 

between Digital Diagnostics and Exactus BioSolutions

 

This Amended and Restated Collaboration and License Agreement (the “ Agreement ”) is made and entered into effective as of January 19, 2016 (the “ Effective Date ”) by and between Digital Diagnostics Inc. , an Australian Corporation   having its principal place of business at Level 1, 606 Sherwood Rd. Sherwood, QLD 4075, Australia(“ Digital Diagnostics ”) and Exactus BioSolutions Inc a Delaware corporation headquartered in Richmond VA USA (“Exactus BioSolutions”).  Digital Diagnostics and Exactus BioSolutions are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

RECITALS

 

Exactus BioSolutions is a Point-of-Care Diagnostics company engaged in the licensing, development, manufacture and commercialization of modular component diagnostic products.

 

Digital Diagnostics is a diagnostics technology company that has technology and expertise relating to the invention and development of certain modular component diagnostics technologies.

 

Exactus BioSolutions and Digital Diagnostics desire to enter into a collaboration and license for the continued development and, if successful, regulatory approval for and commercialization of Product in the Field in accordance with the terms and conditions set forth herein below.

 

Now Therefore , in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows.

 

1.	DEFINITIONS

 

As used in this Agreement, the terms with initial letters capitalized, whether used in the singular or plural form, shall have the meanings set forth in this Article 1 or, if not listed below, the meaning designated in places throughout this Agreement.

 

1.1   “ Affiliate ” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party.  For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity, whether by the ownership of more than fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

 

1.2   “ Alliance Manager ” has the meaning set forth in Section 2.3.

 

1.3   “ Digital Diagnostics Claims ” has the meaning set forth in Section 15.2.

 

1.4   “ Digital Diagnostics Damages ” has the meaning set forth in Section 15.2.

 

1.5   “ Digital Diagnostics Indemnities ” has the meaning set forth in Section 15.2.

 

1.6   “ Digital Diagnostics Know-How ” means all Information Controlled as of the Effective Date or thereafter during the Term by Digital Diagnostics and/or its Affiliate(s) and that is necessary or reasonably useful for the discovery, Development, manufacture, use and/or Commercialization of Devices and/or Products in the Field and that is Confidential Information at the time of its use.  Digital Diagnostics Know-How includes all chemical, structural, manufacturing process, biological, pharmacological, toxicological, clinical, assay and other methods of diagnostic screening, structure activity relationship information or other information that relates to Devices or Products (including its composition, formulation, or method of use, manufacture, preparation or administration).  Digital Diagnostics Know-How shall exclude rights under any Digital Diagnostics Patents and [Digital Diagnostics]’s interest in any Joint Patents.  For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate due to a Change of Control Transaction involving Digital Diagnostics (or any of its Affiliates) and such Third Party.

 

 

1.7   “ Digital Diagnostics Manufacturing Technology ” means all Digital Diagnostics Know-How and Digital Diagnostics Materials (including biosensor test strips, hand held analyzers, smart phone readers, stability samples, software and other technologies necessary for Combination Products to be functional) that are necessary or reasonably useful for Exactus BioSolutions (or its Third Party manufacturer) to manufacture the Products, including (to the extent applicable and in the possession and Control of Digital Diagnostics and/or its Affiliate(s)) information with respect to the production, manufacture, processing, filling, finishing, packaging, inspection, receiving, holding and shipping of Products, or any raw materials or packaging materials with respect thereto, or any intermediate of any of the foregoing, including process and cost optimization, process qualification and validation, commercial manufacture, stability, in-process and release testing, quality assurance and quality control).

 

1.8   “ Digital Diagnostics Materials ” means all tangible materials in the possession and Control of Digital Diagnostics and/or its Affiliate(s) as of the Effective Date or thereafter during the Term that (a) are necessary or reasonably useful for the evaluation, Development, manufacture and/or Commercialization of Products in the Field or (b) otherwise embody Digital Diagnostics Know-How.  Digital Diagnostics Materials shall include, as applicable, elactomers, design documents, specifications, schematics, or any other material engineering or discovery data used in the discovery, improvement or creation of the know-how and device and its components.   For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate due to a Change of Control Transaction involving Digital Diagnostics (or any of its Affiliates) and such Third Party.

 

1.9   “ Digital Diagnostics Patents ” means all Patents that are Controlled as of the Effective Date or thereafter during the Term by Digital Diagnostics and/or its Affiliate(s) and that Cover any Product (including in each case its composition, formulation, combination, product by process, or method of use, manufacture, preparation or administration) or that would be necessary or useful for the discovery, Development, manufacture, use and/or Commercialization of Products in the Field.  Digital Diagnostics Patents shall include Digital Diagnostics’ interest in Joint Patents.  For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate due to a Change of Control Transaction involving Digital Diagnostics (or any of its Affiliates) and such Third Party.  As of the Effective Date, the Digital Diagnostics Patents include the Core Patents (listed in Exhibit B ), the University of Queensland Third Party Patents (listed in Exhibit C ) and the Product Specific Patents (listed in Exhibit D ).

 

1.10   “ Digital Diagnostics Technology ” means the Digital Diagnostics proprietary technology for the detection of proteolytic enzymes in biological samples, including, but not limited to, blood and serum, which is Covered by certain Valid Claims within Digital Diagnostics Patents.

 

1.11   “ Digital Diagnostics Technology ” means the Digital Diagnostics Patents, Digital Diagnostics Know-How and Digital Diagnostics Materials.

 

1.12    “ Applicable Law ” means any applicable federal, state, local or foreign law, statute, ordinance, principle of common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Authority.

 

1.13   “ Arbitrable Matter ” means any dispute concerning the validity, interpretation or construction of, compliance with, or breach of (other than a breach of Sections 12.1, 12.2, 15.1, 15.2 and 15.3), this Agreement, including any dispute with respect to whether either Party is entitled to terminate this Agreement, in whole or as to any country.  For clarity, Arbitrable Matters do not include Litigable Matters.

 

1.14    “ Bankrupt Party ” has the meaning set forth in Section 17.3(a).

 

1.15   “ Base Royalty Rate ” has the meaning set forth in Section 8.4(b).

 

1.16    “ Budget ”  means the estimated expenditure for the Development Program during the Development Term

 

1.17   “ Business Day ” means a day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York USA are required by Applicable Law to remain closed.

 

1.18   “ Calendar Year ” means the one (1) year period beginning on January 1 and ending on December 31.

 

 

1.19   “ Change of Control Transaction ” means, with respect to a Party:

 

(a)   the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a “Specified Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of fifty percent (50%) or more of either (i) the then outstanding shares of common stock of such Party (the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of such Party entitled to vote generally in the election of directors of such Party (the “Outstanding Voting Securities”); provided , however , that for the purposes of this sub-Section (a), the following acquisitions of securities of such Party shall not constitute a Change of Control Transaction of such Party:  (x) any acquisition by such Party, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by such Party or any corporation controlled by such Party or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (b) of this definition;

 

(b)   the consummation of any acquisition, merger or consolidation involving any Third Party (a “Business Combination Transaction”), unless immediately following such Business Combination Transaction, (i) the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Business Combination Transaction beneficially own, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Business Combination Transaction (including a corporation which as a result of such transaction owns the then-outstanding securities of such Party or all or substantially all of such Party’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be and (ii) fifty percent (50%) or more of the members of the board of directors of the corporation resulting from such Business Combination Transaction were members of the Board of Directors of such Party at the time of the execution of the initial agreement, or of the action of the Board of Directors of such Party, providing for such Business Combination Transaction; or

 

(c)   a Party or any of its Affiliates sells or transfers to any Specified Person(s) (other than the other Party or its Affiliates) in one or more related transactions properties or assets representing all or substantially all of such Party’s business or assets at the time of such sale or transfer.

1.20   “ Claim ” has the meaning set forth in Section 15.3.

 

1.21   “ Clinical Study ” means any human clinical study of a Combination Product (biosensor test strips and hand held or smart phone device).

 

1.22   “ CMO ” means TaiDoc Ltd, Taipei, Taiwan or other qualified company selected by EXACTUS to manufacture the  Device and Device components

 

1.23   “ CMO Agreement ” means that certain Manufacturing Services Agreement between CMO and Digital Diagnostics dated as of August 11, 2011, as amended from time to time, relating to the manufacture by CMO of Product.

 

1.24    “ Combination Product ” refers to the use of (i) FibriLyzer and FibriChip or (ii) MatriLyzer and MatriChip in specific combination to provide a functional diagnostic assay.

 

1.25   “ Commercialize ” or “ Commercialization ” means the marketing, promotion, sale (and offer for sale or contract to sell), distribution, importation or other commercial exploitation (including pricing and reimbursement activities) for a Product in the Territory.  Commercialization shall include commercial activities conducted in preparation for Product launch.

 

1.26   “ Commercialization Wind-Down Period ” has the meaning set forth in Section 13.7(b).

 

 

1.27    “ Confidential Information ” means, with respect to a Party, and subject to Section 12.1, all non-public Information of such Party that is disclosed to the other Party under this Agreement, which may include specifications, know-how, trade secrets, technical information, models, business information, inventions, discoveries, methods, procedures, formulae, protocols, techniques, data, and unpublished patent applications, whether disclosed in oral, written, graphic, or electronic form.  All Information disclosed by a Party pursuant to the Prior CDA shall be deemed to be the Confidential Information of such Party pursuant to this Agreement (with the mutual understanding and agreement that any use or disclosure thereof that is authorized under Article 12 shall not be restricted by, or be deemed a violation of, such Prior CDA).

 

1.28   “ Control ” means, with respect to any material, Information, or intellectual property right, that a Party (a) owns such material, Information, or intellectual property right, or (b) has a license or right to use to such material, Information, or intellectual property right, in each case (a) or (b) with the ability to grant to the other Party access, a right to use, or a license, or a sublicense (as applicable) to such material, Information, or intellectual property right on the terms and conditions set forth herein, without violating the terms of any agreement or other arrangement with any Third Party in existence as of the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, right to use or (sub)license.

 

1.29   “ Core Patent ” means any Patent owned by Digital Diagnostics (or any Digital Diagnostics Affiliate) as of the Effective Date or thereafter during the Term and that covers the composition, formulation, method of use and/or method of manufacture of any Product and/or Device, other than the Product Specific Patents.  As of the Effective Date, the Core Patents include the Digital Diagnostics Patents listed in Exhibit B .

 

1.30   “ Cover ”, “ Covered ” or “ Covering ” means, with respect to Product (and/or Device) and a Patent, that, in absence of a (sub)license under, or ownership of, such Patent, the making, using, offering for sale, selling or importing of such Product (and/or Device) would infringe such Patent as issued or following its issuance.

 

1.31   “ Develop ” or “ Development ” means all activities that relate to (a) obtaining, maintaining or expanding Regulatory Approval of a Product and to supporting appropriate usage for such Product, for one or more indications in the Field.  This includes: (i) preclinical/nonclinical Development and testing, toxicology, and Clinical Trials; and (ii) preparation, submission, review, and development of data or information and Regulatory Materials for the purpose of submission to a governmental authority to obtain, maintain and/or expand Regulatory Approval of a Product (including contacts with Regulatory Authorities), and outside counsel regulatory legal services related thereto; provided , however , that Development shall exclude Commercialization and manufacturing activities (including manufacturing activities related to Development).  For clarity, Development shall include Phase 4 Clinical Trials that are required or requested in writing by a Regulatory Authority as a condition of, or in connection with, obtaining or maintaining Regulatory Approval (whether the trial is commenced prior to or after receipt of such Regulatory Approval).“ Development Plan ” has the meaning set forth in Section 3.3(a) and 3.14.

 

1.32    “ Development Program ” has the meaning set forth in Section 3.1.

 

1.33   “ Development Term ” has the meaning set forth in Section 3.2.

 

1.34   “Device” means a machine that is developed for the specific purpose of measuring or detecting an analyte or enzyme activity in a biological sample.

 

1.35   “Device Components” means a disposable part that is used in conjunction with the device to perform a diagnostic assay or specific part or sub-assembly of the Device that is used in the manufacture of the Device.

 

1.36   “ Development Year ” means each twelve (12) month period during the Development Term, with the first Development Year beginning on the Effective Date.

 

1.37    “ Diligent Efforts ” means, with respect to Exactus BioSolutions’s obligations under this Agreement to Develop or Commercialize a Product, the carrying out of such obligations or tasks with a level of effort and resources consistent with the commercially reasonable practices devoted by Exactus BioSolutions for the development, manufacture or commercialization of a diagnostic product owned by it (or to which it has exclusive rights) at a similar stage of development or commercialization and of similar market potential, profit potential and strategic value, based on conditions then prevailing.  Such efforts may take into account, without limitation, issues of safety and efficacy, regulatory authority-approved labeling, product profile, the competitiveness of alternative products in the marketplace, pricing/reimbursement for the product in a country relative to other markets, the likely timing of the product’s entry into the market, the patent and other proprietary position, the likelihood of regulatory approval and other relevant scientific, technical and commercial factors.    “ Diligent Efforts ” means, with respect to Digital Diagnostics’ obligations under this Agreement, the carrying out of such obligations or tasks with a level of effort and resources consistent with the commercially reasonable practices normally devoted by a biotechnology/medical device company, subject to and in accordance with the terms and conditions of this Agreement.

 

 

1.38   “ Disclosing Party ” has the meaning set forth in Section 12.1.

 

1.39   “ Dollar ” or “ $ ” means the lawful currency of the United States.

 

1.40   “ Exactus BioSolutions Claims ” has the meaning set forth in Section 15.1.

 

1.41   “ Exactus BioSolutions Damages ” has the meaning set forth in Section 15.1.

 

1.42   “ Exactus BioSolutions Indemnitees ” has the meaning set forth in Section 15.1.

 

1.43   “ Exactus BioSolutions Patent ” means any Patent that claims a Sole Invention owned by Exactus

 

1.44    “ Effective Date ” means the date specified in the initial paragraph of this Agreement.

 

1.45   “ EU ” or “ European Union ” means the European Union, as its membership may be constituted from time to time, and any successor thereto, and which, as of the Effective Date, consists of Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom, and that certain portion of Cyprus included in such organization.

 

1.46   “ Executive Officer ” means, in the case of Exactus BioSolutions, any senior executive who reports directly to the Chief Executive Officer of Exactus BioSolutions or his or her designee, and in the case of Digital Diagnostics, Digital Diagnostics’ Chief Executive Officer or a member of its Board of Directors.

 

1.47   “ Existing License Agreements ” means the agreements set forth on Exhibit A .

 

1.48   “ Existing Supply ” has the meaning set forth in Section 6.5.

 

1.49   “ Existing Third Party Digital Diagnostics ” means a Third Party that is a party to an Existing License Agreement.

 

1.50   “ Expert ” means a mutually acceptable, disinterested, conflict-of-interest-free individual not affiliated with either Party or its Affiliates who, with respect to a dispute concerning a financial, commercial, scientific or regulatory matter possesses appropriate expertise to resolve such dispute.  The Expert (or any of the Expert’s former employers) shall not be or have been at any time an Affiliate, employee, consultant (during the previous five (5) years), officer or director of either Party or any of its Affiliates.

 

1.51   “ Ex-US Product Specific Patents ” means those Product Specific Patents that are not Joint Patents and that are issued or pending in any country or region other than the U.S.

 

1.52   “ FDA ” means the United States Food and Drug Administration and any successor agency thereto.

 

1.53   “ FD&C Act ” or “ Act ” means the United States Federal Food, Drug and Cosmetic Act, as amended.

 

1.54   “ FibriChip ” means the disposable unit into which a biological sample (e.g. blood or serum) is place and contains the necessary reagents to measure fibrolysis in that biological sample in conjunction with the FibriLyzer.

 

1.55   “ FibriLyzer ” means the hand held or other device into which the FibriChip is placed that contains the necessary electronic and mechanical hardware and software to report a value for the fibrolytic state of a biological sample.

 

1.56   “ Field ” means all human uses, including the diagnosis, treatment, prevention, and/or control of any disease, disorder or condition in humans.

 

1.57   “ First Commercial Sale ” means, with respect to a Product and country, the first sale to a Third Party of such Product in such country after Regulatory Approval or Clearance has been obtained in such country.

 

 

1.58   “ GAAP ” means generally accepted accounting principles of the U.S. consistently applied.

 

1.59   “ Governmental Authority ” means any multi-national, federal, state, local, municipal or other government authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, court, tribunal or other entity).

 

1.60   “ IDE ” means (a) an Investigational Device Exemption as defined in the FD&C Act and applicable regulations promulgated thereunder by the FDA, or (b) the equivalent application to the applicable Regulatory Authority in any other regulatory jurisdiction, the filing of which is necessary to initiate or conduct clinical testing of a diagnostic product in humans in such jurisdiction.

 

1.61   “ Indemnified Party ” has the meaning set forth in Section 15.3.

 

1.62   “ Indemnifying Party ” has the meaning set forth in Section 15.3.

 

1.63   “ Information ” means any data, results, and information of any type whatsoever, in any tangible or intangible form, including know-how, trade secrets, practices, techniques, methods, processes, inventions, developments, specifications, formulations, formulae, materials or compositions of matter of any type or kind (patentable or otherwise), software, algorithms, marketing reports, expertise, stability, technology, test data including pharmacological, biological, chemical, biochemical, toxicological, and clinical test data, analytical and quality control data, stability data, studies and procedures.

 

1.64   “ Infringement ” has the meaning set forth in Section 9.5(a).

 

1.65   “ Infringement Action ” has the meaning set forth in Section 9.5(b).

 

1.66   “ Initial Product Plan ” has the meaning set forth in Section 3.3(a).

 

1.67   “ Initial Product Program ” has the meaning set forth in Section 3.1.

 

1.68   “ Insolvency Event ” has the meaning set forth in Section 13.5.

 

1.69   “ Joint Invention ” has the meaning set forth in Section 9.1.

 

1.70   “ Joint Patent ” means a Patent that claims a Joint Invention.

 

1.71   “ Joint Development Committee ” or “ JDC ” means the committee formed by the Parties as described in Section 2.1(a).

 

1.72   “ Liens ” means any lien, pledge, encumbrance, mortgage, security interest, purchase option, call or similar right, conditional and installment sale agreements, charges or claims of any kind (excluding any license rights granted as of the Effective Date under the Existing License Agreements).

 

1.73   “ Litigable Matter ” means any dispute between the Parties concerning the validity, scope, enforceability, inventorship, or ownership of intellectual property rights, or any breach or alleged breach by a Party of any of Sections 12.1, 12.2, 15.1, 15.2 and 15.3 by a Party.

 

1.74    “ Major Market ” means the United States, the European Countries in the European Economic Union (EU).

 

1.75   “ Managed Care Organizations ” or “ MCOs ” means pharmacies, managed health care organizations, group purchasing organizations, large employers, long-term care organizations, formularies, insurers, government agencies and programs (e.g., Medicare and the VHA and other federal, state and local agencies), or similar organizations.

 

1.76   “ Manufacturing Costs ” means verifiable costs for manufacturing a FibriLyzer or a FibriChip provided by one Party to the other Party which is (a) manufactured and supplied by a Third Party or (b) manufactured directly by the supplying Party or its Affiliate; in each case to the extent such costs are reasonably allocable to the Device or Product supplied, and calculated in accordance with the supplying Party’s internal accounting policies and principles, so long as such Party’s calculations are in accordance with GAAP.

 

For costs under clause (a) above, Manufacturing Costs means: (i) the amount paid by a Party or its Affiliates to such a Third Party in connection with the manufacture and supply of such Device or Product (including expenses related to storage, QA and QC (including testing), shipping, handling, insurance, customs duties or excise taxes), plus (ii) a Party’s FTE costs (measured at the applicable FTE Rate) and other direct out-of-pocket costs recorded as an expense in accordance with its customary accounting practices (so long as the same are consistent with GAAP) in connection with such manufacture and supply, including supply chain management, payments owed to Third Parties on account of Third Party intellectual property licensed to a Party that is used in the course of such manufacture and supply, management of agreements with Third Party manufacturers for such Device or Product and expenses related to storage, QA and QC (including testing), shipping, handling, insurance, customs duties or excise taxes.

For costs under clause (b) above, Manufacturing Costs means the standard cost of goods sold.  For purposes of this definition, “standard costs of goods sold” include materials (such as active ingredients, intermediates, semi-finished materials, excipients, primary and secondary packaging), and conversion costs (such as direct labor, equipment costs and quality testing), and an allocation of general site and manufacturing support costs (including an appropriate allocation of utilities, maintenance, engineering, safety, human resources, finance, plant management and other similar activities and including capital improvements in the form of depreciation, other equipment costs (where such costs are expensed by a Party in accordance with its customary practices)), customs duties or excise taxes, and sales taxes incurred on purchased Product; provided , however , that no allocation shall be made for unused plant capacity.  All components of Manufacturing Costs shall be allocated on a basis consistent with its customary cost accounting practices applied by the Party to the other products it produces.

1.77   “Manufacturing Technology Documentation” has the meaning set forth in Section 6.2.

 

1.78   “ Material Information ” means any information that would affect Exactus BioSolutions’ current or future prospects or an investor’s decision to invest in the company.

 

1.79   “ MatriChip ” means the disposable unit into which a biological sample (e.g. blood or serum) is place and contains the necessary reagents to measure collagenase activity in that biological sample.

 

1.80   “ MatriLyzer ” means the hand held or other device into which the MatriChip is placed that contains the necessary electronic and mechanical hardware and software to report a value for the collagenase state of a biological sample.

 

1.81    “ Net Sales ” means the gross amount invoiced in arms-length transactions by a Related Party(ies) from or on account of the sale of Products to a non-Related Party (net of any inventory management fees or similar fees based on or reasonably allocable to the sale of Products), less the sum of the following:

 

(a)   credits or allowances, if any are actually allowed, on account of price adjustments, recalls, claims, damaged goods, rejections or returns of items previously sold (including Product returned in connection with recalls or withdrawals) and amounts written off by reason of uncollectible debt;

 

(b)   import taxes, export taxes, excise taxes (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)), sales taxes, value-added taxes, consumption taxes, duties or other taxes levied on, absorbed determined and/or imposed with respect to such sales (excluding income or net profit taxes or franchise taxes of any kind), to the extent not reimbursed by a non-Related Party;

 

(c)   insurance, customs charges, freight, shipping and other transportation costs incurred in shipping Product to such non-Related Parties, to the extent not reimbursed by a non-Related Party;

 

(d)   discounts (including trade, quantity and cash discounts) actually allowed, cash and non-cash coupons, retroactive price reductions, and charge-back payments and rebates granted to any non-Related Party (including to governmental entities or agencies, purchasers, reimbursers, customers, distributors, wholesalers, and group purchasing and MCOs (and other similar entities and institutions));

 

(e)   rebates (or their equivalent), administrative fees, chargebacks and retroactive price adjustments and any other similar allowances granted to non-Related Parties (including to Governmental Authorities, purchasers, reimbursers, customers, distributors, wholesalers, and MCOs (and other similar entities and institutions)) which effectively reduce the selling price or gross sales of the Product;

 

 

No deduction shall be made for any item of cost incurred by any Related Party in Developing or Commercializing Products except as permitted pursuant to clauses (a) to (f) of the foregoing sentence; provided that, Products transferred to non-Related Parties in connection with clinical and non-clinical Development and trials, Product samples, compassionate sales or use, or an indigent program or similar bona fide arrangements in which a Related Party agrees to forego a normal profit margin for good faith business reasons shall give rise to Net Sales only to the extent that any Related Party invoices or receives amounts therefor.

 

Product shall be considered “sold” when invoiced.  Such amounts shall be determined from the books and records of the Related Party.

 

It is understood that any accruals for individual items reflected in Net Sales are periodically (at least Quarterly) trued up and adjusted by each Related Party consistent with its customary practices and in accordance with GAAP.

 

Sale or transfer of Products between any of the Related Parties shall not result in any Net Sales, with Net Sales to be based only on any subsequent sales or dispositions to a non-Related Party.  To the extent that any Related Party receives consideration other than or in addition to cash upon the sale or disposition of a Product to a non-Related Party, Net Sales shall include the fair market value of such additional consideration for such sale or disposition of Products.  For clarity, (i) Net Sales shall not include amounts or other consideration received by a Related Party from a non-Related Party in consideration of the grant of a (sub)license or co-promotion or distribution right to such non-Related Party, (ii) sales to a Third Party distributor, wholesaler, group purchasing organization, pharmacy benefit manager, or retail chain customer shall be considered sales to a non-Related Party; and (iii) Net Sales by a Related Party to a non-Related Party consignee are not recognized as Net Sales by such Related Party until the non-Related Party consignee sells the Product.

 

1.82    “ Patent ” means (a) all patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from any of these, including divisionals, continuations, continuations-in-part, converted provisionals, and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications in (a) and (b), including utility models, petty patents and design patents and certificates of invention, (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including adjustments, revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications in (a), (b) and (c), and (e) any similar rights, including so-called pipeline protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patents of addition to any of such foregoing patent applications and patents.

 

1.83   “ Patent Challenge ” has the meaning set forth in Section 9.9.

 

1.84   “ Patent Contact ” has the meaning set forth in Section 9.11.

 

1.85   “ Patent Prosecution Costs ” means the direct out-of-pocket costs (including the reasonable fees and expenses incurred to outside counsel and other Third Parties, including filing, prosecution and maintenance fees incurred to Governmental Authorities) recorded as an expense by a Party or any of its Affiliates (in accordance with GAAP and its customary accounting practices) after the Effective Date and during the Term and pursuant to this Agreement, in connection with the preparation, filing, prosecution, maintenance and extension of Patents, including costs of Patent interference, appeal, opposition, reissue, reexamination, revocation, petitions or other administrative proceedings with respect to Patents and filing and registration fees.

 

“ Person ” means any individual, firm, corporation, partnership, Limited Liability Company, trust, business trust, Joint Venture Company, governmental authority, association or other entity

 

1.86   “ Prior CDA ” means any Confidentiality Agreement entered into by Exactus BioSolutions, or its predecessor EAP and Digital Diagnostics.

 

1.87   “ Product ” means any diagnostic product containing FibriLyzer, FibriChip, MatriLyzer and MatriChip (alone or as a Combination Product), in all forms, presentations, formulations and applications.

 

1.88   “ Product Specific Patent ” means any Patent owned by Digital Diagnostics (or any Digital Diagnostics Affiliate) that specifically covers the composition, formulation, method of use and/or method of manufacture of any Device and/or Product.  As of the Effective Date, the Product Specific Patents consist of the Digital Diagnostics Patents listed in Exhibit D .

 

 

1.89   “ Prosecute ” or “ Prosecution ” has the meaning set forth in Section 9.2(a).

 

1.90   “ Prosecuting Party ” has the meaning set forth in Section 9.4(c).

 

1.91   “ Publication ” has the meaning set forth in Section 12.4.

 

1.92   “ Receiving Party ” has the meaning set forth in Section 12.1.

 

1.93    “ Regulatory Approval ” means with respect to a country, extra-national territory, province, state, or other regulatory jurisdiction, any and all approvals, licenses, registrations or authorizations of any Regulatory Authority necessary in order to commercially distribute, sell, manufacture, import, export or market a product in such country, state, province, or some or all of such extra-national territory or regulatory jurisdiction, but which shall exclude any pricing and reimbursement approvals.

 

1.94   “ Regulatory Authority ” means, with respect to a particular country, extra-national territory, province, state, or other regulatory jurisdiction, any applicable Governmental Authority involved in granting Regulatory Approval and/or, to the extent required for such country, extra-national territory, province, state, or other or regulatory jurisdiction, pricing or reimbursement approval of a Product in such country or regulatory jurisdiction, including the FDA, European Notifying Bodies and in each case including any successor thereto.

 

1.95   “ Regulatory Materials ” means regulatory applications, submissions, dossiers, notifications, registrations, Regulatory Approvals and/or other filings made to or with, or other approvals granted by, a Regulatory Authority that are necessary or reasonably desirable in order to Develop, manufacture or Commercialize a Product in a particular country or regulatory jurisdiction.  Regulatory Materials include IDEs and submissions to Notifying Bodies or similar competent authority in the EU.

 

1.96   “ Related Party ” shall mean Exactus BioSolutions and its Affiliates of one or more Products.  For clarity, Related Party shall not include any distributors, wholesalers or the like unless such entity is an Affiliate of Exactus BioSolutions.

 

1.97    “ Royalty Term ” has the meaning set forth in Section 8.4(d).

 

1.98   “ Safety Data Exchange Agreement ” or “ SDEA” has the meaning set forth in Section 4.4.

 

1.99   “ Safety Reason ” means it is Exactus BioSolutions’ or any of its Affiliates’ reasonable belief that based upon additional information that becomes available or an analysis of the existing information at any time, that the medical risk/benefit of such Device or Product is sufficiently unfavorable as to be incompatible with the welfare of patients to Develop or Commercialize or to continue to Develop or Commercialize it.

 

1.100   “ SEC ” means the U.S. Securities and Exchange Commission.

 

1.101   “ Secondary Product Program ” has the meaning set forth in Section 3.3(a).

 

1.102   “ Sole Inventions ” has the meaning set forth in Section 9.1.

 

1.103   “ Term ” has the meaning set forth in Section 13.1.

 

1.104   “ Termination Notice ” has the meaning set forth in Section 13.3.

 

1.105   “ Territory ” means North America (the United States and Canada) and the European Union.

 

1.106   “ Third Party ” means any Person other than Digital Diagnostics or Exactus BioSolutions or an Affiliate of either of Digital Diagnostics or Exactus BioSolutions.

 

1.107   “ Third Party Costs ” means the out-of-pocket costs and expenses incurred or accrued by Digital Diagnostics with respect to payments made by Digital Diagnostics to Third Parties in conducting the activities assigned to Digital Diagnostics or its Affiliates (or such Third Party) pursuant to the then-current Development Plan, and in accordance with the Budget for such Third Party Costs as agreed to by the JDC and set forth in the Development Plan.  Third Party Costs may include, for example, Development Program-specific animals or studies performed by outside (sub) contractors, but shall not include routine laboratory supplies.

 

 

1.108   “ U.S. ” means the United States of America and its territories, districts and possessions.

 

1.109   “ US Product Specific Patents ” means those Product Specific Patents that are not Joint Patents and that are issued or pending in the U.S.

 

1.110   “ Valid Claim ” means either (a) a claim of an issued and unexpired patent which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal and that is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise (i.e., only to the extent the subject matter is disclaimed or is sought to be deleted or amended through reissue), or (b) a claim of a pending patent application that has not been abandoned, finally rejected or expired without the possibility of appeal or refiling, provided , however , that (i) Valid Claim will exclude any such pending claim in an application that has not been granted within the later of (A) seven (7) years following the earliest non-provisional priority filing date for such application and (B) five (5) years after receipt of the first office action in response to such application and (ii) Valid Claim will exclude any such pending claim that does not have a reasonable bona fide basis for patentability (such reasonable bona fide basis to be determined by arbitrators pursuant to Section 16.2 who shall be an outside counsel selected by the Parties in the event that the Parties disagree as to whether there is a reasonable bona fide basis for patentability for such a claim).

 

1.111   Volume Weighted Average Price is calculated by adding up the dollars traded for every transaction ( price multiplied by number of shares traded) and then dividing by the total shares traded for a period of 15 days prior to and 15 days following an announced milestone event.

 

2.	GOVERNANCE

 

2.1   Joint Development Committee.

 

(a)   Establishment of JDC.   Within thirty (30) days after the Effective Date, the Parties will establish a joint Development committee with the roles set forth in Section 2.1(c) (the “ Joint Development Committee ” or “ JDC ”).  Each Party will initially appoint one to three representatives to the JDC.  The JDC may change its size from time to time by mutual consent of its members on an as-needed basis.  The JDC membership and procedures are further described in this Section 2.1.  Each Party may at any time appoint different JDC representatives by written notice to the other Party.

 

(b)   Membership of JDC.   Each of Digital Diagnostics and Exactus BioSolutions will designate representative(s) to serve as members of the JDC.  Each of Digital Diagnostics and Exactus BioSolutions will select their representatives for the JDC, and each Party may change its designated.   Exactus BioSolutions will appoint the chairperson of the JDC, who will be responsible for calling meetings and preparing and circulating an agenda in advance of each meeting, provided that the chairpersons will call a meeting of the JDC promptly upon the reasonable written request of either company to convene such a meeting.

 

(c)   Role of JDC.   The JDC will be responsible for (i) reviewing the overall management of the Development Program, and monitoring and reviewing changes and updates to the Development Plan, (ii) the monitoring, reviewing and recording of the progress of the Development Program, (iii) monitoring the spending against, the budget for Development Program Costs, as set forth in the Development Plan, (iv) assisting with the prosecution of the Product Specific Patents in accordance with Article 9 below.  In addition, the JDC will provide a forum for discussion and review of Exactus BioSolutions’ key Development activities with respect to the Devices as set forth in the Development Plan and in updates to the Development Plan.  As needed, the JDC shall establish subcommittees and working groups that will report to the JDC to further the objectives of the Development Program.

 

(d)   JDC Meetings.   The JDC will hold meetings at such times and places as the chairperson may determine.  The JDC will meet at least once every calendar quarter during which Exactus BioSolutions is performing the Development Program and the JDC will meet semi-annually thereafter unless the Parties agree otherwise.  The meetings of the JDC need not be in person and may be by telephone or any other method determined by the JDC.  Each Party will bear its own costs associated with attending such meetings.

 

(e)   Discontinuation of JDC.   The JDC shall continue to exist until the first to occur of (a) the Parties mutually agreeing to disband the JDC, (b) the first Regulatory Approval of a Product under this Agreement or (c) at any time after the end of the Development Term, thirty (30) days following Exactus BioSolutions’ receipt of written notice from Digital Diagnostics of its desire to terminate the JDC’s existence.  Thereafter the JDC shall have no further roles or responsibilities under this Agreement, and the JDC shall be replaced by designees of each Party that shall serve as a forum for the Parties for the purposes of the exchange of information and to update Digital Diagnostics on the progress of the Development and Commercialization of Products.  Any subcommittees and working groups established by the JDC in connection with the Development Program will dissolve at the end of the Development Term.

 

 

2.2   Limitations on Authority of the JDC.   The JDC will have solely the roles and responsibilities assigned to it in this Article 2.  The JDC will have no authority to amend, modify or waive compliance with this Agreement.   In addition, the JDC will have no authority to amend, modify or limit Exactus BioSolutions’ final decision-making authority with respect to the Development and Commercialization of Device and Product as set forth in this Agreement.  The JDC shall not have the authority to alter, or waive compliance by a Party with, a Party’s obligations under this Agreement.

 

2.3   Alliance Managers.   Should they be needed, each of the Parties will appoint one representative who possesses a general understanding of Development issues to act as its alliance manager (each, an “ Alliance Manager ”).  The role of the Alliance Manager is to act as a primary point of contact between the Parties to assure a successful relationship between the Parties.  The Alliance Managers will attend all meetings of the JDC and support the co-chairpersons of the JDC in the discharge of their responsibilities.  An Alliance Manager may bring any matter to the attention of the JDC if such Alliance Manager reasonably believes that such matter warrants such attention.  Each Party may change its designated Alliance Manager from time to time upon written notice to the other Party.  Any Alliance Manager may designate a substitute to temporarily perform the functions of such Alliance Manager upon written notice to the other Party’s Alliance Manager.  Each Alliance Manager will be charged with creating and maintaining a collaborative work environment within the JDC.  Each Alliance Manager also will:

 

(a)   be the point of first referral in all matters of conflict resolution;

 

(b)   provide a single point of communication both internally within the Parties’ respective organizations and between the Parties, including during such time as the JDC is no longer constituted;

 

(c)   plan and coordinate any cooperative efforts under this Agreement, if any, and internal and external communications; and

 

(d)   take responsibility for ensuring that JDC activities, such as the conduct of required JDC meetings, occur as set forth in this Agreement and that relevant action items, if any, resulting from such meetings are appropriately carried out or otherwise addressed.

 

2.4   Accounting and Financial Reporting.   The Parties will each appoint one (1) representative with expertise in the areas of accounting, cost allocation, budgeting and financial reporting (each, a “ Financial Representative ”) no later than forty-five (45) days after the Effective Date.  Such Financial Representative shall work under the direction of the JDC during the Development Term and shall provide services to and consult with the JDC thereafter, in order to address the financial, budgetary and accounting issues that arise in connection with the Development Plan or Development Program Costs.  Each Financial Representative may be replaced at any time by the represented Party by providing notice thereof to the other Party.  The Financial Representatives will meet as they or the JDC may agree is appropriate.

 

 

3.	DEVELOPMENT PROGRAM

 

3.1   Development Program.   During the Development Term, Exactus BioSolutions through the JDC will communicate plans and activities necessary for carrying out a Development program with respect to Devices as further described herein (the “ Development Program ”).  First, under the Development Program, the Parties will work collaboratively to continue and complete 510(k), PMA and CE-Mark enabling studies for FibriLyzer and FibriChip (the “ Initial Product Program ”).  .  Second, Under the Development Program, the Parties will work collaboratively to continue and complete 510(k), PMA and CE-Mark enabling studies for MatriLyzer and MatriChip (the “ Secondary Product Program ”).  The timing of initiating the Secondary Product Program is the sole responsibility of Exactus BioSolutions.  The Development Program of both the Initial Product Program and the Secondary Product Program will be carried out in accordance with the Development Plan.  The Development Program may also include activities directed toward the discovery Development of Devices that are backups or alternatives to Product.  As described in the initial Development Plan, Exactus BioSolutions will have lead responsibility for the conduct of the Initial Product Program and the Secondary Product Program.

 

 

The Development Program will be conducted by Exactus BioSolutions in good scientific manner, and in compliance with all applicable good laboratory practices, and applicable legal requirements, to attempt to achieve efficiently and expeditiously the objectives of the Development Program.  Each Party will comply with all Applicable Laws in the performance of work under this Agreement.  Each Party shall use reasonable efforts to ensure that its Affiliates and Third Party contractors (as applicable) perform any activities under the Development Program in good scientific manner and in compliance in all material respects with the requirements of Applicable Law.

 

Each Party agrees to make its employees reasonably available at their respective places of employment to consult with the other Party on issues arising during the performance of the Development Program.   Exactus BioSolutions and Digital Diagnostics will cooperate with each other in carrying out the Development Program.

3.2   Development Term.   The Development Program will be carried out during the two (2) year period following the Effective Date, unless this Agreement is terminated in accordance with Article 13 (such period, as may be extended pursuant to this Section 3.2, being the “ Development Term ”).   Exactus BioSolutions shall have the option to extend the Development Term for three (3) additional one (1) year periods on a year-by-year basis after the initial two (2) year period.  At least one hundred eighty (180) days prior to the scheduled expiration of the Development Term (i.e., the applicable anniversary of the Effective Date) Exactus BioSolutions will provide Digital Diagnostics with a nonbinding, good faith indication of whether or not Exactus BioSolutions intends to extend the Development Term.  In order to exercise its option to extend the Development Term, Exactus BioSolutions must provide Digital Diagnostics a written notice exercising Exactus BioSolutions’ option to extend the Development Term at least ninety (90) days prior to the scheduled expiration of the Development Term (i.e., the applicable anniversary of the Effective Date).  If Exactus BioSolutions does not provide such written notice, the Development Term will end when scheduled (i.e., on the applicable anniversary of the Effective Date).

 

3.3   Development Plan.

 

(a)   The Development Program will be carried out in accordance with a written development plan (the “ Development Plan ”).  The purpose of the Development Plan is to detail the responsibilities and activities of the Parties with respect to carrying out the Development Program.  The Development Plan will include a description of the specific activities to be performed by the Parties in support of the Development Program, the allocation of FTEs to perform such activities, and projected timelines for completion of such activities.  That part of the Development Plan as it relates to the Initial Product Program is the “ Initial Product Plan ”.  The Initial Product Plan will be provided by Exactus BioSolutions within 180 days of the signing of the Agreement.

 

(b)   Amendments to the Initial Product Plan.   The Initial Product Plan may be amended by  Exactus BioSolutions in the event of, and only to the extent reasonably required to address, (x) factors outside the reasonable control of  Exactus BioSolutions to the extent impacting Product, such as new data to the extent related to the safety and/or efficacy of Product or a communication from a Regulatory Authority that precludes the initiation or continued conduct of (or necessitates changes in the protocol for) a Clinical Trial for Product or (y) a shortage or delay of supply of Product by CMO under the CMO Agreement that prevents the initiation or continued conduct of a Clinical Study for Product (each of (x) and (y) being “ New Factors ”).  With respect to any such amendments to the Initial Product Plan, Exactus BioSolutions shall seek to notify Digital Diagnostics through the JDC.  In the case where Digital Diagnostics disagrees with any such amendments to the Initial Product Plan as a result of New Factors, and such matter cannot be resolved by the JDC or the Alliance Managers, then upon written request by Digital Diagnostics, the Parties agree to meet and discuss in good faith a possible resolution of such matter, with such meeting and discussion to include Exactus BioSolutions’ CEO or designate.  If the matter is not resolved following this meeting (or any subsequent meetings as the Parties may agree to), Exactus BioSolutions shall have final decision making authority with respect to such matter.

 

(c)   Amendments to the Development Plan Outside the Initial Product Plan.   Subject to and without limiting Section 3.3(b), the Development Plan as it applies to the conduct of activities outside of the Initial Product Plan (such as, for example, work on second Product) may be updated and amended from time to time, as the JDC determines, provided that if the JDC cannot reach consensus, Exactus BioSolutions shall have final decision making authority.  In exercising such final decision making authority,  Exactus BioSolutions shall be subject to the following: (i)  Exactus BioSolutions shall not have the right to require Digital Diagnostics to incur any additional costs or expenses other than the Development Program Costs, (ii)  Exactus BioSolutions shall not have the right to require Digital Diagnostics to conduct any activities outside the scope of the discovery, Development, production, manufacture and/or pre-clinical development of Devices and (iii)  Exactus BioSolutions shall not have the right to amend the terms and conditions of this Agreement.

 

 

3.4   Responsibility for Expenses for Conduct of Development Program.   Except as set forth in Section 3.4 or as may be otherwise specifically agreed to in writing by Digital Diagnostics and Exactus BioSolutions, each Party shall be responsible for its own costs and expenses that it incurs in connection with the conduct of the Development Program.

 

3.5   Development Program Records.   Digital Diagnostics will maintain complete and accurate records of all work conducted in the performance of the Development Program and all results, data, inventions and developments made in the performance of the Development Program.  Such records will be in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.  Digital Diagnostics shall maintain appropriate records sufficient to document the work performed by each of the individuals comprising the FTEs working in support of the Development Program and the time such individuals spent working in support of the Development Program.  Digital Diagnostics shall provide copies of all requested records (within thirty (30) days of such request), to the extent reasonably required for the performance of Exactus BioSolutions' rights and obligations under this Agreement; provided that Exactus BioSolutions shall maintain such records and the information of Digital Diagnostics in confidence in accordance with Article 12 and shall not use such records or information except to the extent otherwise permitted by this Agreement.

 

In order to protect the Parties’ Patent rights under U.S. law in any inventions conceived or reduced to practice during or as a result of the Development Program, each Party agrees to maintain a policy that requires its employees to record and maintain all data and information developed during the Development Program in such a manner as to enable the Parties to use such records to establish the earliest date of invention and/or diligence to reduction to practice.  At a minimum, the policy shall require such individuals to record all inventions generated by them in standard laboratory notebooks or other suitable means that are dated and corroborated by non-inventors on a regular, contemporaneous basis.

 

3.6   Disclosure of Results of Development Program.   The results of all work performed by a Party as part of the Development Program shall be promptly disclosed to the other Party in a reasonable manner as such results are obtained.  Digital Diagnostics and Exactus BioSolutions will provide reports and analyses at each JDC meeting, and more frequently upon reasonable request by the JDC, detailing the current status of the Development Program, including the utilization of the Digital Diagnostics FTE resources.  Within thirty (30) days following the end of each calendar quarter, Digital Diagnostics and Exactus BioSolutions shall each exchange and provide to the JDC a written report summarizing in reasonable detail the work performed by it under the Development Program and results achieved during the preceding calendar quarter.  In addition, upon reasonable request by a Party, the other Party will make presentations to the JDC of its activities related to the Devices and Products to inform such Party of the details of the work done in the performance of the Development Program.  The results, reports, analyses and other information regarding the Development Program disclosed by one Party to the other Party pursuant hereto may be used only in accordance with the rights granted and other terms and conditions under this Agreement.  Upon reasonable request by Exactus BioSolutions, for purposes of supporting the Development of a Product, Digital Diagnostics shall provide Exactus BioSolutions with additional data, results and other information with respect to the work performed by Digital Diagnostics in the performance of the Development Program.  Any reports required under this Section 3.7 may take the form of and be recorded in minutes of the JDC that will contain copies of any slides relating to the results and presented to the JDC.

 

In addition, at  Exactus BioSolutions’ request Digital Diagnostics will transfer (within thirty (30) days of such request) to  Exactus BioSolutions all data, results, and information related to testing and studies of the Devices (including analytical test results and non-clinical pharmacology and safety data) in the possession of Digital Diagnostics to the extent such data, results and/or information are necessary or reasonably useful for the continued Development and Commercialization of Products, including any and all Information directly relating to manufacturing methods (including related analytical methods) of the Devices or Products.

3.7   Development Efforts.   Each Party shall use good faith Diligent Efforts to perform the Development Program, including its responsibilities under the Development Plan.  In accordance with Section 3.3(b), the timelines with respect to the Initial Product Program (as set forth in the Initial Product Plan) shall not be delayed except in the event of, and only to the extent reasonably required to address, New Factors.

 

3.8   Materials Transfer.   In order to facilitate the Development Program, either Party may provide to the other Party certain materials for use by the other Party in furtherance of the Development Program and the Development and Commercialization of Products.  All such materials shall be used by the receiving Party in accordance with the terms and conditions of this Agreement solely for purposes of performing its rights and obligations under this Agreement, and the receiving Party shall not transfer such materials to any Third Party unless expressly contemplated by this Agreement (including the Development Plan) or upon the written consent of the supplying Party.  As set forth in the Development Plan, each Party shall provide the other Party with samples of Devices, Development and production reagents for Devices and biological materials with respect to screening assays, and such other materials as set forth in the Development Plan for use by the other Party in accordance with the terms and conditions of this Agreement (including the Development Plan).  Any materials provided by  Exactus BioSolutions to Digital Diagnostics shall be used by Digital Diagnostics solely for purposes of conducting the Development Program and will be returned to  Exactus BioSolutions (or destroyed as may be requested by Exactus BioSolutions in writing) promptly following the end of the Development Term or earlier upon request by  Exactus BioSolutions.  All Information related to such Exactus BioSolutions materials shall be Exactus BioSolutions Confidential Information.  All such Exactus BioSolutions’ materials and Digital Diagnostics Materials must be used with prudence and appropriate caution in any experimental work, since all of their characteristics may not be known.

 

 

If Digital Diagnostics develops any materials used in the Development Program, upon request by Exactus BioSolutions, Digital Diagnostics shall transfer to Exactus BioSolutions the materials and Information to enable  Exactus BioSolutions to use such assays in support of Exactus Diagnostic’s internal Development and development activities; provided that Exactus BioSolutions shall not during the Development Term use such assays in support of any program for the same indication as is being pursued for the Product.

 

At Exactus BioSolutions’ option, Digital Diagnostics agrees to deliver to Exactus BioSolutions, at Exactus BioSolutions’ expense, or to dispose of Development Program-specific animals in Digital Diagnostics’ possession following completion of the Development Term or earlier termination of this Agreement.  The Parties agree that if Digital Diagnostics wishes to retain any such Development Program-specific reagents, Exactus BioSolutions will consider reasonable offers from Digital Diagnostics to purchase such Development Program-specific reagents from Exactus BioSolutions.

 

In addition, upon reasonable request by Exactus BioSolutions, Digital Diagnostics shall provide to Exactus BioSolutions samples of any replicatable Digital Diagnostics Materials that were previously transferred to Exactus BioSolutions(but which are no longer available to Exactus BioSolutions), to the extent that such Digital Diagnostics Materials are then available to Digital Diagnostics.  In such event, Exactus BioSolutions shall reimburse Digital Diagnostics for the out-of-pocket shipping costs with respect to such transfer.

3.9   Subcontracting.   Except as provided in the Development Plan or as may be specifically permitted by the JDC, Digital Diagnostics shall not (sub) contract any of the work for which it is responsible in the performance of the Development Program.  In the case of any (sub)contracting of Development Program activities by a Party to a Third Party, such Third Party must have entered into a written agreement with such Party that includes terms and conditions protecting and limiting use and disclosure of Confidential Information and Know-How at least to the same extent as under this Agreement.  Each Party is responsible for compliance by such Third Party with the applicable terms and conditions of this Agreement in the same way and to the same extent as such Party.

 

3.10   Development Responsibilities.   From and after the Effective Date, Exactus BioSolutions shall assume sole responsibility for the Development of Products in the Field in the Territory during the Term at its own cost and expense (including responsibility for all funding, resourcing and decision-making, subject to Sections 3.3 and 3.4), except with respect to the performance by Digital Diagnostics of the Development Program activities assigned to Digital Diagnostics pursuant to the Development Plan and as otherwise may be agreed upon by the Parties in writing.  Exactus BioSolutions, by itself or through its Affiliates, shall use Diligent Efforts to Develop a Product in the Field in accordance with the Development Plan for the purpose of obtaining a Regulatory Approval in each Major Market, provided that Exactus BioSolutions’ obligations with respect to the conduct of the Initial Product Program and Initial Product Plan shall be subject to Section 3.8.  For clarity, it is understood and acknowledged that Diligent Efforts in the Development of Devices and Products may include sequential implementation of Clinical Trials and/or intervals between Clinical Trials for data interpretation and clinical program planning and approval.

 

3.11   Development Plans.

 

(a)   General.   The Development of Devices and Products in the Field by Exactus BioSolutions, including its Affiliates, shall be conducted pursuant to a development plan that shall include both (i) a pre-clinical/non-clinical development plan that outlines any significant non-clinical studies to be undertaken (including work under the Development Plan) and a clinical development plan that outlines the significant Clinical Studies to be undertaken to obtain Regulatory Approval for each Product in the Major Markets (the “ Development Plan ”).  The Development Plan shall incorporate by reference the Initial Product Plan, and the Initial Product Program activities shall be governed by the Initial Product Plan.  The Development Plan shall provide an overview of key activities projected for the Development of the applicable Product in the Field in the Major Markets.  The initial outline for the Development Plan (the “ Initial Development Plan ”) has been agreed to by the Parties as of the Effective Date.  Additional Development Plans for other Products shall be provided by Exactus BioSolutions to Digital Diagnostics through the JDC within six (6) months following the approval by Exactus BioSolutions (in accordance with Exactus BioSolutions’ usual procedures, standards and criteria as applied to its other programs) of a lead Device for full preclinical development.

 

(b)   Updates to the Development Plan.   During the Term, Exactus BioSolutions shall provide Digital Diagnostics (through the JDC if still constituted or, if the JDC is not constituted, through the Alliance Managers) with semi-annual updates to the Development Plan.  Such semi-annual updated Development Plan shall take into account completion or cessation of Development activities or commencement of new Development activities.  Any changes to the Development Plan shall be governed by Sections 3.3 and 3.4.

 

(c)   Decision-Making.   Except for the Development Plan (which is subject to Sections 3.3 and 3.4), Exactus BioSolutions shall have final decision-making authority with respect to all Development activities for Products in the Field in the Territory, including the activities to be conducted, applicable protocols and amendments thereto, the cessation or suspension of any study, updating the Development Plan as set forth in this Section 3.13, and approving any updates or amendments to the Development Plan.  Following the Development Term, the role of the JDC with respect to all Development activities for Products shall be limited to discussion and transfer of information in accordance with the roles assigned to the JDC as set forth in Article 2.

 

 

3.12   Technology Transfer to Exactus BioSolutions.   Without limiting the licenses and other rights and obligations under this Agreement (including the rights granted to Exactus BioSolutions under Article 7, and Digital Diagnostics’ obligation to transfer Digital Diagnostics Manufacturing Technology and Manufacturing Technology Documentation under Article 6), Digital Diagnostics shall, at no additional charge to Exactus BioSolutions, deliver, and cause its Affiliates, to deliver, to Exactus BioSolutions within fifteen (15) days following the Effective Date (and, thereafter during the Development Term, no less frequently than on a quarterly basis and more frequently upon reasonable request by Exactus BioSolutions) all data, information and reports in its possession relating to Devices, tangible embodiments of Digital Diagnostics Know-How which is reasonably necessary or useful for the Development, manufacture, and/or Commercialization of Product (including, but not limited to, preclinical and clinical data (including target specificity, pre-analytical variables, analytical sensitivity and specificity and clinical study reports) in hard copy and electronic form (if available)), assays, protocols, procedures, reports, and Regulatory Materials; provided , however , Digital Diagnostics shall have no obligation to deliver Digital Diagnostics Manufacturing Technology and Manufacturing Technology Documentation except as set forth under Article 6.  In addition, Digital Diagnostics shall promptly disclose to Exactus BioSolutions’ Patent Contact any new Digital Diagnostics inventions that embody Digital Diagnostics Know-How or any new Digital Diagnostics Patents.  Digital Diagnostics shall, upon reasonable request by Exactus BioSolutions, provide Exactus BioSolutions with copies, and permit inspection by Exactus BioSolutions of, its raw data and information for purposes of supporting or maintaining the Regulatory Approval for Product.  In addition, Digital Diagnostics shall, at no cost to Exactus BioSolutions, provide reasonable consultation and assistance for the purpose of transferring to Exactus BioSolutions such Digital Diagnostics Know-How to the extent reasonably necessary or useful for Exactus BioSolutions to Develop and Commercialize Device or Product in the Field.

 

3.13   Development Report.   At each quarterly meeting of the JDC, Exactus BioSolutions will provide to the JDC a summary and other information describing Exactus BioSolutions’ activities related to its Development of Products, in detail that is at least sufficient to establish that Exactus BioSolutions is using Diligent Efforts to Develop Products as set forth in Section 3.12 (the “ Development Report ”), provided , however , that Section 3.7 shall apply with respect to the sharing of the results of work performed by a Party as part of the Development Program (including the Initial Product Program).  The JDC will summarize such information in the minutes of each meeting.  If the JDC is no longer constituted, Exactus BioSolutions will provide the Development Report directly to [Digital Diagnostics]’s Alliance Manager.

 

3.14   Standards of Conduct.   Exactus BioSolutions shall perform, and shall use reasonable efforts to ensure that its Affiliates and Third Party contractors perform, its Development activities with respect to the Products in good scientific manner, and in compliance in all material respects with the requirements of Applicable Law.

 

3.15   Use of Third Parties.   Exactus BioSolutions may retain Third Parties to perform Development activities subject to the terms of this Agreement.  Any such Third Parties performing Development activities hereunder shall be subject to confidentiality and non-use obligations consistent with those set forth in this Agreement.  Exactus BioSolutions shall remain responsible and liable for the performance by its Affiliates or permitted Third Party contractors of those of its obligations under this Agreement that it (sub)licenses or delegates to an Affiliate or Third Party contractor.

 

3.16   Inspection of Digital Diagnostics Records.   Upon reasonable prior notice, Digital Diagnostics shall permit an independent internationally recognized certified public accounting firm (subject to obligations of confidentiality to Digital Diagnostics), appointed by Exactus BioSolutions and reasonably acceptable to Digital Diagnostics, to inspect the applicable records of Digital Diagnostics to verify the Development Program Costs (including the level of FTE effort); provided that such inspection shall not occur more often than once per Calendar Year, unless a material error is discovered in such inspection in which case Exactus BioSolutions shall have the right to conduct a more thorough and more frequent inspection for such period.  Any inspection conducted under this Section 3.18 shall be at the expense of Exactus BioSolutions.  Any overpayment by Exactus BioSolutions to Digital Diagnostics shall be credited against future amounts due by Exactus BioSolutions to Digital Diagnostics.  Any underpayment by Exactus BioSolutions shall be paid in the next quarterly reimbursement to Digital Diagnostics or within forty-five (45) days, whichever is later.

 

4.	REGULATORY MATTERS

 

4.1   Regulatory Matters for Products.

 

(a)   Regulatory Filings.   Exactus BioSolutions shall have sole responsibility for preparing and submitting all Regulatory Materials for Products in the Field in the Territory, including preparing, submitting and holding all IDEs and other such regulatory filings applicable regulatory approvals, marketing applications and correspondences  for Products; provided that Digital Diagnostics shall be responsible at the direction of Exactus BioSolutions for preparing certain subsections (including the Device Master File (DMF)) of the IDE and related technical reports and other documentation in support of the IDE for Products in the US and equivalent notifications to Notifying Bodies in the EU.  Digital Diagnostics shall cooperate fully with Exactus BioSolutions and provide to Exactus BioSolutions all Information Controlled by Digital Diagnostics, in each case as may be reasonably requested by Exactus BioSolutions, in order to support any Regulatory Materials for Products in the Field in the Territory and interactions with any Regulatory Authority in connection with Development and/or Regulatory Approval of Products.  To the extent that any Regulatory Materials cannot be assigned to Exactus BioSolutions if requested by Exactus BioSolutions as set forth in Section 4.1(b), Digital Diagnostics hereby grants to Exactus BioSolutions the exclusive right to reference and use all such Regulatory Materials (including any DMFs)) with respect to Product.

 

(b)   Ownership of Regulatory Materials.   Exactus BioSolutions will own all Regulatory Materials for Products and all such Regulatory Materials shall be submitted in the name of Exactus BioSolutions (or its Affiliate as applicable).

 

(c)   Decision-Making.   Except with respect to the Development Plan, which is subject to Sections 3.3 and 3.4, Exactus BioSolutions shall have sole decision-making authority with respect to regulatory matters with respect to Products (including the content of any regulatory filing or dossier, pharmacovigilance reporting, labeling, safety, and the decision to file or withdraw any MAA or to cease or suspend any Clinical Study).

 

(d)   Copies to Digital Diagnostics.   Exactus BioSolutions shall provide Digital Diagnostics with copies of all sections of all Regulatory Materials for Products for which Digital Diagnostics has assisted Exactus BioSolutions in drafting (such as the DMF section of the IDE for Product), and copies of all material communications to or from Regulatory Authorities to the extent related to such sections, in each case as soon as practicable, but in any event, within twenty (20) Business Days of filing or receipt by Exactus BioSolutions.  In addition, Exactus BioSolutions shall provide Digital Diagnostics with a complete copy of the IDE

 

(e)    for Product within twenty (20) Business Days of filing by Exactus BioSolutions.