UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022 | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to _____________.
Commission file number 0-20713
CASI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 58-1959440 |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) |
9620 Medical Center Drive, Suite 300
Rockville, Maryland
(Address of principal executive offices)
20850
(Zip code)
(240) 864-2600
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of exchange on which registered |
Common Stock |
| CASI |
| Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
⌧ NO ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
⌧ NO ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ◻ | Non-accelerated filer þ | Smaller reporting company ☑ |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ☐ NO ⌧
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most recent practicable date.
Class |
| Outstanding at August 5, 2022 |
Common Stock $.01 Par Value |
| 13,606,130 |
CASI PHARMACEUTICALS, INC.
Table of Contents
2
TRADEMARKS AND SERVICE MARKS
We own or have rights to trademarks and trademark applications for use in connection with the operation of our business, including, but not limited to, CASI and CASI PHARMACEUTICALS. All other trademarks appearing in this Quarterly Report on Form 10-Q that are not identified as marks owned by us are the property of their respective owners.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements also may be included in other statements that we make. All statements that are not descriptions of historical facts are forward-looking statements. These statements can generally be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” or “anticipates” or similar terminology. These forward-looking statements include, among others, statements regarding the timing of our commercial launch of products, clinical trials, our cash position and future expenses, and our future revenues.
Actual results could differ materially from those currently anticipated due to a number of factors, including: the risk that we may be unable to continue as a going concern as a result of our inability to raise sufficient capital for our operational needs; the possibility that we may be delisted from trading on The Nasdaq Capital Market if we fail to satisfy applicable continued listing standards, including compliance with the Nasdaq bid price rule; the risk in relation to being identified as a “Commission Identified Issuer”; the volatility in the market price of our common stock; the outbreak of the COVID-19 pandemic and its effects on global markets and supply chains; the risk of substantial dilution of existing stockholders in future stock issuances; the difficulty of executing our business strategy on a global basis including China; our inability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates or future candidates; legal or regulatory developments in China that adversely affect our ability to operate in China; our lack of experience in manufacturing products and uncertainty about our resources and capabilities to do so on a clinical or commercial scale; risks relating to the commercialization, if any, of our products and proposed products (such as marketing, safety, regulatory, patent, product liability, supply, competition and other risks); our inability to predict when or if our product candidates will be approved for marketing by the U.S. Food and Drug Administration (FDA), European Medicines Agency (EMA), National Medical Products Administration (NMPA), or other regulatory authorities; our inability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates or future candidates; the risks relating to the need for additional capital and the uncertainty of securing additional funding on favorable terms; the risks associated with our product candidates, and the risks associated with our other early-stage products under development; the risk that result in preclinical and clinical models are not necessarily indicative of clinical results; uncertainties relating to preclinical and clinical trials, including delays to the commencement of such trials; our ability to protect our intellectual property rights; our ability to design and implement a development plan for our ANDAs held by CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”); the lack of success in the clinical development of any of our products; and our dependence on third parties; the risks related to our dependence on Juventas to conduct the clinical development of CNCT19 and to partner with us to co-market CNCT19; risks related to our dependence on Juventas to ensure the patent protection and prosecution for CNCT19; risks relating to the commercialization, if any, of our proposed products (such as marketing, safety, regulatory, patent, product liability, supply, competition and other risks); risks relating to interests of our largest stockholders and our Chairman and CEO that differ from our other stockholders; and risks related to the development of a new manufacturing facility by CASI Wuxi. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition..
We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above and in Section IA, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our other filings with the Securities and Exchange Commission (“SEC”). We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place undue reliance on forward-looking statements, which only relate to events or information as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events. Additional information about the factors and risks that could affect our business, financial condition and results of operations, are contained in our filings with the U.S. Securities and Exchange Commission (“SEC”), which are available at www.sec.gov.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| |||||||
| June 30, 2022 |
| December 31, 2021 |
| |||
ASSETS |
|
|
|
| |||
Current assets: |
|
|
|
| |||
Cash and cash equivalents | $ | 18,862 | $ | 38,704 | |||
Investment in equity securities, at fair value |
| 5,705 |
| 9,868 | |||
Accounts receivable, net of $0 allowance for doubtful accounts | 10,260 | 9,803 | |||||
Inventories | 5,791 | 1,907 | |||||
Prepaid expenses and other |
| 1,666 |
| 1,688 | |||
Total current assets |
| 42,284 |
| 61,970 | |||
Property, plant and equipment, net |
| 14,853 |
| 12,712 | |||
Intangible assets, net |
| 10,952 |
| 12,203 | |||
Long-term investments | 41,671 | 40,128 | |||||
Right of use assets | 8,462 | 9,107 | |||||
Other assets |
| 635 |
| 2,178 | |||
Total assets | $ | 118,857 | $ | 138,298 | |||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY |
|
|
|
| |||
Current liabilities: |
|
|
|
| |||
Accounts payable | $ | 4,598 | $ | 4,789 | |||
Accrued and other current liabilities |
| 7,576 |
| 8,397 | |||
Bank borrowings | 1,001 | — | |||||
Total current liabilities |
| 13,175 |
| 13,186 | |||
Deferred income |
| 2,658 |
| 2,828 | |||
Other liabilities |
| 13,420 |
| 14,325 | |||
Total liabilities |
| 29,253 |
| 30,339 | |||
Commitments and contingencies |
|
|
|
| |||
Redeemable noncontrolling interest, at redemption value | 22,661 | 23,457 | |||||
Stockholders’ equity: |
|
|
|
| |||
Preferred stock, $1.00 par value: 5,000,000 shares authorized and 0 shares issued and |
| — |
| — | |||
outstanding | |||||||
Common stock, $0.01 par value: | |||||||
250,000,000 shares authorized at June 30, 2022 and December 31, 2021 |
|
| |||||
13,733,459 shares and 13,987,578 shares issued at June 30, 2022 and December 31, 2021, respectively; | |||||||
13,606,130 shares and 13,979,624 shares outstanding at June 30, 2022 and December 31, 2021, respectively | 1,373 | 1,399 | |||||
Additional paid-in capital |
| 695,369 |
| 694,826 | |||
Treasury stock, at cost: 127,329 shares and 7,954 shares held at June 30, 2022 and December 31, 2021 |
| (9,068) |
| (8,034) | |||
Accumulated other comprehensive income |
| (160) |
| 1,954 | |||
Accumulated deficit |
| (620,571) |
| (605,643) | |||
Total stockholders’ equity |
| 66,943 |
| 84,502 | |||
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $ | 118,857 | $ | 138,298 | |||
The accompanying notes are an integral part of these consolidated financial statements.
4
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
Three Months Ended June 30 |
| Six Months Ended June 30 |
| ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Revenues: | |||||||||||||
Product sales | $ | 8,550 | 7,125 | $ | 17,575 | $ | 12,825 | ||||||
Lease income from a related party |
| 23 | 37 |
| 60 |
| 73 | ||||||
Total revenues | 8,573 | 7,162 | 17,635 | 12,898 | |||||||||
Costs of revenues: | |||||||||||||
Cost of goods sold | 1,865 | 1,537 | 3,842 | 2,774 | |||||||||
Royalty fee | 1,685 | 1,445 | 3,466 | 2,566 | |||||||||
Total costs of revenues | 3,550 | 2,982 | 7,308 | 5,340 | |||||||||
Gross Profit | 5,023 | 4,180 | 10,327 | 7,558 | |||||||||
Operating expenses: |
|
|
|
|
|
| |||||||
Research and development | 3,851 | 2,255 | 7,843 | 7,513 | |||||||||
General and administrative | 5,520 | 5,488 | 10,845 | 10,990 | |||||||||
Selling and marketing |
| 3,398 | 3,360 | 6,675 | 6,075 | ||||||||
Acquired in-process research and development | — | 1,055 | — | 6,555 | |||||||||
Total operating expenses |
| 12,769 |
| 12,158 |
| 25,363 |
| 31,133 | |||||
Loss from operations | (7,746) | (7,978) | (15,036) | (23,575) | |||||||||
Non-operating income (expense): | |||||||||||||
Interest income, net |
| 40 | 76 | 114 | 182 | ||||||||
Other income | 11 | 33 | 49 | 53 | |||||||||
Foreign exchange gain | 1,355 | 76 | 1,688 | 295 | |||||||||
Change in fair value of investments |
| (1,153) | 1,914 | (2,708) | 3,482 | ||||||||
Impairment loss of long-term investments | — | (865) | — | (865) | |||||||||
Loss before income tax expense | (7,493) | (6,744) | (15,893) | (20,428) | |||||||||
Income tax expense | — | — | — | — | |||||||||
Net loss | (7,493) | (6,744) | (15,893) | (20,428) | |||||||||
Less: loss attributable to redeemable noncontrolling interest | (548) | (317) | (965) | (666) | |||||||||
Accretion to redeemable noncontrolling interest redemption value | 735 | 519 | 1,348 | 1,067 | |||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | $ | (7,680) | $ | (6,946) | $ | (16,276) | $ | (20,829) | |||||
Net loss per share (basic and diluted) | (0.56) | (0.50) | (1.19) | (1.57) | |||||||||
Weighted average number of common stock outstanding (basic and diluted) |
| 13,606,130 | 13,979,636 | 13,700,282 | 13,235,128 | ||||||||
Comprehensive loss: |
|
|
|
|
|
| |||||||
Net loss | $ | (7,493) | $ | (6,744) | $ | (15,893) | $ | (20,428) | |||||
Foreign currency translation adjustment |
| (3,541) | 1,005 | (3,293) | 833 | ||||||||
Total comprehensive loss | $ | (11,034) | $ | (5,739) | $ | (19,186) | $ | (19,595) | |||||
Less: Comprehensive loss attributable to redeemable noncontrolling interest | (1,800) | 14 | (2,144) | (403) | |||||||||
Comprehensive loss attributable to common stockholders | $ | (9,234) | $ | (5,753) | $ | (17,042) | $ | (19,192) | |||||
The accompanying notes are an integral part of these consolidated financial statements.
5
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
Accumulated | ||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Treasury | Comprehensive | Accumulated | |||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income /(Loss) |
| Deficit |
| Total | ||||||||||
Balance at December 31, 2021 | — | $ | — | 13,979,624 | $ | 1,399 | $ | 694,826 | $ | (8,034) | $ | 1,954 | $ | (605,643) | $ | 84,502 | ||||||||||
Repurchase and retirement of common stock | — | — | (373,494) | (26) | (1,940) | (1,034) | (3,000) | |||||||||||||||||||
Stock-based compensation expense, net of forfeitures |
| — |
| — |
| — | — | 1,908 | — | — | — |
| 1,908 | |||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 175 | — | 175 | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. |
| — |
| — |
| — | — | (613) | — | — | (7,983) |
| (8,596) | |||||||||||||
Balance at March 31, 2022 |
| — | $ | — |
| 13,606,130 | $ | 1,373 |
| 694,181 |
| (9,068) | 2,129 |
| (613,626) |
| 74,989 | |||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | 1,923 | — | — | — | 1,923 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (2,289) | — | (2,289) | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | — | — | — | — | (735) | — | — | (6,945) | (7,680) | |||||||||||||||||
Balance at June 30, 2022 |
| — | $ | — |
| 13,606,130 | $ | 1,373 | $ | 695,369 | $ | (9,068) | $ | (160) | $ | (620,571) | $ | 66,943 | ||||||||
Accumulated | ||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Treasury | Comprehensive | Accumulated | |||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Loss |
| Deficit |
| Total | ||||||||||
Balance at December 31, 2020 | — | $ | — | 12,394,271 | $ | 1,240 | $ | 658,246 | $ | (8,034) | $ | 589 | $ | (570,501) | $ | 81,540 | ||||||||||
Issuance of common stock pursuant to financing agreements | — | — | 1,585,365 |
| 159 |
| 32,341 |
| — | — |
| — | 32,500 | |||||||||||||
Stock issuance costs |
| — |
| — |
| — | — | (2,019) | — | — | — |
| (2,019) | |||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | — |
| — |
| 1,998 |
| — | — |
| — | 1,998 | |||||||||||||
Foreign currency translation adjustment |
| — |
| — |
| — | — | — | — | (104) | — |
| (104) | |||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. |
| — |
| — |
| — |
| — |
| (548) |
| — | — |
| (13,335) |
| (13,883) | |||||||||
Balance at March 31, 2021 |
| — | $ | — |
| 13,979,636 | $ | 1,399 |
| 690,018 |
| (8,034) | 485 |
| (583,836) |
| 100,032 | |||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | 1,040 | — | — | — | 1,040 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 674 | — | 674 | |||||||||||||||||
Net loss attributable to CASI Pharmaceuticals, Inc. | — | — | — | — | (519) | — | — | (6,427) | (6,946) | |||||||||||||||||
Balance at June 30, 2021 |
| — | $ | — |
| 13,979,636 | $ | 1,399 | $ | 690,539 | $ | (8,034) | $ | 1,159 | $ | (590,263) | $ | 94,800 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended |
| ||||||
| June 30, 2022 |
| June 30, 2021 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| |||
Net loss | $ | (15,893) | (20,428) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
| ||||||
Depreciation for property, plant and equipment |
| 105 | 307 | ||||
Amortization of intangible assets |
| 662 | 674 | ||||
Reduction in the carrying amount of the right-of-use assets | 643 | 687 | |||||
Loss / (gain) on disposal of property, plant and equipment |
| — | 65 | ||||
Stock-based compensation expense |
| 3,831 | 3,038 | ||||
Acquired in-process research and development |
| — | 6,555 | ||||
Change in fair value of investments |
| 2,708 | (3,482) | ||||
Impairment loss of long-term investments | — | 865 | |||||
Changes in operating assets and liabilities: |
| ||||||
Accounts receivable | (457) | (1,122) | |||||
Inventories | (3,884) | (2,119) | |||||
Prepaid expenses and other assets |
| 257 | 352 | ||||
Accounts payable |
| 236 | 884 | ||||
Accrued and other current liabilities and other liabilities |
| (1,895) | (1,592) | ||||
Deferred income | (34) | (25) | |||||
Net cash used in operating activities |
| (13,721) |
| (15,341) | |||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| |||
Proceeds from disposal of property and equipment | 138 | — | |||||
Purchases of property, plant and equipment | (1,719) | (1,208) | |||||
Proceeds from sales of BioInvent equity securities | 1,294 | — | |||||
Cash paid to acquire equity securities in Precision Autoimmune Therapeutics Co., Ltd. | (2,962) | — | |||||
Cash paid to acquire in-process research and development | — | (6,250) | |||||
Cash paid to acquire convertible loan in Cleave | — | (5,500) | |||||
Cash paid to acquire convertible loan in Black Belt Tx Limited | — | (86) | |||||
Net cash used in investing activities |
| (3,249) |
| (13,044) | |||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
| ||||
Proceeds from bank borrowings | 1,001 | 709 | |||||
Repurchase of common stock | (3,000) | — | |||||
Stock issuance costs |
| — | (2,019) | ||||
Proceeds from sale of common stock |
| — | 32,500 | ||||
Net cash (used in) provided by financing activities |
| (1,999) |
| 31,190 | |||
Effect of exchange rate change on cash and cash equivalents |
| (873) | 488 | ||||
Net (decrease)/ increase in cash and cash equivalents | (19,842) | 3,293 | |||||
|
| ||||||
Cash and cash equivalents at beginning of period | 38,704 | 57,064 | |||||
Cash and cash equivalents at end of period | $ | 18,862 | $ | 60,357 | |||
|
|
| |||||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment in accrued and other current liabilities | $ | 469 | $ | — | |||
Accrual for acquisition of in-process research and development | — | 305 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
7
CASI Pharmaceuticals, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”) (Nasdaq: CASI) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. The Company was incorporated in 1991, and in 2012, with new leadership, the Company shifted its business strategy to China and has since built an infrastructure in China that includes sales and marketing, medical affairs, regulatory and clinical development and in the foreseeable future, manufacturing. In 2014, the Company changed its name to “CASI Pharmaceuticals, Inc.” The majority of the Company’s operations are now located in China. The Company is focused on acquiring, developing and commercializing products that augment its hematology/oncology therapeutic focus as well as other areas of unmet medical need. The Company is executing its plan to become a biopharmaceutical leader by launching medicines in the greater China market leveraging its China-based regulatory, clinical and commercial competencies and its global drug development expertise.
The Company launched its first commercial product, EVOMELA® (Melphalan for Injection) in China in August 2019. In China, EVOMELA® is approved for use as a conditioning treatment prior to stem cell transplantation and as a palliative treatment for patients with multiple myeloma. The other core hematology/oncology assets in the Company’s pipeline include CNCT 19, an autologous CD19 CAR-T investigative product (“CNCT19”); BI-1206, an antibody which has a novel mode-of-action, blocking the inhibitory antibody checkpoint receptor FcγRIIB to unlock anti-cancer immunity and enhance the efficacy of antibody-based immunotherapy in both hematological malignancies and solid tumors; CB-5339, a novel VCP/p97 inhibitor focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with various malignancies; and CID-103, a full human IgG1 anti-CD38 monoclonal antibody recognizing a unique epitope that has demonstrated encouraging preclinical efficacy and safety profile compared to other anti-CD38 monoclonal antibodies.
Liquidity and Capital Resources
Since its inception in 1991, the Company has incurred significant losses from operations and, as of June 30, 2022, had incurred an accumulated deficit of $620.6 million.
The Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the interim consolidated financial statements are issued. As of June 30, 2022, the Company had a balance of cash and cash equivalents of $18.9 million, of which $13.4 million was held in the financial institutions in the PRC. The Company intends to continue to exercise tight controls over operating expenditures and will continue to pursue opportunities, as required, to raise additional capital and will also actively pursue non- or less-dilutive capital raising arrangements or opportunities.
Risks and Uncertainties
During the peak of the COVID-19 pandemic in 2020, the Company experienced disruptions to the EVOMELA® marketing and sales activities as well as to the supply chain for EVOMELA®. The COVID-19 pandemic also impacted the targeted start time of its CID-103 trial due to the lock down of many medical facilities in Europe. During 2021 and the first quarter of 2022, the Company has experienced minimal disruption to its business activities or supply chain as a result of the COVID-19 pandemic. However, since the second quarter of 2022, the COVID-19 related lock down and associated restrictions in certain areas in China led to limitation of access to local hospitals, which had an adverse impact on the sales of EVOMELA for the second quarter, and is expected to have a negative impact on the same for the whole year. The restrictions also adversely impacted the enrolling of patients for the CNCT19 Phase II registration studies. Given that such COVID-19 related restrictions are beyond the Company’s control, it is unable to, at this stage, assess for how long such COVID-19 related restrictions may continue and the full extent to which such restrictions may directly and indirectly impact the Company’s business operations.
The Company currently relies on a single source for the supply of EVOMELA®. The continuation of the COVID-19 pandemic or the emergence of new COVID-19 variants or new pandemics may affect the economies and financial markets of many countries, which may result in a period of economic slowdown or recessions. In such an event, the Company’s ability to continue to commercialize and expand distribution of EVOMELA® could be adversely affected if the supplier refuses or is unable to provide products for any reason (including the occurrence of an event like the COVID-19 pandemic that makes delivery impractical). The Company would have
8
to work with Acrotech to negotiate an agreement with a substitute supplier, which, assuming a substitute supplier was available, would likely interrupt the manufacturing of EVOMELA®, cause supply chain delays and increase costs.
The COVID-19 pandemic has adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, which along with high degree of uncertainty in the global financial ecosystem and certain political instabilities may result in a period of regional, national, and global economic slowdown or regional, national, or global recessions that could affect the Company’s ability to continue to commercialize and expand distribution of EVOMELA® (Melphalan For Injection) or other drugs in its existing product pipeline. Early in the COVID-19 pandemic, the Company experienced a disruption to its supply chain for EVOMELA®, it has experienced no supply disruption in 2021 and the first half year of 2022; however, there can be no assurance that restrictions will not be imposed again. In addition, economic and other uncertainties may adversely affect other parties’ willingness to negotiate and execute product licenses and thus hamper our ability to in-license clinical-stage and late-stage drug candidates in China or elsewhere.
2. License and Distribution Agreements
Acrotech License Arrangements
The Company has product rights and perpetual exclusive licenses from Acrotech Biopharma L.L.C. (“Acrotech”) to develop and commercialize its commercial product EVOMELA® (Melphalan Hydrochloride For Injection) in the greater China region (which includes Mainland China, Taiwan, Hong Kong and Macau). As well the Company had similar rights to assets ZEVALIN® (Ibritumomab Tiuxetan) and MARQIBO® (Vincristine Sulfate Liposome Injection). The exclusive licenses held by the Company were originally licensed from Spectrum Pharmaceuticals Cayman, LP Inc. (“Spectrum”), and Spectrum completed the sale of its portfolio of FDA-approved hematology/oncology products including EVOMELA® to Acrotech on March 1, 2019. On December 3, 2018, the Company received NMPA’s approval for importation, marketing and sales in China and in August 2019 the Company launched commercial sales EVOMELA® in China. The NMPA required EVOMELA® post-marketing study has been completed and the clinical study report is being finalized for regulatory submission. Based on the FDA withdrawal of the approved US indication for MARQIBO® (Vincristine Sulfate Liposome Injection) in May 2022, the product rights and perpetual exclusive licenses to develop and commercialize MARQIBO® in the greater China region have been returned to Acrotech. Also in May 2022, the Company terminated the license agreement between Acrotech and the Company with respect to ZEVALIN®, which was assumed by Acrotech from Spectrum.
China Resources Pharmaceutical Commercial Group International Trading Co., Ltd.
In March 2019, the Company entered into a three-year exclusive distribution agreement with China Resources Pharmaceutical Commercial Group International Trading Co., Ltd. (“CRPCGIT”) to appoint CRPCGIT on an exclusive basis as its distributor to distribute EVOMELA® in the territory of the People’s Republic of China (excluding Hong Kong, Taiwan and Macau), subject to certain terms and conditions. The Company’s internal marketing and sales team are responsible for commercial activities, including, for example, direct interaction with Key Opinion Leaders (KOL), physicians, hospital centers and the generating of sales. The agreement was renewed in March 2022 for another two years.
Precision Autoimmune Therapeutics Co., Ltd., (previously known as Beijing Tianshi Tongda Pharmaceuticals Technology Co., Ltd)
In May 2022, the Company entered into a Sublicense Agreement (the “Sublicense Agreement”) with Precision Autoimmune Therapeutics Co., Ltd. (“PAT”), a company established under the laws of P.R. China, pursuant to which the Company granted PAT an exclusive (subject to the Commercialization and Co-Marketing rights), perpetual, worldwide license, with the right to freely grant further sublicenses subject to terms and conditions in the Sublicense Agreement, for the investigational anti-CD38 monoclonal antibody TSK011010 licensed and controlled by the Company from Black Belt Therapeutics Limited, in the treatment, prevention and diagnosis of autoimmune diseases, conditions and disorders in humans.
Pursuant to the Sublicense Agreement, PAT will make an upfront payment of $10,000,000 equivalent in two equal instalments upon completion of its first and second financing, respectively, plus potential future payments of development and sales milestones and royalties to the Company.
Also in May 2022, CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”) entered into an agreement for the investment in PAT in the amount of RMB 20.0 million (approximately $3.0 million) in cash during PAT’s first equity financing (see Note 5).
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Juventas Cell Therapy Ltd. (“Juventas”)
In June 2019, the Company entered into a license agreement for exclusive worldwide license to commercialize an autologous anti-CD19 T-cell therapy product (CNCT19) from Juventas (the “Juventas license agreement”). Juventas is a China-based company engaged in cell therapy. The terms of the agreement include RMB 70 million ($10 million) of milestone payments upon the registration of Phase II clinical trial of CNCT19 and sales royalty payments. The milestone was met during the quarter ended September 30, 2020. As a result, the Company paid the milestone payment of RMB 70 million to Juventas in September 2020, which was expensed as acquired in-process research and development in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020.
In September 2020, Juventas and its shareholders (including CASI Biopharmaceuticals) agreed to certain terms and conditions required by a new third-party investor to facilitate the Series B financing of Juventas, pursuant to which the Company agreed to amend and supplement the original licensing agreement (the "Supplementary Agreement") by agreeing to pay Juventas certain percentage of net profits generated from commercial sales of CNCT19 in addition to the royalty fee payment calculated as a percentage of net sales. The Supplementary Agreement also specifies a minimum annual target net profit to be distributed to Juventas and certain other terms and obligations. In return, the Company obtained additional equity interests in Juventas.
Under the Supplementary Agreement, Juventas and the Company will jointly market CNCT19, including, but not limited to, establishing medical teams, developing medical strategies, conducting post-marketing clinical studies, establishing Standardized Cell Therapy Centers, establishing and training providers with respect to cell therapy, testing for cell therapy, and monitoring quality controls (cell collection and transfusion, etc.), and patient management (adverse reactions treatment, patients’ follow-up visits, and establishment of a database). The Company also will reimburse Juventas for a portion of Juventas’ marketing expenses as reviewed and approved by a joint commercial committee to be constituted. The Company will continue to be responsible for recruiting and establishing a sales team to commercialize CNCT19.
BioInvent International AB
In October 2020, the Company entered into an exclusive licensing agreement with BioInvent International AB (“BioInvent”) for the development and commercialization of novel anti-FcγRIIB antibody, BI-1206, in mainland China, Taiwan, Hong Kong and Macau. BioInvent is a biotechnology company focused on the discovery and development of first-in-class immune-modulatory antibodies for cancer immunotherapy. BI-1206 is being investigated in a Phase 1/2 trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in patients with solid tumors, and in a Phase 1/2a trial in combination with MabThera® (rituximab) in patients with relapsed/refractory non-Hodgkin lymphoma (NHL). The CASI Clinical Trial Application (CTA) was approved by China National Medical Products Administration (NMPA) in December 2021 and ethics committee approvals have been received in January of 2022. The Company obtained approval from Human Genetic Resources Administration of China (“HGRAC”) in April 2022. The Company is planning a Phase 1 study of BI-1206 in combination with rituximab with a single agent BI-1206 run in phase in patients with NHL (mantle cell lymphoma, marginal zone lymphoma, and follicular lymphoma) to assess PK, safety and tolerability, select the Recommended Phase 2 Dose and assess early signs of clinical efficacy as part of its development program for BI-1206 in China. The study received regulatory approval from the China Center for Drug Evaluation (“CDE”) in the second quarter of 2022, the first-patient enrolled is expected to be initiated in the second half of 2022.
Under the terms of the agreement, BioInvent and CASI will develop BI-1206 in both hematological malignancies and solid tumors, with CASI responsible for commercialization in China and associated markets. CASI made a $5.9 million upfront payment in November 2020 to BioInvent and will pay up to $83 million in development and commercial milestone payments plus tiered royalties in the high-single to mid-double-digit range on net sales of BI-1206. Because BI-1206 underlying the acquired rights has not reached technological feasibility and has no alternative future uses, the Company expensed $5.9 million as acquired in-process research and development in 2020.
Black Belt Therapeutics Limited
In April 2019, the Company entered into a license agreement with Black Belt Therapeutics Limited (“Black Belt”) for exclusive worldwide rights to CID-103, an investigational anti-CD38 monoclonal antibody (Mab) (formerly known as TSK011010). The Company expects that its clinical materials and commercial inventory will be supplied by one or more contract manufacturers with whom the Company has contracted with. Under the terms of the agreement, CASI obtained global rights to CID-103 for an upfront
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payment of 5 million euros ($5.7 million) and would pay up to $46.3 million in development milestone payments and certain royalties based on sales milestones. In June 2021, the Company achieved the First-Patient-In (FPI) in the Phase 1 dose escalation and expansion study of CID-103, and made $750,000 milestone payment in June 2021 and €250,000 ($305,000) payment in August 2021 under the terms of the agreement. Because CID-103 underlying the acquired rights has not yet reached technological feasibility and has no alternative uses, the Company expensed 5 million euros and $1.1 as acquired in-process research and development, respectively, in 2019 and 2021. As mentioned above, in May 2022, the Company entered into the Sublicense Agreement to grant PAT an exclusive, perpetual, worldwide license, for the investigational anti-CD38 monoclonal antibody TSK011010.
Cleave Therapeutics, Inc.
In March 2021, the Company entered into an exclusive license with Cleave Therapeutics, Inc. (“Cleave”) for the development and commercialization of CB-5339, an oral novel VCP/p97 inhibitor, in both hematological malignancies and solid tumors, in Mainland China, Hong Kong, Macau and Taiwan. Cleave is a clinical-stage biopharmaceutical company focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with cancer. Cleave and the Company will develop CB-5339 in both hematological malignancies and solid tumors, with CASI responsible for development and commercialization in China and associated markets. The Company paid a $5.5 million upfront payment to Cleave and will pay up to $74 million in development and commercial milestone payments plus tiered royalties in the high-single to mid-double-digit range on net sales of CB-5339.
CB-5339 is being evaluated by Cleave in a Phase 1 clinical trial in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). Because CB-5339 has not yet reached technological feasibility and has no alternative future uses, the Company expensed the $5.5 million upfront payment as acquired in-process research and development in 2021.
Pharmathen Global BV
On October 29, 2019, the Company entered into an exclusive distribution agreement with Pharmathen Global BV ("Pharmathen") for the development and distribution of octreotide long acting injectable (Octreotide LAI) microsphere in China. Octreotide LAI formulations, which are approved in various European countries, are considered a standard of care for the treatment of acromegaly and the control of symptoms associated with certain neuroendocrine tumors. CASI intends to advance the development, import drug registration, and market approval of this product in China.
The terms of the agreement include an upfront payment of 1 million euros which was paid by the Company in 2019, and up to 2 million euros of additional milestone payments, of which 1.5 million euros ($1.7 million) was paid by the Company with achievements of certain milestones and was expensed as acquired in-process research and development in 2020. CASI is responsible for the development, import drug registration, product approval and commercialization in China. CASI has a non-royalty exclusive distribution period after the product launch at an agreed supply costs for the first three years.
Riemser Pharma GmbH
In August 2019, the Company entered into a distribution agreement in China with Riemser Pharma GmbH (“Riemser”) to a novel formulation of thiotepa, a chemotherapeutic agent, which has multiple potential indications including use as a conditioning treatment for use prior to allogenic hematopoietic stem cell transplantation. Thiotepa has a long history of established use in the hematology/oncology setting. Pursuant to the distribution agreement, CASI obtained the exclusive distribution right of the products in China, and Riemser will be responsible for manufacturing and supplying CASI with clinical materials and commercial inventory. The Company is applying NADA registration and, subject to regulatory and marketing approvals, the Company intends to advance and commercialize this product in China. In January 2020, Riemser was acquired by Esteve Healthcare, S.L. (“ESTEVE”), an international pharmaceutical company headquartered in Barcelona, Spain. There is no contingent milestone payment due to Riemser under the agreement.
3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company's significant accounting estimates relate to recoverability of operating lease right-of-use assets, intangible assets and long-term investments, net realizable value and obsolescence allowance for inventories, deferred tax assets and valuation allowance, allowance for doubtful accounts, stock-based arrangements and fair value of investments. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results may differ from those estimates, and such differences may be material to the consolidated financial statements.
Recent Accounting Pronouncements
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those transactions. The Company does not expect the impact of this guidance to have a material impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”) and subsequent amendments to the initial guidance including ASU No. 2018-19, ASU No. 2019-04, and ASU No. 2019-05 (collectively, “Topic 326”). Topic 326 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This standard is effective for public business entities, excluding entities eligible to be smaller reporting companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, this standard is effective for annual and interim periods beginning after December 15, 2022 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. As a smaller reporting company, the Company expects to adopt this standard in fiscal year 2023. The Company is currently assessing the impact that the adoption of this ASU will have on the consolidated financial statements.
4.Revenue Related Information
The Company’s revenue is primarily consisted of sales of EVOMELA ®. As of June 30, 2022, the Company did not incur, and therefore did not defer, any material costs to obtain or fulfill contracts. The Company did not have any contract assets or contract liabilities as of June 30, 2022 and December 31, 2021. There was no product exchange during the periods ended June 30, 2022 and 2021.
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5. Investment in Equity Securities, at Fair Value and Long-term Investments
Investment in Equity Securities, at Fair Value
The following table summarizes the Company’s investment in equity securities at fair value as of June 30, 2022 and December 31, 2021, respectively:
Gross | |||||||||||
(In thousands) | unrealized | Aggregate fair | |||||||||
June 30, 2022 |
| Classification |
| Cost |
| gains /(losses) |
| value | |||
MaxCyte - equity interest |
| Investment | $ | — | $ | 1,753 | $ | 1,753 | |||
BioInvent - equity interest |
| Investment | $ | 4,337 | $ | (385) | $ | 3,952 | |||
Total | $ | 5,705 | |||||||||
Gross | |||||||||||
(In thousands) | unrealized | Aggregate fair | |||||||||
December 31, 2021 |
| Classification |
| Cost |
| gains |
| value | |||
MaxCyte - equity interest |
| Investment | $ | — | $ | 3,866 | $ | 3,866 | |||
BioInvent - equity interest |
| Investment | $ | 5,661 | $ | 341 | $ | 6,002 | |||
Total | $ | 9,868 | |||||||||
In the second quarter of 2022, the Company sold 275,000 ordinary shares of BioInvent for $1.3 million. The Company recognized gain of $131,000 in consolidated statements of operations and comprehensive loss.
Unrealized gains on the Company’s equity investment for the three months ended June 30, 2022 and 2021 were nil and $1.9 million, respectively. Unrealized gains on the Company’s equity investment for the six months ended June 30, 2022 and 2021 were nil and $3.4 million, respectively. Unrealized losses on the Company’s equity investment for the three months ended June 30, 2022 and 2021 were $1.4 million and nil, respectively. Unrealized losses on the Company’s equity investment for the six months ended June 30, 2022 and 2021 were $3.0 million and nil, respectively. Unrealized gains (losses) on the Company’s equity investments are recognized as change in fair value of investment in the consolidated statements of operations and comprehensive loss.
Long-term Investments
Long-term investments as of June 30, 2022 and December 31, 2021 consisted of the following:
Gross | Foreign | ||||||||||||||
Gross | unrealized | currency | |||||||||||||
June 30, 2022 | unrealized | losses (including | translation | Aggregate | |||||||||||
(In thousands) |
| Cost |
| gains |
| impairment) |
| adjustment |
| fair value | |||||
Available-for-sale debt securities: |
|
|
|
|
|
|
|
| |||||||
Alesta Therapeutics B.V. - convertible loan | $ | 261 | $ | 13 | $ | — | $ | — | $ | 274 | |||||
Securities measured at fair value: | |||||||||||||||
BioInvent International AB - warrants | 656 | — | (170) | — | 486 | ||||||||||
Cleave Therapeutics, Inc. - convertible loan | 5,500 | 342 | — | — | 5,842 | ||||||||||
Equity securities without readily determinable fair value: |
|
|
|
|
|
|
|
|
| ||||||
Alesta Therapeutics B.V. - equity interests |
| 2,250 |
| — |
| (865) |
| — |
| 1,385 | |||||
Juventas Cell Therapy Ltd - equity interests |
| 23,500 |
| 6,958 |
| — |
| 240 |
| 30,698 | |||||
Juventas Cell Therapy Ltd - put option |
| 491 |
| — |
| (521) |
| 30 |
| — | |||||
Prepayment for investment: | |||||||||||||||
Precision Autoimmune Therapeutics Co., Ltd - equity interests | 2,962 | — | — | 24 | 2,986 | ||||||||||
Total | $ | 35,620 | $ | 7,313 | $ | (1,556) | $ | 294 | $ | 41,671 | |||||
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Investment in Precision Autoimmune Therapeutics Co., Ltd., (“PAT”)
In May 2022, CASI China entered into an agreement for the investment in PAT in the amount of RMB 20.0 million (approximately $3.0 million) in cash during PAT’s first equity financing. Upon consummation of such equity financing, CASI China will hold 15% equity interests of PAT and will hold third of the board seats. The leading investor, Guangzhou Redhill Capital Investment Management Co., Ltd, a venture capital company unaffiliated to the Company, will hold 27.5% equity of PAT, and the follower investor, Wuxi Zhihe Daokang Phase II Venture Capital Partnership (Limited Partnership), a venture capital partnership of which Dr. Wei-Wu He, chairman of the board of directors and chief executive officer of the Company, is the general partner, will also hold 27.5% equity of PAT, with the remaining 30% equity held by Hainan Jingshi Kangji Pharmaceuticals Technology Partnership (Limited Partnership), a partnership formed as the equity holding vehicle for PAT’s Employee Stock Ownership Plans. As of June 30, 2022, CASI China has paid all the consideration, the transaction had not been consummated and PAT had no business operation.
6. Inventories
The Company’s inventories consist of finished goods amounted to $5.8 million and $1.9 million, as of June 30, 2022 and December 31, 2021, respectively. No write down to the carrying amount of inventory have been recorded in the three and six months ended June 30, 2022 and 2021.
7.Property, Plant and Equipment
Property, plant and equipment consist of the following:
8. Leases
Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.
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Operating lease liabilities are included in accrued and other current liabilities and other liabilities (noncurrent) in the consolidated balance sheets as of June 30, 2022 and December 31, 2021.
In November 2019, CASI Wuxi entered into a fifty-year lease agreement for the right to use state-owned land in China for the construction of a manufacturing facility. The land parcel is 74,028.40 square meters. The Company classifies this lease as an operating lease. The Company prepaid all of the lease payments for the land use right in 2019 in the amount of RMB 45 million (equivalent to $6.5 million).
Rent expense for the six months ended June 30, 2022 and 2021 was $0.7 million and $0.8 million, respectively. There were no variable lease costs or sublease income for leased assets for the six months ended June 30, 2022 and 2021.
Right of use assets and liabilities as of June 30, 2022 and December 31, 2021 on the condensed consolidated balance sheets were as follows:
| June 30, | December 31, |
| ||||
(In thousands) |
| 2022 |
| 2021 | |||
$ | 8,462 | $ | 9,107 | ||||
$ | 1,038 | $ | 1,061 | ||||
| 858 |
| 1,105 | ||||
$ | 1,896 | $ | 2,166 | ||||
Supplemental cash flow information related to leases was as follows:
All of the Company’s existing leases as of June 30, 2022 and December 31, 2021 were classified as operating leases. As of June 30, 2022 and December 31, 2021, the Company had nine and eight, respectively, material operating leases for land and facilities with remaining terms expiring from 2022 through 2069 and a weighted average remaining lease term of 37.15 years and 36.47 years, respectively. The Company has fair value renewal options for many of the Company’s existing leases, none of which are considered reasonably certain of being exercised or included in the minimum lease term. Weighted average discount rates used in the calculation of the lease liability as of June 30, 2022 and December 31, 2021 is 3.53% and 3.56%, respectively. The discount rates reflect the estimated incremental borrowing rate, which includes an assessment of the credit rating to determine the rate that the Company would
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have to pay to borrow, on a collateralized basis for a similar term, an amount equal to the lease payments in a similar economic environment.
A maturity analysis representing the future undiscounted cash flow of the Company’s operating leases liabilities as of June 30, 2022 is as follows:
(In thousands) |
|
| |
2022 (remaining six months) | $ | 528 | |
2023 |
| 939 | |
2024 |
| 484 | |
Thereafter |
| 13 | |
Total |
| 1,964 | |
Discount factor |
| (68) | |
Lease liability |
| 1,896 | |
Amounts due within 12 months |
| 1,038 | |
Non-current lease liability | $ | 858 |
9.Accrued and Other Current Liabilities, and Other Liabilities
10. Bank Borrowings
In May 2022, the Company entered into a Business Loan Agreement (together with related security agreements and promissory note, the “Agreement”) with East West Bank (“EWB”). Under the Agreement, EWB made available to the Company a revolving line of credit up to a maximum of $10.0 million. The Agreement will mature on December 31, 2022, unless extended to April 30, 2024 subject to certain conditions as defined in the Agreement. In general, amounts borrowed under the Agreement are secured by a lien on the Company’s assets, including first priority security interest in accounts receivable and inventory and pledge of available-for-sale securities. As of June 30, 2022, the outstanding principal balance under this agreement was nil.
In June 2022, the Company’s subsidiary, CASI China entered into a Loan Agreement with China International Trust and Investment Corporation Bank (“CITIC Bank”). Under the Loan Agreement, CITIC Bank made available to CASI China a guaranteed line of credit up to a maximum of RMB 20.0 million (approximately $3.0 million). The Loan Agreement will mature on June 13, 2023. The joint and several liability guarantee was provided by Beijing Shouchuang Financing Guarantee Co. Ltd. concurrently with the Loan
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Agreement. The loan was secured by a pledge of the land use right held by CASI Wuxi, one of the Company’s subsidiary. Interest accrues on the principal amounts of the loans outstanding at an fixed annual rate of 3.98% and payable monthly. All outstanding principals will be paid in one payment upon maturity of the Loan Agreement. As of June 30, 2022, the outstanding principal balance under this agreement was RMB 6.7 million ($1.0 million).
11. Redeemable Noncontrolling Interest
Changes in redeemable noncontrolling interest during the six month periods ended June 30, 2022 and 2021 are as follows:
12. Stockholders’ Equity
Reverse Stock Split
On June 1, 2022, the Company effectuated a reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”) pursuant to an amendment to its Amended and Restated Certificate of Incorporation filed on May 26, 2022. Trading of the Common Stock on a reverse stock split-adjusted basis began at the opening of trading on the Nasdaq Capital Market on June 2, 2022. After the reverse stock split, each ten (10) shares of Common Stock issued and outstanding was combined into one (1) validly issued, fully paid and non-assessable share of Common Stock. The par value per share of the Common Stock remains the same. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to a fractional share of Common Stock were instead entitled to receive a proportional cash payment. The Reverse Stock Split did not reduce the total number of shares of Common Stock that the Company is authorized to issue, which remains 250,000,000 shares. In addition, proportionate adjustments was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of Common Stock and the number of shares of Common Stock reserved for issuance pursuant to the Company’s equity incentive plans. Unless otherwise indicated, all share numbers in this report have been adjusted to reflect the Reverse Stock Split. Net loss per share was adjusted retrospectively.
Stock Repurchase Program
On December 15, 2021, the board of directors of the Company approved a stock repurchase program for the repurchase of up to $10 million of the Company’s Common Stock (and no more than 12,500,000 shares of the Company’s Common Stock, not adjusted to reflect the Reverse Stock Split) through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and through trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act. The trading plan was terminated on March 31, 2022, and as of the termination of the plan, the Company has repurchased 3,734,992 shares of Common Stock (among which 2,541,245 shares of Common Stock were retired, not adjusted to reflect the Reverse Stock Split) amounted to $3.0 million.
March 2021 Underwritten Public Offering
On March 24, 2021, the Company closed an underwritten public offering of 15,853,658 shares of the Company’s Common Stock (not adjusted to reflect the Reverse Stock Split, the “Offering”) at a price to the public of $2.05 per share. The gross proceeds to CASI from the Offering were $32.5 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI.
The Company is using the net proceeds of this offering for working capital and general corporate purposes, which include, but are not limited to advancing the Company’s product portfolio, acquiring the rights to new product candidates and general and administrative expenses.
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Common Stock Sales Agreements
On July 19, 2019, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC, as sales agent (the “Open Market Agreement”) pursuant to which the Company may elect to sell from time to time, at its option, up to $30 million in shares of the Company’s Common Stock, subject to the terms and conditions of the Open Market Agreement. During the three and six months ended June 30, 2022, the Company had not offered and sold any shares of Common Stock under the Open Market Agreement. As of June 30, 2022, the Company had issued 493,000 shares (not adjusted to reflect the Reverse Stock Split) with net proceeds of $1.5 million, with remained $28.5 million available under the Open Market Agreement.
On October 29, 2021, the Company has entered into a Common Stock sales agreement (“Stock Sales Agreement”), with H.C. Wainwright & Co., LLC, relating to shares of Common Stock of the Company. In accordance with the terms of the sales agreement, the Company may offer and sell shares of Common Stock in “at-the-market” transactions, subject to compliance with the terms and conditions of the Stock Sales Agreement, with an aggregate offering price of not more than $20,000,000. As of June 30, 2022, the Company had not offered or sold any shares of Common Stock under the sales agreement.
Stock Purchase Warrants
In history, the Company issued shares of its common stock with accompanying warrants to certain institutional investors, accredited investors and existing stockholders.
As of June 30, 2022, the and number of warrants was 617,277 with weighted average exercise price of $36.9. All outstanding warrants are equity classified.
13. Net Loss Per Share
Net loss per share (basic and diluted) was computed by dividing net loss attributable to common stockholders, considering the accretions to redemption value of the redeemable noncontrolling interest, by the weighted average number of shares of common stock outstanding. As of June 30, 2022 and December 31, 2021, outstanding stock options totaling 3,437,229 and 3,324,368, respectively, and outstanding warrants both totaling 617,277, were anti-dilutive, and therefore, were not included in the computation of weighted average shares used in computing diluted loss per share. Pursuant to the reverse stock split, net loss per share was adjusted retrospectively.
The following table sets forth the basic and diluted net loss per share computation and provides a reconciliation of the numerator and denominator for the periods presented:
14. Stock-Based Compensation
The Company has adopted various stock compensation plans for executive, scientific and administrative personnel of the Company, as well as outside directors and consultants.
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The stock-based compensation expenses are recorded as components of research and development expense, sales and marketing expense, and general and administrative expense, as follows:
Six Months Ended June 30, | |||||||
(In thousands) |
| 2022 |
| 2021 |
| ||
Research and development | $ | 348 | $ | 141 | |||
Sales and Marketing | 121 | 74 | |||||
General and administrative |
| 3,362 |
| 2,823 | |||
Stock-based compensation expense | $ | 3,831 | $ | 3,038 | |||
15. Income Taxes
At December 31, 2021, the Company had a $1.4 million unrecognized tax benefit. The Company recorded a full valuation allowance on the deferred tax asset after offsetting unrecognized tax benefit recognized in the consolidated financial statements as of December 31, 2021.
During the six months ended June 30, 2022, there were no material changes to the measurement of unrecognized tax benefits in various tax jurisdictions.
16. Fair Value Measurements
Financial instruments of the Company primarily consist of cash and cash equivalents, investment in equity securities, accounts receivable, long-term investments, accounts payable, accrued liabilities, notes payable and bank borrowings. As of June 30, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable and bank borrowings were carried at cost which approximates their fair values due to the short-term nature of the instruments.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.
The Company has equity investments in the common stock of two publicly traded companies. The Company’s investments in these equity securities are carried at their estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the common stock is based on quoted market price for the investees’ common stock, a Level 1 input.
The Company has an equity investment in the warrants of a publicly traded company. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period. The fair value of the warrants was measured using observable market-based inputs other than quoted prices in active markets for identical assets, level 2 inputs. The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of warrants. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the fair value determination of a warrant.
The Company has an investment in the convertible debt of Alesta Therapeutics B.V.. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input.
The Company has an investment in the convertible debt of Cleave. The Company’s investment is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period using Level 3 input. The unpaid balance for this convertible debt amounted to $5.7 million and $5.6 million as of June 30, 2022 and December 31, 2021, respectively.
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The following tables present the Company’s financial assets accounted for at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy:
(In thousands) |
| Fair Value at | ||||||||||
Description |
| December 31, 2021 |
| Level 1 |
| Level 2 |
| Level 3 | ||||
Investments classified as Current and non-Current Assets | ||||||||||||
Investments in common stock | $ | 9,868 | $ | 9,868 | $ | — | $ | — | ||||
Investment in warrants - Designated as investment measured at FVTPL | $ | 591 | $ | — | $ | 591 | $ | — | ||||
Investment in convertible loan - AFS | $ | 268 | $ | — | $ | — | $ | 268 | ||||
Investment in convertible loan - Designated as investment measured at FVTPL | $ | 5,576 | $ | — | $ | — | $ | 5,576 | ||||
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||
Fair Value at | Valuation | Unobservable | ||||||||||
Description |
| December 31, 2021 |
| Techniques |
| Input |
| Average/Median | ||||
Investment in convertible loan - Designated as investment measured at FVTPL | $ | 5,576 | Discounted cash flow | Discount rate | 20%/20% | |||||||
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company measures equity investments without readily determinable fair values at its cost, minus impairment, if any, plus or minus changes resulting from observable transactions of identical or similar securities of the same issuer.
Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company had no non-financial assets and that are measured at fair value on a recurring basis as of June 30, 2022.
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company had no non-financial assets and that are measured at fair value on a non-recurring basis as of June 30, 2022.
17. Related Party Transactions
Transactions with Juventas.
On July 1, 2019 the Company entered into a one-year equipment lease with Juventas, which is classified as an operating lease. Transactions with Juventas are considered to be related party transactions as the Company’s Chairman and CEO is the chairman and
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one of the founding shareholders of Juventas. The lease was renewed for another year in July 2020 and in June 2021. The lease income were RMB 155,000 ($23,000) and RMB 240,000 ($37,000), respectively, for the three months ended June 30, 2022 and 2021. The lease income were RMB 393,000 ($60,000) and RMB 480,000 ($73,000), respectively, for the six months ended June 30, 2022 and 2021.
In June 2022, the Company and Juventas entered into a lab equipment transfer contract, pursuant to which the previous leasing agreement was terminated and the Company transferred the equipment to Juventas. Total consideration for the transfer was RMB 900,000 ($138,000) in cash.
March 2021 Underwritten Public Offering Transactions.
On March 24, 2021, the Company closed an underwritten public offering of 15,853,658 shares of the Company’s Common Stock (not adjusted to reflect the Reverse Stock Split, the “Offering”) at a price to the public of $2.05 per share. The gross proceeds to CASI from the Offering were $32.5 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI.
ETP BioHealth III Fund LP (“ETP BioHealth”), in which CASI’s Chairman and CEO is the founder and managing partner of ETP BioHealth’s general partner (Emerging Technology Partners, LLC (“ETP”), purchased shares of common stock in the Offering at the public offering price and on the same terms as the other purchasers in the Offering. ETP BioHealth purchased 3,000,000 (not adjusted to reflect the Reverse Stock Split) shares at the public offering price of $2.05 per share for a total of $6.15 million.
18. Commitments and Contingencies
In conjunction with the Cleave agreement entered into during 2021 (see Note 2), the Company is responsible for certain milestone and royalty payments. As of June 30, 2022, no milestones had been achieved.
In conjunction with the BioInvent agreement entered into during 2020 (see Note 2), the Company is responsible for certain milestone and royalty payments. As of June 30, 2022, no milestones had been achieved.
In conjunction with the Black Belt agreement entered into during 2019 (see Note 2), the Company is responsible for certain milestone and royalty payments. In June 2021, the Company achieved the First-Patient-In (FPI) in the Phase 1 dose escalation and expansion study of CID-103, and made $750,000 milestone payment in June 2021 and 250,000 euros ($305,000) in August 2021. As of June 30, 2022, no other milestones had been achieved.
In conjunction with the Pharmathen agreement entered into during 2019 (see Note 2), the Company is responsible for one remaining milestone payment. As of June 30, 2022, the remaining milestone had not been achieved.
To develop a GMP manufacturing facility, in November 2019, CASI Wuxi entered into a lease agreement of a state-owned land and committed to invest land use right and property, plant and equipment of RMB1 billion (equivalent to $143 million) by August 2022. In February 2022, the Company has reached an alignment with the Wuxi local government that the original three-year investment plan will be extended, details regarding the plan are under negotiation, and most of the construction work related to the Wuxi land has not started yet. In 2020, CASI Wuxi entered into a lease agreement with local government for a manufactory building next to the leased land and a series of contracts for the construction and equipment. The total contract amount entered into for this manufacturing facility is approximately RMB 174.2 million (approximately $26.0 million), and the commitment under these contracts was RMB 61.2 million (approximately $9.1 million) as of June 30, 2022.
The Company is subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”, or “we” or “our”) (Nasdaq: CASI) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. We were incorporated in 1991, and in 2012, with new leadership, we shifted our business strategy to China and has since built an infrastructure in China that includes sales and marketing, medical affairs, regulatory and clinical development and in the foreseeable future, manufacturing. We are focused on acquiring, developing and commercializing products that augment our hematology oncology therapeutic focus as well as other areas of unmet medical need. We are executing our plan to become a biopharmaceutical leader by launching medicines in the greater China market, leveraging our China-based regulatory, clinical and commercial competencies and our global drug development expertise. The majority of our operations are now located in China and are conducted primarily through two of our subsidiaries: (i) CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”), which is wholly owned and is located in Beijing, China, and (ii) CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”), which is located in Wuxi, China. Our Beijing office is primarily responsible for our day-to-day operations, and our commercial team of over 100 hematology/oncology sales and marketing specialists is based in China. CASI Wuxi is part of the long-term strategy to support our future clinical and commercial manufacturing needs, to manage our supply chain for certain products, and to develop a GMP manufacturing facility in China.
We launched our first commercial product, EVOMELA® (Melphalan for Injection) in China in August 2019. In China, EVOMELA® is approved for use as a conditioning treatment prior to stem cell transplantation and as a palliative treatment for patients with multiple myeloma. The other core hematology/oncology assets in our pipeline include:
| ● | CNCT19 is an autologous CD19 CAR-T investigative product (“CNCT19”) being developed by our partner Juventas Cell Therapy Ltd. (“Juventas”) for which we have exclusive World-Wide co-commercial and profit-sharing rights. CNCT19 is being developed as a potential treatment for patients with hematological malignancies which express CD19 including, B-cell acute lymphoblastic leukemia (“B-ALL”) and B-cell non-Hodgkin lymphoma (“B-NHL”). The CNCT19 Phase 1 studies in patients with B-ALL and B-NHL in China have been completed by Juventas, the Phase 2 B-ALL and B-NHL registration studies are both currently enrolling in China. |
| ● | In October 2020, the Company entered into an exclusive licensing agreement with BioInvent International AB (“BioInvent”) for the development and commercialization of novel anti-FcγRIIB antibody, BI-1206, in mainland China, Taiwan, Hong Kong and Macau. BioInvent is a biotechnology company focused on the discovery and development of first-in-class immune-modulatory antibodies for cancer immunotherapy. BI-1206 is being investigated in a Phase 1/2 trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in patients with solid tumors, and in a Phase 1/2a trial in combination with MabThera® (rituximab) in patients with relapsed/refractory non-Hodgkin lymphoma (NHL). The CASI Clinical Trial Application (CTA) was approved by China National Medical Products Administration (NMPA) in December 2021 and ethics committee approvals have been received in January of 2022. The Company obtained approval from Human Genetic Resources Administration of China (“HGRAC”) in April 2022. The Company is planning a Phase 1 study of BI-1206 in combination with rituximab with a single agent BI-1206 run in phase in patients with NHL (mantle cell lymphoma, marginal zone lymphoma, and follicular lymphoma) to assess PK, safety and tolerability, select the Recommended Phase 2 Dose and assess early signs of clinical efficacy as part of its development program for BI-1206 in China. The study received regulatory approval from the China Center for Drug Evaluation (“CDE”) in the second quarter of 2022, the first-patient enrolled is expected to be initiated in the second half of 2022. |
| ● | CB-5339 is a novel VCP/p97 inhibitor focused on valosin-containing protein (VCP)/p97 as a novel target in protein homeostasis, DNA damage response and other cellular stress pathways for therapeutic use in the treatment of patients with various malignancies. We entered into an exclusive license on March 21, 2021 with Cleave Therapeutics, Inc. (“Cleave”) for the development and commercialization of CB-5339 in Mainland China, Hong Kong, Macau and Taiwan. CB-5339, an oral second-generation, small molecule VCP/p97 inhibitor, is being evaluated in a Phase 1 clinical trial in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). CB-5339 CTA application for the multiple myeloma indication has been submitted in March 2022 to the CDE. |
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| ● | CID-103 is a full human IgG1 anti-CD38 monoclonal antibody recognizing a unique epitope that has demonstrated encouraging preclinical efficacy and safety profile compared to other anti-CD38 monoclonal antibodies for which we have exclusive global rights. CID-103 is being developed for the treatment of patients with multiple myeloma. The Phase 1 dose escalation and expansion study of CID-103, in patients with previously treated, relapsed or refractory multiple myeloma is ongoing in France and the UK. |
We also have greater China rights to Octreotide (Long Acting Injectable), a standard of care for the treatment of acromegaly and for the control of symptoms associated with certain neuroendocrine tumors; and Thiotepa, a cytotoxic agent which has a long history of established use in the hematology/oncology setting. We have an exclusive China license and distribution rights to a novel formulation of thiotepa, which has multiple indications including use as a conditioning treatment for certain allogeneic haemopoietic stem cell transplants. However, due to the evolving standard of care environment, the rare and niche indication for these product and our commitment to prioritize resources, we are currently evaluating our potential opportunities for these products. In addition, our assets include six FDA-approved ANDAs which we are evaluating due to generic drug pricing reforms by the Chinese government and its impact on the pricing and competitiveness of these products.
CASI has built a fully integrated, world class biopharmaceutical company dedicated to the successful development and commercialization of innovative and other therapeutic products. Our business development strategy is currently focused on acquiring additional targeted drugs and immuno-oncology therapeutics through licensing that will expand our hematology/oncology franchise. We use a market-oriented approach to identify pharmaceutical/biotechnology candidates that we believe to have the potential for gaining widespread market acceptance, either globally or in China, and for which development can be accelerated under our global drug development strategy. In many cases our business development strategy includes direct equity investments in the licensor company. We intend for our pipeline to reflect a diversified and risk-balanced set of assets that include (1) late-stage clinical drug candidates in-licensed for China or global regional rights, (2) proprietary or licensed innovative drug candidates, and (3) select high quality pharmaceuticals that fit our therapeutic focus. We have focused on US/EU approved product candidates, and product candidates with proven targets or product candidates that have reduced clinical risk with a greater emphasis on innovative therapeutics. Although oncology with a focus on hematological malignancies is our principal clinical and commercial target, we are opportunistic about other therapeutic areas that can address unmet medical needs. We will continue to pursue building a robust pipeline of drug candidates for development and commercialization in China as our primary market, and if rights are available for the rest of the world.
We believe our China operations offer a significant market and growth potential due to the extraordinary increase in demand for high quality medicines coupled with regulatory reforms in China that facilitate the entry of new pharmaceutical products into the country. We will continue to in-license clinical-stage and late-stage drug candidates, and leverage our cross-border operations and expertise, and hope to be the partner of choice to provide access to the China market. We expect the implementation of our plans will include leveraging our resources and expertise in both the U.S. and China so that we can maximize regulatory, development and clinical strategies in both countries.
Our commercial product, EVOMELA®, was originally licensed from Spectrum Pharmaceuticals, Inc. (“Spectrum”) and we had a supply agreement with Spectrum to support our application for import drug registration and for commercialization purposes. Spectrum completed the sale of its portfolio of FDA-approved hematology/oncology products including EVOMELA® to Acrotech Biopharma L.L.C. (“Acrotech”) on March 1, 2019. The original supply agreement with Spectrum was assumed by Acrotech.
As part of the long-term strategy to support our future clinical and commercial manufacturing needs and to manage our supply chain for certain products, on December 26, 2018, we established CASI Wuxi, between the Company and Wuxi Jintou Huicun Investment Enterprise, a limited partnership (“Wuxi LP”). To develop a GMP manufacturing facility, CASI Wuxi entered into a lease agreement of a state-owned land in 2019, a lease agreement of a manufactory building in 2020, and a series of contracts for construction and equipment since 2020.
During the peak of the COVID-19 pandemic in 2020, we experienced disruptions to the EVOMELA® marketing and sales activities as well as to the supply chain for EVOMELA®. The COVID-19 pandemic also impacted our targeted start time of our CID-103 trial due to the lock down of many medical facilities in Europe. During 2021 and the first quarter of 2022, we have experienced minimal disruption to our business activities or supply chain as a result of the COVID-19 pandemic. However, since the second quarter of 2022, the COVID-19 related lock down and associated restrictions in certain areas in China led to limitation of access to local hospitals, which had an adverse impact on the sales of EVOMELA® for the second quarter, and is expected to have a negative impact on the same for the whole year. The restrictions also adversely impacted the enrolling of patients for the CNCT19 Phase II registration
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studies. Given that such COVID-19 related restrictions are beyond our control, it is unable to, at this stage, assess for how long such COVID-19 related restrictions may continue and the full extent to which such restrictions may directly and indirectly impact our business operations.
We currently rely on a single source for the supply of EVOMELA®. The continuation of the COVID-19 pandemic or the emergence of new COVID-19 variants or new pandemics may affect the economies and financial markets of many countries, which may result in a period of economic slowdown or recessions. In such an event, our ability to continue to commercialize and expand distribution of EVOMELA® could be adversely affected if the supplier refuses or is unable to provide products for any reason (including the occurrence of an event like the COVID-19 pandemic that makes delivery impractical). We would have to work with Acrotech to negotiate an agreement with a substitute supplier, which, assuming a substitute supplier was available, would likely interrupt the manufacturing of EVOMELA®, cause supply chain delays and increase costs.
The COVID-19 pandemic has adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, which along with high degree of uncertainty in the global financial ecosystem and certain political instabilities may result in a period of regional, national, and global economic slowdown or regional, national, or global recessions that could affect our ability to continue to commercialize and expand distribution of EVOMELA® (Melphalan For Injection) or other drugs in our existing product pipeline. Early in the COVID-19 pandemic, we experienced a disruption to our supply chain for EVOMELA®, we have experienced no supply disruption in 2021 and the first half year of 2022; however, there can be no assurance that restrictions will not be imposed again. In addition, economic and other uncertainties may adversely affect other parties’ willingness to negotiate and execute product licenses and thus hamper our ability to in-license clinical-stage and late-stage drug candidates in China or elsewhere.
RESULTS OF OPERATIONS
Operating Items
Revenues
Product Sales
Product sales consist of sales of EVOMELA® that launched during August 2019. Revenue was $8.6 million and $17.6 million, respectively, for the three and six months ended June 30, 2022, compared to $7.1 million and $12.8 million, respectively, for the corresponding periods in 2021. Revenues increased by 20% and 37%, respectively, for the three and six months ended June 30, 2022 as compared to the corresponding periods of 2021 due to the continued growth in EVOMELA® sales.
Lease Income
Lease income consists primarily of an equipment lease with Juventas (a related party). Lease income was $23,000 and $60,000, respectively, for the three and six months ended June 30, 2022, compared to $37,000 and $73,000, respectively, for the corresponding periods in 2021.
Operating Expenses
Cost of Revenues
Cost of revenues consists primarily of the cost of inventories of EVOMELA® and sales-based royalties related to the sale of EVOMELA®.
Costs of revenues were $3.6 million and $7.3 million, respectively, for the three and six months ended June 30, 2022, compared to $3.0 million and $5.3 million, respectively, for the corresponding periods in 2021. Royalty cost was $1.7 million and $3.5 million, respectively, for the three and six months ended June 30, 2022, compared to $1.4 million and $2.6 million, respectively, for the corresponding periods in 2021.
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Costs of revenues excluding royalty were $1.9 million and $3.8 million, respectively, for the three and six months ended June 30, 2022, compared to $1.5 million and $2.8 million, respectively, for the corresponding periods in 2021. Costs of revenues excluding royalty as a percentage of revenues were 22% in all the four periods.
Research and Development Expenses
Research and development (R&D) expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract preclinical testing and clinical trials of our product candidates, including the costs of drug substance and drug product, regulatory maintenance costs of ANDAs, facilities expenses, and amortization expense of acquired ANDAs.
Research and development expenses were $3.9 million and $7.8 million, respectively, for the three and six months ended June 30, 2022, compared to $2.3 million and $7.5 million, respectively, for the corresponding periods in 2021. The increase of research and development expenses for the three months periods was mainly due to expense incurred for CID-103.
General and Administrative Expenses
General and administrative expenses include compensation and other expenses related to executive, finance, business development and administrative personnel, professional services, investor relations and facilities.
General and administrative expenses were $5.5 million and $10.8 million, respectively, for the three and six months ended June 30, 2022, compared to $5.5 million and $11.0 million, respectively, for the corresponding periods in 2021. Our general and administrative expenses stayed stable.
Selling and Marketing Expenses
Selling and marketing expenses are the direct costs related to the sales of EVOMELA® that was launched in China in August 2019, such as sales force salaries, bonuses, advertising, and other marketing efforts.
Selling and marketing expenses were $3.4 million and $6.7 million, respectively, for the three and six months ended June 30, 2022, compared to $3.4 million and $6.1 million, respectively, for the corresponding periods in 2021. The increase in selling and marketing expenses for the six months periods was due to the increase of sales commission in accordance with the increase in sales of EVOMELA® and expansion of sales team in China.
Acquired in-process Research and Development
There were no acquired in-process R&D expenses for the three and six months ended June 30, 2022. Acquired in-process R&D expenses for the three and six months ended June 30, 2021 were $1.1 million and $6.6 million, respectively. Among the total $6.6 million, $1.1 million was related to the milestone payment for the development of CID-103, and $5.5 million was related to the upfront payment to Cleave for the development of CB-5339.
Non-Operating Items
Interest income, net
Interest income, net was $40,000 and $114,000, respectively, for the three and six months ended June 30, 2022, compared to $76,000 and $182,000, respectively, for the corresponding periods in 2021.
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Other income
Other income was $11,000 and $49,000, respectively, for the three and six months ended June 30, 2022, compared to $33,000 and $53,000, respectively, for the corresponding periods in 2021. Other income recognized was mainly related to the government grant from the Jiangsu Province Wuxi Huishan Economic Development Zone for the development of leased state-owned land in Wuxi for the construction of a manufacturing facility. The grant was recorded as deferred income upon receipt and is being amortized over the term of the lease of the land.
Foreign exchange gains
Foreign exchange gains was $1.4 million and $1.7 million, respectively, for the three and six months ended June 30, 2022, compared to $76,000 and $295,000, respectively, for the corresponding periods in 2021. The foreign exchange gains were primarily due to accounts receivable with CRPCGIT and USD denominated cash accounts that are held by our Chinese subsidiaries.
Change in fair value of investments
The changes in fair value of investments for the three and six months ended June 30, 2022 were losses of $1.2 million and $2.7 million, respectively, compared to gains of $1.9 million and $3.5 million, respectively, for the corresponding periods in 2021. The changes represent unrealized gains or losses on the Company’s investments in equity securities and long-term investments. The changes were due to the fluctuations in the market price of two publicly traded companies invested by us for each periods.
Impairment loss of long-term investments
There was no impairment loss of long-term investments during the three and six months ended June 30, 2022. Impairment loss of long-term investments for the three and six months ended June 30, 2021 was $0.9 million relating to the investment in Black Belt Tx.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has been engaged primarily in research and development activities. As a result, the Company has incurred and expect to continue to incur operating losses in 2022 and the foreseeable future.
The Company will require significant additional funding to fund operations beyond the second quarter of 2023 until such time, if ever, it becomes profitable. The Company intends to augment its cash balances by pursuing other forms of capital infusion, including strategic alliances or collaborative development opportunities with organizations that have capabilities and/or products that are complementary to its capabilities and products in order to continue the development of its potential product candidates that they intend to pursue to commercialization. If the Company seeks strategic alliances, licenses, or other alternative arrangements, such as arrangements with collaborative partners or others, to raise further financing, it may need to relinquish rights to certain of its existing product candidates, or products they would otherwise seek to develop or commercialize on its own, or to license the rights to its product candidates on terms that are not favorable to it.
The Company also invested in its development of the Wuxi land and construction of the manufacturing building. Commencing from the fourth quarter of 2020, in relation to the development of the Wuxi land and construction of the manufacturing building, the Company entered into a series of contracts for the development and construction work. Total commitment under these contracts was RMB 61.2 million (approximately $9.1 million) as of June 30, 2022.
The Company will continue to seek to raise additional capital to fund its commercialization efforts, expansion of its operations, capital expenditure, research and development, and for the acquisition of new product candidates, if any. The Company intends to and is currently actively communicating to explore one or more of the following alternatives to raise additional capital:
| ● | raising bank loans; |
| ● | selling additional equity securities; |
| ● | out-licensing product candidates to one or more corporate partners; |
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| ● | completing an outright sale of non-priority assets; and/or |
| ● | engaging in one or more strategic transactions. |
The Company also will continue to manage its cash resources prudently and cost-effectively.
There can be no assurance that adequate additional financing under such arrangements will be available to the Company on terms that they deem acceptable, if at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders may result, or the equity securities may have rights, preferences, or privileges senior to those of the holders of its common stock. If they fail to obtain additional capital when needed, they may be required to delay or scale back their commercialization efforts, advancement of the Spectrum products, and the ANDA products, or plans for other product candidates, if any.
Since its inception in 1991, the Company has incurred significant losses from operations and, as of June 30, 2022, had incurred an accumulated deficit of $620.6 million. The Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the interim consolidated financial statements are issued for the period ended June 30, 2022 .
FINANCING ACTIVITIES
Bank Borrowings
In May 2022, the Company entered into a Business Loan Agreement (together with related security agreements and promissory note, the “Agreement”) with East West Bank (“EWB”). Under the Agreement, EWB made available to the Company a revolving line of credit up to a maximum of $10.0 million. The Agreement will mature on December 31, 2022, unless extended to April 30, 2024 subject to certain conditions as defined in the Agreement. In general, amounts borrowed under the Agreement are secured by a lien on the Company’s assets, including first priority security interest in accounts receivable and inventory and pledge of available-for-sale securities. Under the Agreement, the Company shall maintain at least $2.5 million cash on deposit at EWB. EWB shall, when certain conditions are met, partially or fully release this cash deposit requirement. Amounts borrowed under the Agreement bear interest, payable monthly. Interest shall accrue based upon the daily Wall Street Journal Prime Rate (as quoted in the “Money Rates” column of The Wall Street Journal (Western Edition)) plus 0.35% with a floor rate of 3.85%. Interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. As of June 30, 2022, the outstanding principal balance under this agreement was nil.
In June 2022, the Company’s subsidiary, CASI China entered into a Loan Agreement with China International Trust and Investment Corporation Bank (“CITIC Bank”). Under the Loan Agreement, CITIC Bank made available to CASI China a guaranteed line of credit up to a maximum of RMB 20.0 million (approximately $3.0 million). The Loan Agreement will mature on June 13, 2023. The joint and several liability guarantee was provided by Beijing Shouchuang Financing Guarantee Co. Ltd. concurrently with the Loan Agreement. The loan was secured by a pledge of the land held by CASI Wuxi. Interest accrues on the principal amounts of the loans outstanding at an fixed annual rate of 3.98% and payable monthly. All outstanding principals will be paid in one payment upon maturity of the Loan Agreement. As of June 30, 2022, the outstanding principal balance under this agreement was RMB 6.7 million ($1.0 million)
Stock Repurchase Program
On December 15, 2021, our board of directors approved a stock repurchase program for the repurchase of up to $10 million of our common stock (and no more than 12,500,000 shares of our common stock, not adjusted to reflect the Reverse Stock Split) through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and through trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act. The trading plan was terminated on March 31, 2022, and as of the termination date, we had repurchased 3,734,992 shares of Common Stock (among which 2,541,245 shares of Common Stock were retired, not adjusted to reflect the Reverse Stock Split) amounted to $3.0 million.
March 2021 Underwritten Public Offering
On March 24, 2021, the Company closed an underwritten public offering of 15,853,658 shares of the Company’s Common Stock (not adjusted to reflect the Reverse Stock Split, the “Offering”) at a price to the public of $2.05 per share. The gross proceeds to CASI from the Offering were $32.5 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI.
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The Offering was made by means of a written prospectus supplement and accompanying prospectus forming part of a shelf registration statement on Form S-3, previously filed with the SEC on November 20, 2020, which was declared effective on December 2, 2020. We have filed a final prospectus supplement, dated March 24, 2021, with the SEC relating to the Offering.
The Company is using the net proceeds of this offering for working capital and general corporate purposes, which include, but are not limited to advancing the Company’s product portfolio, acquiring the rights to new product candidates and general and administrative expenses.
Common Stock Sales Agreements
On July 19, 2019, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC, as sales agent (the “Open Market Agreement”) pursuant to which the Company may elect to sell from time to time, at its option, up to $30 million in shares of the Company’s common stock, subject to the terms and conditions of the Open Market Agreement. During the three and six months ended June 30, 2022, the Company has not offered and sold any shares of common stock under the Open Market Agreement. As of June 30, 2022, the Company had issued 493,000 shares (not adjusted to reflect the Reverse Stock Split) with net proceeds of $1.5 million, with remained $28.5 million available under the Open Market Agreement.
On October 29, 2021, the Company has entered into a common stock sales agreement (“Stock Sales Agreement”), with H.C. Wainwright & Co., LLC, relating to shares of common stock of the Company. In accordance with the terms of the sales agreement, the Company may offer and sell shares of common stock in “at-the-market” transactions, subject to compliance with the terms and conditions of the Stock Sales Agreement, with an aggregate offering price of not more than $20,000,000. As of June 30, 2022, the Company had not offered or sold any shares of common stock under the sales agreement.
INTEREST RATE CHANGES
Management does not believe that our working capital needs are sensitive to changes in interest rates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of our management, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of June 30, 2022 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
ITEM 1A. RISK FACTORS
For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussion set forth in Item 1A of CASI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the information under “Special Note Regarding Forward-Looking Statements” included in this report. Other than disclosed herein, there have been no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Risk Relating to Our Auditor
Our Common Stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or in 2023 if proposed changes to the law are enacted. The delisting of our Common Stock, or the threat of such Common Stock being delisted, may materially and adversely affect the value of your investment.
The Holding Foreign Companies Accountable Act, or the HFCAA, was signed into law on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our Common Stock from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements of the HFCAA, pursuant to which the SEC will identify an issuer as a “Commission Identified Issuer” if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for three consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB identified our auditor as one of the registered public accounting firms that the PCAOB is unable to inspect or investigate completely. We have been identified by the SEC as a “Commission Identified Issuer” after the filing of our annual report on 10-K for the fiscal year ended December 31, 2021.
Whether the PCAOB will be able to conduct inspections of our auditor before the issuance of our financial statements on Form 10-K for the year ending December 31, 2023 which is due by March 31, 2024, or at all, is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. If our Common Stock are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our Common Stock will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our Common Stock when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our Common Stock. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
On June 22, 2021, the U.S. Senate passed a bill which would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On February 4, 2022, the U.S. House of Representatives passed a bill which contained, among other things, an identical provision. If this provision is enacted into law and the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA is reduced from three years to two, then our common stock could be prohibited from trading in the United States in 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
29
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
30
ITEM 6. EXHIBITS
EXHIBIT INDEX
3.1 |
| |
4.1*˄ | Promissory Note issued by the Registrant to East West Bank, dated May 23, 2022 | |
10.1* ˄ | ||
10.2* ˄ | Business Loan Agreement between the Registrant and East West Bank, dated May 23, 2022 | |
10.3* | Commercial Security Agreement between the Registrant and East West Bank, dated May 23, 2022 | |
10.4* ˄ | Commercial Pledge Agreement between the Registrant and East West Bank, dated May 23, 2022 | |
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS | Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith). |
*Filed Herewith
**Furnished Herewith
˄ Certain confidential information contained in this exhibit has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CASI PHARMACEUTICALS, INC. | ||
(Registrant) | |||
|
|
| |
|
| ||
Date: Augsut 12, 2022 | /s/ Wei-Wu He | ||
| Wei-Wu He | ||
| Chief Executive Officer | ||
|
| ||
|
| ||
Date: Augutst 12, 2022 | /s/ Larry (Wei) Zhang | ||
| Larry (Wei) Zhang | ||
| Principal Financial Officer |
32
Exhibit 4.1
Certain confidential information contained in this document, marked by brackets and
asterisk, has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K,
because it (i) is not material and (ii) would be competitively harmful if publicly
disclosed.
PROMISSORY NOTE
Borrower: | CASI PHARMACEUTICALS, INC | Lender: | East West Bank |
| 9620 MEDICAL CENTER DR, STE 300 | | Loan Servicing Department |
| ROCKVILLE, MD 20850 | | 9300 Flair Drive, 6th Floor |
| | | El Monte, CA 91731 |
Principal Amount: $10,000,000.00 | | Date of Note: May 18, 2022 | |
PROMISE TO PAY. To repay Borrower's loan, CASI PHARMACEUTICALS, INC ("Borrower") promises to pay to East West Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Ten Million & 00/100 Dollars ($10,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest due upon maturity on December 31, 2022. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning on a date which is one (1) month after date of the initial advance, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest as shown on the most recent statement or bill provided to Borrower (if no statement or bill has been provided for any reason, it shall be applied to the unpaid interest accrued since the last payment); then to principal; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.
EXTENSION OF MATURITY DATE. Borrower shall have the option to extend the maturity date of the Note to 4/30/2024 if Borrower, through partner [******] submits a “New Drug Application” for [******] no later than [******]. The maturity date shall not be extended if Borrower fails to submit a “New Drug Application” for [******] by [******] or the [******] application is declined by [******].
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the daily Wall Street Journal Prime Rate, as quoted in the "Money Rates" column of The Wall Street Journal (Western Edition) as determined by Lender (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each day. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.500% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate of 0.350 percentage points over the Index (the "Margin"), adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 3.850% per annum based on a year of 360 days. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. NOTICE: Under no circumstances will the interest rate on this Note be less than 3.850% per annum or more than the maximum rate allowed by applicable law.
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $100.00. Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: East West Bank, Loan Service Department, 9300 Flair Drive, 6th Floor El Monte, CA 91731.
LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 5.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the
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related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
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Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Cure Provisions. If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
OTHER DEFAULTS MODIFIED. Notwithstanding the section above entitled “Other Defaults”, Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or Agreement or in any of the Related Documents between Lender and Borrower; or any shareholder, member, trustor, or any owner of the Borrower also holding a controlling interest in any given entity’s common stock, membership interest, trust interest, or any other ownership interest (“Related Entity”), fails to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between Lender and the Related Entity.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay all costs and expenses Lender incurs to collect this Note. This includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of New York without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of New York.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account and whether evidenced by a certificate of deposit). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts.
COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein:
(A)a Commercial Security Agreement dated May 18, 2022 made and executed between CASI PHARMACEUTICALS, INC and Lender on collateral described as: inventory, chattel paper, accounts, equipment and general intangibles.
(B)a Commercial Pledge Agreement dated May 18, 2022 made and executed between CASI PHARMACEUTICALS, INC and Lender on collateral described as securities or investment property.
(C)an Assignment of Deposit Account dated May 18, 2022 made and executed between CASI PHARMACEUTICALS, INC and Lender on collateral described as a certificate of deposit.
If there is any inconsistency between the terms and conditions of this Note and the terms and conditions of the collateral documents, the terms and conditions of this Note shall prevail.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: WEI-WU HE, CEO/Chairman of CASI PHARMACEUTICALS, INC. Borrower agrees to be liable for all sums either:
(A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.
CERTIFICATION OF ACCURACY. Borrower certifies under penalty of perjury that all financial documents provided to Lender, which may include
Page 3
income statements, balance sheets, accounts payable and receivable listings, inventory listings, rents rolls, and tax returns, are the most recent such documents prepared by Borrower, that they give a complete and accurate statement of the financial condition of Borrower, as of the dates of such statements, and that no material change has occurred since such time, except as disclosed to Lender in writing. Borrower agrees to notify Lender immediately of the extent and character of any material adverse change in the Borrower's financial condition. The financial documents shall constitute continuing representations of Borrower and shall be construed by Lender to be continuing statements of the financial condition of Borrower and to be new and original statement of all assets and liabilities of Borrower with respect to each advance under this Note and every other transaction in which Borrower becomes obligated to Lender until Borrower advises Lender to the contrary. The financial documents are being given to induce Lender to extend credit and Lender is relying upon such documents. Lender may verify with third parties any information contained in financial documents delivered to Lender, obtain information from others, and ask and answer questions and requests seeking credit experience about the undersigned.
CHOICE OF VENUE. If there is a lawsuit, the undersigned, and if more than one, each of the undersigned, agree upon Lender's request to submit to the jurisdiction of the courts of such county as Lender shall designate in the State of New York.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender
reports any inaccurate information about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: East West Bank Loan Service Department P.O. Box 60021 City of Industry, CA 91716-0021.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER:
CASI PHARMACEUTICALS, INC | | ||
| | ||
By: | /s/ Wei-Wu He | | |
WEI-WU HE, CEO/Chairman of CASI | | ||
PHARMACEUTICALS, INC | | ||
LaserPro, Ver. 21.3.11.003 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. - NY E:\PROD\LOANDOC\CFI\LPL\D20.FC TR-35213 PR-7 (M)
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Exhibit 10.1
Execution Version
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTIALCS, INC. IF PUBLICLY DISCLOSED.
*** TRIPLE ASTERIKS DENOTE OMISSIONS
SUBLICENSE AGREEMENT
by and between
CASI PHARMACEUTICALS, INC.
and
BEIJING TIANSHI TONGDA PHARMACEUTICALS TECHNOLOGY CO., LTD
entered into as of
May 23, 2022
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS | 1 | |
ARTICLE 2 SUBLICENSE | 17 | |
2.1 | Sublicense Grants to TIANSHI | 17 |
2.2 | Sublicensing | 17 |
2.3 | Non-Compete | 18 |
2.4 | [***] | 19 |
2.5 | No Implied Licenses | 19 |
ARTICLE 3 GOVERNANCE | 19 | |
3.1 | Joint Steering Committee | 19 |
3.2 | Joint Project Team | 19 |
3.3 | Decisions | 19 |
3.4 | Meetings of the JSC | 19 |
3.5 | Meeting Minutes | 20 |
ARTICLE 4 TRANSFERS TO TIANSHI | 20 | |
4.1 | Know-How Transfer | 20 |
4.2 | Assistance and Costs | 20 |
4.3 | Additional Assistance | 20 |
ARTICLE 5 EXPLOITATION OF LICENSED PRODUCT | 20 | |
5.1 | Overview | 20 |
5.2 | Development | 20 |
5.3 | Clinical Development Plan | 21 |
5.4 | Diligence Obligations | 21 |
5.5 | [***] | 21 |
5.6 | Manufacturing and Supply | 21 |
5.7 | Right of Reference | 21 |
5.8 | Adverse Event Reporting | 21 |
5.9 | Reports | 22 |
ARTICLE 6 PAYMENTS | 22 | |
6.1 | Upfront Payment. | 22 |
6.2 | Equity | 22 |
6.3 | Milestone Payments | 22 |
6.4 | Royalties | 26 |
6.5 | Foreign Exchange | 31 |
6.6 | Payment Method; Late Payments | 31 |
6.7 | No Right to Offset | 31 |
- i -
6.8 | Records | 31 |
6.9 | Audits | 31 |
6.10 | Audit Dispute | 32 |
6.11 | Taxes | 32 |
ARTICLE 7 INTELLECTUAL PROPERTY MATTERS | 33 | |
7.1 | Ownership of Intellectual Property | 33 |
7.2 | Patent Prosecution | 34 |
7.3 | Defense Against Third Party Patent Claims | 35 |
7.4 | Prosecution of Infringers | 36 |
7.5 | Patent Listing | 38 |
7.6 | Patent Term Extensions | 38 |
7.7 | Trademarks | 38 |
7.8 | Ownership and Enforcement of Product Trademarks | 38 |
ARTICLE 8 REPRESENTATIONS, WARRANTIES, AND COVENANTS | 39 | |
8.1 | Mutual Representations and Warranties | 39 |
8.2 | Additional Representations and Warranties of CASI. | 40 |
8.3 | Non Reliance; Disclaimer | 42 |
8.4 | Covenants of CASI | 43 |
8.5 | Covenants of TIANSHI | 43 |
ARTICLE 9 INDEMNIFICATION | 43 | |
9.1 | Indemnification by CASI | 43 |
9.2 | Indemnification by TIANSHI | 44 |
9.3 | Indemnification Procedures | 44 |
9.4 | LIMITATION OF LIABILITY | 46 |
ARTICLE 10 CONFIDENTIALITY | 46 | |
10.1 | Confidential Information | 46 |
10.2 | Confidentiality Obligations | 47 |
10.3 | Permitted Disclosure and Use | 47 |
10.4 | Notification | 48 |
10.5 | Publicity | 48 |
10.6 | Use of Names | 48 |
10.7 | Survival | 48 |
ARTICLE 11 TERM; TERMINATION | 48 | |
11.1 | Term | 48 |
11.2 | Termination for Breach | 48 |
11.3 | Termination for Convenience by TIANSHI | 49 |
- ii -
11.4 | Termination by TIANSHI for Safety Reasons | 49 |
11.5 | Termination for Patent Challenge | 49 |
ARTICLE 12 EFFECTS OF TERMINATION | 49 | |
12.1 | General Effects of Termination | 49 |
12.2 | Termination by CASI for TIANSHI’s Breach or by TIANSHI for Convenience | 50 |
12.3 | Accrued Rights | 51 |
12.4 | Termination Sole Remedy | 51 |
12.5 | Survival | 51 |
ARTICLE 13 DISPUTE RESOLUTION | 52 | |
13.1 | Disputes | 52 |
13.2 | Binding Arbitration | 52 |
13.3 | Tolling | 52 |
13.4 | Patent Right Dispute Resolution | 53 |
13.5 | Equitable Remedies | 53 |
ARTICLE 14 MISCELLANEOUS | 53 | |
14.1 | Entire Agreement; Amendment | 53 |
14.2 | Force Majeure | 53 |
14.3 | Notices | 53 |
14.4 | No Strict Construction; Interpretation | 54 |
14.5 | Assignment | 54 |
14.6 | Performance by Affiliates | 55 |
14.7 | Further Actions | 55 |
14.8 | Severability | 55 |
14.9 | Binding Effect; No Third Party Beneficiaries | 55 |
14.10 | No Implied Waivers; Rights Cumulative | 55 |
14.11 | Independent Contractors | 55 |
14.12 | English Language; Governing Law | 55 |
14.13 | Counterparts | 56 |
- iii -
Schedules | |
Schedule 1.4 | Adimab Agreement Key Terms |
Schedule 1.31 | CASI Patent Right |
Schedule 1.38 | Cellca Agreement Key Terms |
Schedule 1.73 | Lyophilization Milestone Specifications |
Schedule 1.150 | TSK011010 Compound |
Schedule 13.2 | Arbitration Procedures |
- iv -
Execution Version
SUBLICENSE AGREEMENT
This SUBLICENSE AGREEMENT (this “Agreement”) is entered into as of May 23, 2022 (the “Effective Date”) by and between BEIJING TIANSHI TONGDA PHARMACEUTICALS TECHNOLOGY CO., LTD, having a place of business at Room 101-31, Floor 1, Building 2, 1# Jiuqiao Road, Beijing Economic and Technological Development Zone (Daxing), Beijing, China (“TIANSHI”), and CASI PHARMACEUTICALS, INC., a corporation organized and existing under the laws of Delaware, having its principal place of business at 9620 Medical Center Drive, Suite 300, Rockville, MD 20850 (“CASI”). CASI and TIANSHI are sometimes referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, CASI owns or controls rights to certain intellectual property relating to the Licensed Compound and Licensed Product;
WHEREAS, TIANSHI possesses resources and expertise in the development, manufacture, commercialization, and other exploitation of pharmaceutical and biologic products; and
WHEREAS, TIANSHI desires to obtain from CASI, and CASI desires to grant to TIANSHI, rights and sublicenses to Exploit the Licensed Compound and Licensed Product in the Field in the Territory pursuant to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 | “Abbreviated Application” means (a) an application submitted to the FDA under subsection (k) of Section 351 of the PHSA, or (b) any analogous application to an application set forth in clause (a) submitted to a Regulatory Authority. |
1.2 | “Acquired Party” has the meaning set forth in Section 2.3.2 (Acquisitions by Third Parties). |
1.3 | “Adimab” means Adimab LLC, a Delaware limited liability company having an address at 7 Lucent Drive, Lebanon, NH 03766. |
1.4 | “Adimab Agreement” means that certain Collaboration Agreement dated as of February 11, 2019 by and between Adimab and Black Belt and all amendments thereto. Schedule 1.4 (Adimab Agreement Key Terms) sets forth certain key terms in the Adimab Agreement. |
1.5 | “Adimab Milestone Event” has the meaning set forth in Section 6.3.1(d) (Milestone Payments under the Adimab Agreement). |
1.6 | “Adimab Milestone Payment” has the meaning set forth in Section 6.3.1(d) (Milestone Payments under the Adimab Agreement). |
1.7 | “Adimab Net Sales” means “Net Sales,” as such term is defined in the Adimab Agreement. |
1.8 | “Adimab Product” means a “Product,” as such term is defined under the Adimab Agreement. |
1.9 | “Adimab Royalty Payments” means the royalty payments to be made by TIANSHI pursuant to Section 6.4.1(a)(i) (Adimab Royalty Payments). |
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1.10 | “Adimab Royalty Term” means, with respect to an Adimab Product, the “Royalty Term” for such Adimab Product, as such term is defined under the Adimab Agreement. |
1.11 | “Affiliate” means, with respect to either Party, any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, for so long as such control exists. For purposes of this definition, “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise; or (b) the ownership, directly or indirectly, of more than 50% of the voting securities or other ownership interest of a Person (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity). The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the U.S., the maximum percentage ownership permitted by law for a foreign investor may be less than 50%, and that in such case such lower percentage will be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management or policies of such entity. |
1.12 | “AGC” means AGC BIOLOGICS, A/S, formerly known as CMC BIOLOGICS A/S, organized and existing under the laws of Denmark whose registered office is at Vaandtaarnsvej 83 DK-2860 Soeborg, Denmark. |
1.13 | “AGC Agreement” means: |
1.13.1 | the Development and Manufacturing Services Agreement between AGC and Tusk Therapeutics Limited dated February 16, 2017, as novated to Black Belt on January 16, 2019; and |
1.13.2 | the Quality Agreement between AGC and Tusk Therapeutics Limited dated March 17, 2017, as novated to Black Belt on 18 January 2019. |
1.14 | “Arbitral Tribunal” has the meaning set forth on Schedule 13.2 (Arbitration Procedures). |
1.15 | “Arbitration Rules” has the meaning set forth on Schedule 13.2 (Arbitration Procedures). |
1.16 | “Arising Intellectual Property” means all (a) Inventions related to a Licensed Product developed or invented by or on behalf of TIANSHI, its Affiliates, or its Sublicensees during the period commencing on the Effective Date and ending on the effective date of termination of this Agreement, and (b) any Patent Rights that Cover any such Inventions and have a priority date during the period commencing on the Effective Date and ending on the effective date of termination of this Agreement. |
1.17 | “Audit Arbitrator” has the meaning set forth in Section 6.10 (Audit Dispute). |
1.18 | “Audit Dispute” has the meaning set forth in Section 6.10 (Audit Dispute). |
1.19 | [***] |
1.20 | “Bayh-Dole Act” means the Patent and Trademark Law Amendments Act of 1980, as amended, codified at 35 U.S.C. §§ 200-212, as amended, as well as any regulations promulgated pursuant thereto, including in 37 C.F.R. Part 401. |
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1.21 | “Biosimilar Competition” means, on a Licensed Product-by-Licensed Product, country-by-country, and Calendar Year-by-Calendar Year basis, both the following have occurred: |
1.21.1 | the aggregate Net Sales of a given Licensed Product in a given country in a given Calendar Year fall by [***]% or more from the peak aggregate Net Sales in any prior Calendar Year; and |
1.21.2 | a Biosimilar Product with respect to such Licensed Product is being marketed and sold by a Third Party in such Calendar Year in such country. |
1.22 | “Biosimilar Product” means, with respect to a Licensed Product in a country, a biological product that is sold in such country by a Third Party that (a) has been licensed as a biosimilar or interchangeable biological product by the FDA pursuant to section 351(k) of the PHSA, or any subsequent or superseding law, statute, or regulation, and for which a Licensed Product is the reference product, as defined by section 351(i)(4) of the PHSA, (b) incorporates, cites, cross-references, or relies upon in any way any data or information contained in any Regulatory Submission for a Licensed Compound or Licensed Product in order to obtain or maintain any Regulatory Approval or Reimbursement Approval for such product, (c) has been granted a marketing authorization as a similar biological medicinal product by the European Union pursuant to Directive 2001/83/EC and Parliament and Council Regulation No. (EC) 726/2004, each as may be amended, or any subsequent or superseding law, statute or regulation, and for which a Licensed Product is the reference medicinal product as defined by Article 10(2)(A) of Directive 2001/83/EC, or (d) has achieved analogous regulatory marketing approval from a Regulatory Authority in another jurisdiction in reliance on the fact of, or the data supporting, the prior approval of such Licensed Product by such Regulatory Authority. |
1.23 | “Black Belt” means Black Belt Therapeutics Limited. |
1.24 | “Black Belt License Agreement” means that certain License Agreement between Black Belt and CASI dated as of April 16, 2019. |
1.25 | “Black Belt Royalty Payments” means the royalty payments to be made pursuant to Section 6.4.1(b) (Region-Specific Royalty Rates for Existing Licensed Products) and Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products). |
1.26 | “Black Belt Royalty Term” has the meaning set forth in the Black Belt License Agreement. |
1.27 | “Business Day” means any day other than a day on which the commercial banks in New York City, New York, U.S. or Beijing, China, are authorized or required to be closed. |
1.28 | “Calendar Quarter” means each successive period of three calendar months commencing on January 1, April 1, July 1 and October 1, except that the first Calendar Quarter of the Term commences on the Effective Date and ends on the day immediately before the first to occur of January 1, April 1, July 1, or October 1 after the Effective Date, and the last Calendar Quarter ends on the last day of the Term. |
1.29 | “Calendar Year” means each successive period of 12 calendar months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term commences on the Effective Date and ends on December 31 of the year in which the Effective Date occurs and the last Calendar Year of the Term commences on January 1 of the year in which the Term ends and ends on the last day of the Term. |
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1.30 | “CASI Know-How” means all Know-How owned or Controlled by CASI before or on the Effective Date or at any time during the Term, in each case, that is necessary to Exploit any Licensed Compound or Licensed Product, but excluding any Know-How included in the Joint Know-How. |
1.31 | “CASI Patent Right” means any Patent Right owned or Controlled by CASI before or on the Effective Date or at any time during the Term (including pursuant to any Third Party Agreement), in each case, that Covers any Licensed Compounds or Licensed Product, the Exploitation of any Licensed Compound or Licensed Product, or any other invention necessary to Exploit any Licensed Compound or any Licensed Product, but excluding any Joint Patent Right. The CASI Patent Rights owned or Controlled by CASI and existing as of the Effective Date are set forth on Schedule 1.31 (CASI Patent Rights). |
1.32 | [***] |
1.33 | [***] |
1.34 | “CASI Royalty Term” means, for purposes of determining royalties payable to CASI pursuant to Section 6.4.1(b) (Region-Specific Royalty Rates for Existing Licensed Products), Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products) and Section 6.4.1(g) (CASI Royalty Payments), with respect to each Licensed Product and each country in the Territory, the period commencing on the First Commercial Sale of a Licensed Product in such country, and ending upon the latest to occur of: (a) the expiration of the last Valid Claim of a CASI Patent Right or Joint Patent Right Covering the composition of matter, formulation, use or manufacture of such Licensed Product in such country; (b) 10 years after the First Commercial Sale of such Licensed Product in such country; or (c) expiration of Regulatory Exclusivity for such Licensed Product in such country. |
1.35 | “CASI Technology” means the CASI Know-How, CASI Patent Rights, and CASI’s interest in the Joint Patent Rights. |
1.36 | “CD38” means the glycoprotein Cluster of Differentiation 38 also known as ADP-Ribosyl Cyclase/Cyclic ADP-Ribose Hydrolase 1. |
1.37 | “Cellca” means Sartorius Stedim Cellca GmbH. |
1.38 | “Cellca Agreement” means that certain Framework for Services and License Agreement dated as of February 14, 2017, by and between Cellca and Tusk, as modified by that certain Deed of Novation dated as of November 8, 2018, by and among Cellca, Tusk, and Black Belt Therapeutics Limited and the Work Orders relating thereto and all amendments thereof. Schedule 1.38 (Cellca Agreement Key Terms) sets forth certain key terms in the Cellca Agreement. |
1.39 | “Cellca Milestone Event” has the meaning set forth in Section 6.3.1(e) (Milestone Payments Under the Cellca Agreement). |
1.40 | “Cellca Milestone Payment” has the meaning set forth in Section 6.3.1(e) (Milestone Payments Under the Cellca Agreement). |
1.41 | “Change of Control” means, with respect to a Party, that: (a) any Third Party acquires directly or indirectly the beneficial ownership of any voting security of such Party, or if the percentage ownership of such Third Party in the voting securities of such Party is increased through stock |
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redemption, cancellation, or other recapitalization, and immediately after such acquisition or increase such Third Party is, directly or indirectly, the beneficial owner of voting securities representing at least 50% of the total voting power of all of the then outstanding voting securities of such Party; (b) a merger, consolidation, recapitalization, or reorganization of such Party is consummated that would result in shareholders or equity holders of such Party immediately prior to such transaction, owning less than 50% of the outstanding voting securities of the surviving entity (or its parent entity) immediately following such transaction; (c) the shareholders or equity holders of such Party approve a plan of complete liquidation of such Party, or an agreement for the sale or disposition by such Party of all or substantially all of such Party’s assets, other than pursuant to the transaction described above or to an Affiliate; or (d) the sale or transfer to a Third Party of all or substantially all of such Party’s consolidated assets taken as a whole, through one or more related transactions.
1.42 | “China” means the People’s Republic of China, as constituted as of the Effective Date, (a) solely for purposes of determining whether a Development Milestone Event has been achieved, excluding the Macao Special Administrative Region, Hong Kong Special Administrative Region, and Taiwan, and (b) for all other purposes under this Agreement, including the Macao Special Administrative Region, Hong Kong Special Administrative Region, and Taiwan. |
1.43 | “Clinical Trial” means any study conducted in humans (healthy volunteers or patients) according to a set protocol and meeting the requirements of GCP. |
1.44 | “CMC” means the chemistry, manufacturing, and controls of Licensed Product. |
1.45 | “Combination Product” means a Licensed Product that is (a) sold in the form of a combination that contains or comprises one or more additional therapeutically active pharmaceutical agents (whether co-formulated, co-packaged, co-administered, or otherwise sold for a single price) other than a Licensed Compound, or (b) sold for a single price together with any (i) delivery device or component therefor, (ii) companion diagnostic related to any Licensed Compound, or (iii) product, process, service, or therapy other than the Licensed Compound (such additional therapeutically active pharmaceutical agent and each of (i) – (iii), an “Other Component”); or (c) defined as a “combination product” by the FDA pursuant to 21 C.F.R. §3.2(e) or its foreign equivalent, but, in each case ((a)-(c)), excluding any antibody drug conjugate and bispecific products. |
1.46 | “Commercialize,” “Commercializing,” or “Commercialization” means all activities directed to the marketing, pricing, promoting, physician targeting, reimbursing, branding, selling, or offering for sale, of a product, including strategy, planning, market research, advertising, educating, importing, exporting, distributing, and post-marketing safety surveillance and reporting and activities directed to obtaining Reimbursement Approvals, as applicable. For clarity, “Commercialization” will not include any activities related to Manufacturing, performance of Medical Affairs, or Development of a product. “Commercialize,” “Commercializing” and “Commercialized” will be construed accordingly. |
1.47 | “Commercially Reasonable Efforts” means, with respect to TIANSHI’s obligations under this Agreement that relate to any Licensed Compound or Licensed Product, the level of efforts as required to carry out a task in a diligent and sustained manner without undue interruption, pause or delay, which level is at least commensurate with the level of efforts that a similarly situated biopharmaceutical company of similar size and resources would reasonably devote to a product of similar market potential at a similar stage in development or product life cycle and having similar commercial and scientific advantages and disadvantages, when utilizing sound and reasonable scientific, medical, and business practice and judgment in order to Develop such Licensed |
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Compound or Licensed Product, based on conditions then prevailing and taking into account all relevant factors, including (a) issues of safety, tolerability, and efficacy, (b) product profile, (c) difficulty in and costs of Developing or Manufacturing any Licensed Compound or Licensed Product, (d) competitiveness of any Licensed Compound or Licensed Product and alternative therapies in the marketplace, (e) the nature and extent of market exclusivity, (f) the patent or other proprietary position of any Licensed Compound or Licensed Product, (g) Third Party intellectual property rights, (h) the regulatory structure involved, (i) the potential profitability of any Licensed Compound or Licensed Product, taking into account anticipated and actual Development costs and expenses, and (j) anticipated or actual product labeling. It is anticipated that the level of effort will change over time, reflecting changes in the status of such Licensed Product and the market or country involved.
1.48 | “Competing Infringement” has the meaning set forth in Section 7.4.1 (Notice). |
1.49 | “Competitive Activities” has the meaning set forth in Section 2.3 (Covenant). |
1.50 | “Competitive Product” means any therapeutic compound or product (a) the primary mechanism of action of which is the inhibition of CD38, or (b) that is, or is expected to be, described on a label approved by a Regulatory Authority as having the inhibition of CD38 as the primary mechanism of action. |
1.51 | “Confidential Information” has the meaning set forth in Section 10.1 (Confidential Information). |
1.52 | “Control” or “Controlled” means the possession by a Party (whether by ownership, license, or otherwise other than pursuant to this Agreement) of, (a) with respect to any tangible Know-How, the legal authority or right to physical possession of such tangible Know-How, with the right to provide such tangible Know-How to the other Party on the terms set forth herein, or (b) with respect to Patent Rights, Regulatory Approvals, Regulatory Submissions, intangible Know-How, or other intellectual property rights, the legal authority or right to grant a license, sublicense, access, or right to use (as applicable) to the other Party under such Patent Rights, Regulatory Approvals, Regulatory Submissions, intangible Know-How, or other intellectual property rights on the terms set forth herein, in each case ((a) and (b)), (i) in accordance with and without breaching or otherwise violating the terms of any arrangement or agreement with a 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, license, or sublicense or at any time during the Term, (ii) without requiring the consent of a Third Party, and (iii) at no additional cost (unless the other Party agrees to assume such cost). |
1.53 | “Cover” means, with respect to a particular subject matter at issue and a relevant Patent Right, that the manufacture, use, sale, offer for sale, or importation of such subject matter would fall within the scope of one or more claims in such Patent Right. |
1.54 | “Develop,” “Developing” or “Development” means all internal and external research, development, and regulatory activities related to pharmaceutical or biologic products, including (a) research, non-clinical testing, toxicology, testing and studies, non-clinical and preclinical activities, and Clinical Trials, and (b) preparation, submission, review, and development of data or information for the purpose of submission to a Regulatory Authority to obtain authorization to conduct Clinical Trials or to obtain, support, or maintain Regulatory Approval of a pharmaceutical or biologic product, but excluding activities directed to Manufacturing, performance of Medical Affairs, or Commercialization. Development will include development and regulatory activities for additional forms, formulations, or indications for a pharmaceutical or biologic product after receipt of Regulatory Approval of such product (including label expansion), including Clinical |
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Trials initiated following the receipt of Regulatory Approval or any Clinical Trial to be conducted after receipt of Regulatory Approval that was mandated by the applicable Regulatory Authority as a condition of such Regulatory Approval with respect to an approved formulation or indication (such as post-marketing studies, observational studies, and implementation and management of registries and analysis thereof, in each case, if required by any Regulatory Authority in any region in the Territory to support or maintain Regulatory Approval for a pharmaceutical or biologic product in such region). “Develop,” “Developing” and “Developed” will be construed accordingly.
1.55 | “Development Milestone Event” means each of the development milestone events set forth in TABLE 6.3.1(a) (Lyophilization Milestone Payments), TABLE 6.3.1(b) (Development Milestones for Existing Licensed Products), TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products), Section 4.4 of the Adimab Agreement, and Section 6 of the Work Order of the Cellca Agreement. |
1.56 | “Development Milestone Payment” means each of the milestone payments set forth in TABLE 6.3.1(a) (Lyophilization Milestone Payments), TABLE 6.3.1(b) (Development Milestones for Existing Licensed Products), TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products), Section 4.4 of the Adimab Agreement, and Section 6 of the Work Order of the Cellca Agreement. |
1.57 | “Disclosing Party” has the meaning set forth in Section 10.1 (Confidential Information). |
1.58 | “Dispute” has the meaning set forth in Section 13.1 (Disputes). |
1.59 | “DMF” means a drug master file. |
1.60 | “Dollars” or “$” means U.S. dollars. |
1.61 | “E.U.” means the European Union, as constituted as of the Effective Date, including, in any case, the United Kingdom. |
1.62 | “Effective Date” has the meaning set forth in the preamble hereto. |
1.63 | “EMA” means the European Medicines Agency or any successor entity. |
1.64 | “Enforcing Party” has the meaning set forth in Section 7.4.2(d)(i) (Cooperation; Damages). |
1.65 | “Euros” or “€” means E.U. euros. |
1.66 | “Executive Officer” means an executive officer (or their designee) of the applicable Party. |
1.67 | “Existing Licensed Product” means (a) a Licensed Product comprising or containing TSK011010 alone or in combination with one or more active ingredients, or (b) a Lyophilized Product, alone or in combination with one or more active ingredients, in each case ((a) and (b)), in any and all forms, presentations, formulations, dosages, dosage forms, and strengths, including any line extensions of any of the foregoing, but excluding any Next Generation Licensed Product. |
1.68 | “Exploit” or “Exploitation” means to make, have made, import, use, sell, or offer for sale, including to research, Develop, Commercialize, register, modify, enhance, improve, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), formulate, optimize, have |
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used, export, transport, distribute, promote, market, have sold or otherwise dispose of, and otherwise exploit.
1.69 | “FDA” means the U.S. Food and Drug Administration or any successor entity. |
1.70 | “FD&C Act” means the U.S. Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto). |
1.71 | “Field” means the treatment, prevention and diagnosis of autoimmune diseases, conditions and disorders in humans. For clarity, CASI shall retain the exclusive global rights to [***- the Licensed Product for all uses outside the [***] |
1.72 | “First Commercial Sale” means, with respect to a Licensed Product and a country in the Territory for the purposes of determining the Royalty Term for such Licensed Product, the first sale of such Licensed Product by TIANSHI or its Affiliate or Sublicensee for monetary value to a Third Party in such country after receipt of Regulatory Approval for such Licensed Product. Sales prior to receipt of Regulatory Approval for a Licensed Product, if any, including so-called “treatment IND sales,” “named patient sales,” and “compassionate use sales,” in each case, will not be construed as a First Commercial Sale with respect to such Licensed Product. |
1.73 | “First Financing” means TIANSHI’s first financing consummated substantially contemporaneously with the Effective Date for the primary purpose of raising capital. |
1.74 | “First Lyophilization Milestone” means (a) the achievement of the criteria set forth on Schedule 1.75 (Lyophilization Milestone Specifications) as “First Milestone Criteria,” or (b) CASI or TIANSHI’s decision to designate and approve a Licensed Product in a lyophilized form as acceptable for use in a clinical bridging study (a Licensed Product meeting such criteria in clause (a) or designated by CASI or TIANSHI in clause (b), a “Lyophilized Product”). |
1.75 | “FTE” means the equivalent of the work of one duly qualified employee of CASI full time for one year (consisting of a total of 1,880 hours per year). The portion of an FTE billable by CASI for one individual during a given accounting period will be determined by dividing the number of hours worked directly by such individual on the work to be conducted under this Agreement during such accounting period and the number of FTE hours applicable for such accounting period based on 1,880 working hours per Calendar Year. |
1.76 | “FTE Rate” means $300,000 per FTE per Calendar Year. |
1.77 | “GAAP” means U.S. generally accepted accounting principles, as then current at the relevant time and as consistently applied by the applicable Party. |
1.78 | “Good Clinical Practices” or “GCP” means Good Clinical Practice as promulgated by the FDA under and in accordance with the FD&C Act (Title 21 of the U.S. Code, Section 301 et seq.), Title 21, Parts 312 of the U.S. Code of Federal Regulations, and the guidelines and standards published by the FDA that relate thereto as may be amended from time to time, or any successors thereto. To the extent consistent with U.S. law, “GCP” also includes the practices and standards described in the Guidelines on Principles of Good Clinical Practice in Conduct of EU Clinical Trials as promulgated by the European Commission under European Directive 2001/20/EC and the ICH Harmonised Tripartite Guideline for Good Clinical Practice (ICH E6) and any analogous practices, standards guidelines and regulations promulgated by any applicable Regulatory Authority in any |
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country or jurisdiction in the Territory, as each may be amended from time to time, or any successors thereto.
1.79 | “Good Laboratory Practices” or “GLP” means Good Laboratory Practices as promulgated by the FDA under and in accordance with the FD&C Act (Title 21 of the U.S. Code, Section 342 et seq), Title 21, Part 58 of the U.S. Code of Federal Regulations, and the guidelines and standards published by the FDA that relate thereto as may be amended from time to time, or any successors thereto. To the extent consistent with U.S. law, “GLP” also includes the principles of good laboratory practice as set out in Directives 2004/9/EC and 2004/10/EC (as supplemented by the OECD Principles of Good Laboratory Practices), all applicable national implementing legislation and guidelines, and all applicable equivalent regulatory requirements of a Regulatory Authority in any country or jurisdiction in the Territory, as each may be amended from time to time, or any successors thereto. |
1.80 | “Governmental Authority” means any multi-national, federal, state, local, municipal, provincial, or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court, or other tribunal). |
1.81 | “Grandfathered Products” has the meaning set forth in Section 2.3.2 (Acquisitions by Third Parties). |
1.82 | “IBA Rules” has the meaning set forth on Schedule 12.2 (Arbitration Procedures). |
1.83 | “ICH” means the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use. |
1.84 | “IND” means an Investigational New Drug application required pursuant to 21 C.F.R. Part 312 or any comparable filings outside of the U.S. required to commence human clinical trials in such country or region (such as an application for a Clinical Trial Authorization in the E.U.), and all supplements or amendments that may be filed with respect to the foregoing. |
1.85 | “Indemnification Claim Notice” has the meaning set forth in Section 9.3.1 (Notice of Claim). |
1.86 | “Indemnified Party” has the meaning set forth in Section 9.3.1 (Notice of Claim). |
1.87 | “Indemnifying Party” has the meaning set forth in Section 9.3.1 (Notice of Claim). |
1.88 | “Indemnitee” has the meaning set forth in Section 9.3.1 (Notice of Claim). |
1.89 | “Infringement Claim” has the meaning set forth in Section 7.3.1 (Notice of Infringement Claims). |
1.90 | “Inventions” means any new and useful process, manufacture, or composition of matter, know-how, or other invention that is first developed and invented, by either Party or jointly by the Parties in connection with performance of activities under this Agreement. |
1.91 | “Joint Know-How” means all Inventions, technical data, reports, information, procedures, techniques, and other Know-How developed or invented in the course of performance of activities under this Agreement where the inventors of the applicable Invention or other Know-How are employees, agents, or independent contractors of both CASI and TIANSHI, or their respective Affiliates or Sublicensees. |
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1.92 | “Joint Patent Rights” means any Patent Right that claims priority to a date during the Term and Covers Joint Know-How. |
1.93 | “Joint Technology” means all Joint Know-How and Joint Patent Rights. |
1.94 | “Know-How” means any and all proprietary information (including scientific, technical, or regulatory information), data (including physical data such as laboratory notes and laboratory notebooks, chemical data, toxicology data, animal data, raw data, clinical data, and analytical and quality control data), discoveries, materials, results, records, Inventions, improvements, modifications, protocols, formulas, dosage regimens, control assays, processes, techniques, methods, assays, compositions, chemical or biological materials, designs, articles of manufacture, formulations, discoveries, product specifications, marketing, pricing and distribution costs, Inventions, algorithms, technology, forecasts, profiles, strategies, plans, results in any form whatsoever, know-how, and trade secrets of any kind, including sequence information, vectors and host cells that include DNA, in each case, whether or not copyrightable, patented, or patentable, or in written, electronic or any other form now known or hereafter developed. |
1.95 | “Laws” means all applicable laws, statutes, rules, regulations, ordinances, and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city, or other political subdivision, domestic or foreign, anywhere in the world. |
1.96 | “Licensed Compound” means CID-103, also known as TSK011010, Controlled by CASI, the primary mechanism of which is the inhibition of CD38. |
1.97 | “Licensed Product” means any pharmaceutical composition or preparation comprising or containing the Licensed Compound, alone or in combination with one or more other active ingredients, in any and all forms, presentations, formulations, dosages, dosage forms, strengths, and modes of administration, and including any improvements to any of the foregoing. Licensed Products include all Adimab Products, Existing Licensed Products, and Next Generation Licensed Products. |
1.98 | “Losses” means, collectively, liability, damage, tax, costs, loss or expense (including reasonable outside attorneys’ fees and expenses of litigation). |
1.99 | “Lyophilized Product” has the meaning set forth in Section 1.73 (First Lyophilization Milestone). |
1.100 | “MAA” means any new drug application or other marketing authorization application, in each case, filed with the applicable Regulatory Authority in a country or other regulatory jurisdiction (and all supplements and amendments thereto), which application is required to commercially market or sell a pharmaceutical or biologic product in such country or jurisdiction, including (a) all New Drug Applications and Biologics License Applications submitted to the FDA in the U.S. in accordance with the FD&C Act with respect to a biologic or pharmaceutical product, (b) all MAAs submitted to (i) the EMA under the centralized EMA filing procedure in the E.U. or (ii) a Regulatory Authority in any country in the E.U. if the centralized EMA filing procedure is not used to gain Regulatory Approval in such country, (c) Japanese New Drug Application submitted to the PMDA in Japan, (d) application to commercially market or sell a pharmaceutical or biologic product submitted to the National Medical Products Administration in China, or (e) any analogous application or submission to any Regulatory Authority in any other country or regulatory jurisdiction, and in each case ((a) – (e)), all supplements or amendments that may be filed with respect to any of the foregoing. |
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1.101 | “Major European Country” means Germany, France, Spain, Italy, and, as constituted as of the Effective Date, the United Kingdom. |
1.102 | “Manufacture” or “Manufacturing” means activities directed to manufacturing, processing, packaging, labeling, filling, finishing, assembly, inspection, testing, shipping, storage, supply, handling, or freight of any pharmaceutical or biologic product (or any components or process steps involving any product or any companion diagnostic), placebo, or comparator agent, as the case may be, including cell line development, quality assurance and stability testing, characterization testing, manufacturing, quality control release testing of drug substance and drug product, quality assurance batch record review and release of product, quality control, process development, qualification, and validation, scale-up, pre-clinical, clinical, and commercial manufacture, analytic development and supply, initial manufacturing licenses, approvals and inspections, qualification and validation of Third Party contract manufacturers, stability and release testing, equipment validation, testing and release, packaging development and final packaging and labeling, shipping configurations and shipping studies, and product characterization, and overseeing the conduct of any of the foregoing but excluding activities directed to Development, Commercialization, or Medical Affairs. “Manufacturing” and “Manufactured” will be construed accordingly. |
1.103 | “Marketing Approval” means, with respect to a Licensed Product, all approvals (including supplements, amendments, pre- and post-approvals), permits, licenses, registrations and authorizations necessary for the Commercialization of such Licensed Product in the Territory, including receipt of all Regulatory Approvals and Reimbursement Approvals. |
1.104 | “Medical Affairs” means activities conducted by a Party’s medical affairs departments (or, if a Party does not have a medical affairs department, the equivalent function thereof), including communications with key opinion leaders, medical education, symposia, advisory boards (to the extent related to medical affairs or clinical guidance), activities performed in connection with patient registries, and other medical programs and communications, including educational grants, research grants (including conducting investigator-initiated studies), and charitable donations to the extent related to medical affairs and not to other activities that do not involve the promotion, marketing, sale, or other Commercialization of the Licensed Products and are not conducted by a Party’s medical affairs (or equivalent) departments. |
1.105 | “Milestone Events” means each of (a) the Development Milestone Events set forth in Section 6.3.1(a) (Milestone Payments for Lyophilized Form), Section 6.3.1(b) (Milestone Payments for Existing Licensed Products), Section 6.3.1(c) (Milestone Payments for Next Generation Licensed Products), and (b) the Sales Milestone Events. |
1.106 | “Milestone Payments” means each of (a) the Development Milestone Payments set forth in Section 6.3.1(a) (Milestone Payments for Lyophilized Form), Section 6.3.1(b) (Milestone Payments for Existing Licensed Products), Section 6.3.1(c) (Milestone Payments for Next Generation Licensed Products), and (b) the Sales Milestone Payments. |
1.107 | “Net Sales” means, with respect to any Licensed Product and a given country or jurisdiction for the purposes of determining royalties payable to CASI pursuant to Section 6.4.1(b) (Region-Specific Royalty Rates for Existing Licensed Products) and Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products), the gross amount invoiced by TIANSHI or its Affiliates (not including CASI) or Sublicensees (excluding any Third Party Distributors), including gross amounts invoiced to wholesalers and Third Party Distributors, to each Third Party receiving Licensed Product in arm’s length transactions in such country or jurisdiction, less the |
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following deductions from such total amounts that are actually incurred, allowed, accrued, or specifically allocated:
(a) | credits, price adjustments, or allowances for damaged products, and returns or rejections of such Licensed Product; |
(b) | trade, cash, and quantity discounts, allowances and credits (other than price discounts granted at the time of invoicing that have already been included in the gross amount invoiced); |
(c) | chargeback payments and rebates (or the equivalent thereof), retroactive or otherwise, granted to group purchasing organizations, managed health care organizations or to federal, state/provincial, local, and other governments, including their agencies, or to trade customers; |
(d) | any invoiced freight, postage, shipping, insurance, and other transportation charges, as well as any fees for services provided by wholesalers and warehousing chains related to the distribution of such Licensed Product; |
(e) | sales, value-added (to the extent not refundable in accordance with Law), and excise taxes, tariffs and duties, and other taxes directly related to the sale (but not including taxes assessed against the income derived from such sale); |
(f) | the portion of administrative fees paid during the relevant time period to group purchasing organizations, pharmaceutical benefit managers, or Medicare Prescription Drug Plans relating to such Licensed Product; |
(g) | any consideration actually paid or payable for any Delivery System related to a billed or invoiced sale of such Licensed Product, where for purposes of this Net Sales definition, a “Delivery System” means any delivery system designed to assist in the administration of such Licensed Product; |
(h) | any reserves for uncollected amounts, including bad debt; |
(i) | that portion of the annual fee on prescription drug manufacturers imposed by the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (as amended) and reasonably allocable to sales of the Licensed Products; and |
(j) | any other similar and customary deductions that are consistent with GAAP, but which may not be duplicative of the deductions specified in (a) – (i) above. |
Net Sales will include the amount or fair market value of all other consideration received by TIANSHI or its Affiliates or Sublicensees in respect of the Licensed Product, whether such consideration is in cash, payment in kind, exchange, or other form. For purposes of calculating Net Sales, all Net Sales will be converted into Dollars in accordance with Section 6.5 (Foreign Exchange).
For this definition:
(i) | the transfer of Licensed Product by or among TIANSHI or its Affiliates or Sublicensees is not considered a sale; and |
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(ii) | Net Sales will not include transfers or dispositions for charitable, donation, promotional, compassionate use, pre-clinical, clinical, regulatory or governmental purposes. |
(A) | If, with respect to a Combination Product, TIANSHI or its Affiliate or Sublicensee separately sells in such country or other jurisdiction, (1) a product containing as its sole active ingredient a Licensed Compound contained in such Combination Product (the “Mono Product”) and (2) products containing as their sole active ingredients the other active ingredients in such Combination Product, then the Net Sales attributable to such Combination Product will be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/(A+B) where: “A” is TIANSHI’s (or its Affiliate’s or Sublicensee’s, as applicable) average Net Sales price for the Mono Product in such country or other jurisdiction during the period to which the Net Sales calculation applies and “B” is TIANSHI’s (or its Affiliate’s or Sublicensee’s, as applicable) average Net Sales price for products that contain as their sole active ingredients the Other Components in such Combination Product in such country or other jurisdiction during the period to which the Net Sales calculation applies. |
(B) | If, with respect to a Combination Product, TIANSHI or its Affiliate or Sublicensee separately sells in such country or other jurisdiction the Mono Product but does not separately sell in such country or other jurisdiction products containing as their sole active ingredients the other active ingredients in such Combination Product, then the Net Sales attributable to such Combination Product will be calculated by multiplying the Net Sales of such Combination Product by the fraction A/C where: “C” is TIANSHI’s (or its Affiliate’s or Sublicensee’s, as applicable) average Net Sales price for such Combination Product in such country or other jurisdiction during the period to which the Net Sales calculation applies. |
(C) | If, with respect to a Combination Product, TIANSHI and its Affiliates and Sublicensees do not separately sell in such country or other jurisdiction the Mono Product but separately sells products containing as their sole active ingredients the other active ingredients contained in such Combination Product, then the Net Sales attributable to such Combination Product will be calculated by multiplying the Net Sales of such Combination Product by the fraction (C-B)/C. |
(D) | If, with respect to a Combination Product, TIANSHI and its Affiliates and Sublicensees do not separately sell in such country or other jurisdiction any of the Mono Product or the Other Components in such Combination Product, then the Net Sales attributable to such Combination Product will be determined by the Parties in good faith based on the relative fair market value of such Mono Product and such Other Components. If the Parties cannot agree on such relative value, then TIANSHI will have final decision-making with respect to such allocation of value. |
1.108 | “New License Agreement” has the meaning set forth in Section 12.1.6 (Sublicense Continuation Upon Termination). |
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1.109 | “Next Generation Licensed Product” means any Licensed Product other than an Existing Licensed Product. “Next Generation Licensed Products” include any (a) antibody drug conjugate, (b) antibody radionuclide conjugate, (c) radioligand, (d) bispecific antibody, in each case ((a)-(d)), that includes a Licensed Compound, or (e) any re-engineered version of any Licensed Compound in existence as of the Effective Date, including to enhance antibody-dependent cellular toxicity. |
1.110 | “Patent Challenge” means, with respect to any CASI Patent Rights, to contest the validity or enforceability of any such CASI Patent Rights, in whole or in part, in any court, arbitration proceeding or other tribunal, including the United States Patent and Trademark Office, the European Patent Office, and the United States International Trade Commission. As used in this term “Patent Challenge”, the term “contest” includes (a) filing an action under 28 U.S.C. §§ 2201-2202 seeking a declaration of invalidity or unenforceability of any such CASI Patent Rights; (b) filing, or joining in, a petition under 35 U.S.C. § 311 to institute inter partes review of any such CASI Patent Rights, or any portion thereof; (c) filing, or joining in, a petition under 35 U.S.C. § 321 to institute post-grant review of any such CASI Patent Rights, or any portion thereof; (d) any foreign equivalent of clauses (a), (b), or (c) in the Territory outside of the United States; or (e) filing or commencing any opposition, nullity or similar proceedings challenging the validity of any such CASI Patent Rights in any country outside the United States; but excluding (i) filing a request under 35 U.S.C. § 302 for re-examination of any such CASI Patent Rights, (ii) filing a request under 35 U.S.C. § 251 for a reissue of any such CASI Patent Rights, or (iii) any foreign equivalents of the foregoing clauses (i) or (ii) applicable in the Territory outside of the United States. |
1.111 | “Patent Rights” means any and all (a) patent applications (filed or in preparation) and issued patents, including, all national, regional, and international patents and patent applications; provisionals; continuations; divisionals; continuations-in-part; continued prosecution applications; reissues, renewals, substitutions, reexaminations, and revivals thereof; (b) patents that have issued or in the future issue from the foregoing patent applications, including utility models, petty patents and design patents and certificates of invention; and (c) extensions (including pediatric exclusivity, patent term extension and supplementary patent certificate) or restorations of the patents described above by existing or future extension or restoration mechanisms. |
1.112 | “Patent Term Extension” means any patent term extension under 35 U.S.C. §156 or any non-U.S. counterpart or equivalent of the foregoing, including supplemental protection certificates and any other extensions that are available as of the Effective Date or become available in the future. |
1.113 | “Person” means an individual, a corporation, a partnership, an association, a trust, or other entity or organization, including a government or political subdivision or an agency thereof. |
1.114 | “Phase III Clinical Trial” means a human clinical trial in any country described in 21 C.F.R. §312.21(c), or an equivalent clinical study required by a Regulatory Authority outside the United States. |
1.115 | “PHSA” means the United States Public Health Service Act, 42 U.S.C. §§ 201 et seq., as amended from time to time. |
1.116 | “PMDA” means the Pharmaceuticals and Medical Devices Agency or any successor entity. |
1.117 | “President Arbitrator” has the meaning set forth on Schedule 12.2 (Arbitration Procedures). |
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1.118 | “Product Trademarks” means the Trademarks to be used by TIANSHI or its Affiliates or Sublicensees in connection with the Exploitation of Licensed Products in the Territory and any registrations thereof or any pending applications relating thereto in the Territory. |
1.119 | “Purple Book” has the meaning set forth in Section 7.5 (Patent Listing). |
1.120 | “Qualifications” has the meaning set forth on Schedule 12.2 (Arbitration Procedures). |
1.121 | “Receiving Party” has the meaning set forth in Section 10.1 (Confidential Information). |
1.122 | “Recovery” has the meaning set forth in Section 7.4.2(d)(v) (Cooperation; Damages). |
1.123 | “Regulatory Approval” means, with in any given jurisdiction, approval to market a Licensed Product legally as a drug or biologic, including approval of a Biologic License Application (as defined in the U.S. FD&C Act) and the regulations promulgated thereunder (21 C.F.R. §§ 600-680) in the United States, or approval of a comparable filing in the United States or any other jurisdiction. Reimbursement Approval need not be obtained in order for Regulatory Approval to be achieved. |
1.124 | “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 or, to the extent required for such country, extra-national territory, province, state, or other or regulatory jurisdiction, Reimbursement Approval of a Licensed Compound or Licensed Product in such country, state, province, or some or all of such extra-national territory or regulatory jurisdiction, including the FDA, the EMA, the European Commission, the PMDA, and in each case, including any successor thereto. |
1.125 | “Regulatory Data” means any and all research data, pharmacology data, chemistry, manufacturing and control data, preclinical data, clinical data, and all other documentation submitted, or recommended or required to be submitted, to Regulatory Authorities in connection with any Regulatory Submission for a Licensed Compound or Licensed Product (including any applicable DMFs, CMC data, or similar documentation). |
1.126 | “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a Licensed Product in a country or jurisdiction in the Territory, other than a Patent Right, that prohibits a Person from (a) relying on safety or efficacy data generated by or on behalf of a Party with respect to such Licensed Product in an application for Regulatory Approval of a Biosimilar Product, or (b) Commercializing a Licensed Product or a Biosimilar Product, including orphan drug exclusivity, or rights similar thereto in other countries or regulatory jurisdictions. |
1.127 | “Regulatory Submissions” means INDs, MAAs, clinical trial applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals, or other filings made to, received from or otherwise conducted with a Regulatory Authority to Exploit a Licensed Product in a particular country or jurisdiction. |
1.128 | “Reimbursement Approval” means, with respect to a country, if applicable, the approval, agreement, determination, or decision establishing the pricing or reimbursement for a pharmaceutical or biologic product that can be charged or reimbursed in regulatory jurisdictions where the applicable Governmental Authorities negotiate, approve, or determine the price or reimbursement of pharmaceutical or biologic products. |
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1.129 | “Royalty Payments” means the Adimab Royalty Payments, Black Belt Royalty Payment or CASI Royalty Payments, as applicable. |
1.130 | “Royalty Report” has the meaning set forth in Section 6.4.2(a) (Royalty Reports). |
1.131 | “Royalty Term” means the Adimab Royalty Term, Black Belt Royalty Term or the CASI Royalty Term, as applicable. |
1.132 | “Second Financing” has the meaning set forth in Section 6.1.2. |
1.133 | “Sales Milestone Event” means each of the sales milestone events set forth in TABLE 6.3.2(a) (Existing Licensed Product Sales Milestones) and TABLE 6.3.2(b) (Next Generation Licensed Product Sales Milestones). |
1.134 | “Sales Milestone Payment” means each of the one-time milestone payments set forth in TABLE 6.3.2(a) (Existing Licensed Product Sales Milestones) and TABLE 6.3.2(b) (Next Generation Licensed Product Sales Milestones). |
1.135 | “Second Lyophilization Milestone” means the achievement of the criteria set forth on Schedule 1.75 (Lyophilization Milestone Specifications) as “Second Milestone Criteria.” |
1.136 | “Sublicensee” means any Person to which a further sublicense is granted pursuant to this Agreement. For clarity, wholesalers, or resellers of Licensed Product that perform their activities on behalf of TIANSHI or Third Party Distributors will not be considered Sublicensees. |
1.137 | “Technology Transfer Period” means the period commencing on the receipt by CASI of the $5,000,000 upfront payment referred to in Section 6.1.1 and ending six months thereafter. |
1.138 | “Term” has the meaning set forth in Section 11.1 (Term). |
1.139 | “Territory” means all countries worldwide. |
1.140 | “Third Party” means any individual, corporation, partnership, limited liability company, trust, unincorporated association, Governmental Authority, or other entity or body other than CASI or TIANSHI or an Affiliate of either of them. |
1.141 | “Third Party Agreements” means (a) the Adimab Agreement, (b) the Cellca Agreement and (c) the Black Belt License Agreement. |
1.142 | “Third Party Claim” means collectively, any and all Third Party demands, claims, actions, suits, and proceedings (whether criminal or civil, in contract, tort, or otherwise) that are brought by a Third Party not affiliated with or employed by a Party or an Affiliate of such Party. |
1.143 | “Third Party Distributor” means, with respect to any country, any Third Party that purchases all its requirements for Licensed Products in such country from TIANSHI or its Affiliates or Sublicensees and is appointed as a distributor to distribute, market and resell such Licensed Product in such country, even if such Third Party is granted ancillary rights to Develop, package, or obtain Regulatory Approval of such Licensed Product in order to distribute, market, or sell such Licensed Product in such country. |
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1.144 | “Third Party Milestone Payment” has the meaning set forth in Section 6.3.1(e) (Milestone Payments Under the Cellca Agreement). |
1.145 | “TIANSHI” has the meaning set forth in the preamble hereto. |
1.146 | “TIANSHI CDP” has the meaning set forth in Section 5.3. |
1.147 | “TIANSHI Development Milestone Payment” has the meaning set forth in Section 6.3.1. |
1.148 | “TIANSHI Sales Milestone Payment” has the meaning set forth in Section 6.3.2.2.4 |
1.149 | “Trademark” means any word, name, symbol, color, designation, or device or any combination thereof that functions as a source identifier, including any trademark, trade dress, brand mark, service mark, trade name, brand name, logo, business symbol, or domain names, whether or not registered. |
1.150 | “TSK011010” means CID-103, the CD38 inhibitor that is further described on Schedule 1.150 (TSK011010 Compound). |
1.151 | “Tusk” means Tusk Therapeutics, Ltd., Tusk Therapeutics N.V., and Tusk Therapeutics SA. |
1.152 | “U.S.” means the United States of America, including all possessions and territories thereof. |
1.153 | “Valid Claim” means a claim of (a) any issued and unexpired patent whose validity, enforceability, or patentability has not been affected by any of the following: (i) irretrievable lapse, abandonment, revocation, dedication to the public, or disclaimer; or (ii) a holding, finding, or decision of invalidity, unenforceability, or non-patentability; or (b) a pending patent application that is filed and prosecuted in good faith that has not been pending for more than eight years from its earliest priority date. |
ARTICLE 2
SUBLICENSE
2.1 | Sublicense Grants to TIANSHI. CASI hereby grants to TIANSHI an exclusive (even as to CASI and its Affiliates but subject to Section 5.5 and any other rights or obligations of CASI set forth under this Agreement), perpetual (subject to Article 11 (Term; Termination) and Article 12 (Effects of Termination)), worldwide sublicense, with the right to freely grant further sublicenses (subject to Section 2.2 (Sublicensing)), under the CASI Technology to Exploit the Licensed Compound and Licensed Product in the Field in the Territory. |
2.2 | Sublicensing. |
2.2.1 | Sublicense Rights. TIANSHI may further sublicense the rights and obligations granted to it under Section 2.1 (Sublicense Grants to TIANSHI) through multiple tiers to one or more Affiliates or Third Parties; provided that in each such case: |
(a) | any Sublicensee will carry out the applicable responsibilities of TIANSHI under this Agreement in connection with such sublicensed rights, and TIANSHI shall be fully responsible to CASI under this Agreement for all acts and omissions of any Sublicensee as if TIANSHI were itself exercising such sublicensed rights and performing such sublicensed obligations under this Agreement; |
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(b) | any sublicense of the rights shall impose like obligations on the Sublicensee as are imposed on TIANSHI under this Agreement, including under this Section 2.2 (Sublicensing), Article 5 (Exploitation of Licensed Products), Section 6.3 (Milestone Payments), Section 6.4 (Royalties), Section 6.8 (Records), Section 6.9 (Audits), Article 7 (Intellectual Property Matters), Section 9.2 (Indemnification by TIANSHI), Article 10 (Confidentiality), Article 11 (Term; Termination), and Article 12 (Effects of Termination). TIANSHI must ensure that all the terms of each sublicense are consistent with the terms of this Agreement and shall further ensure that all Sublicensees duly comply with the applicable sublicense or promptly terminate any Sublicensee not in compliance therewith; and |
(c) | within 10 Business Days of the grant of any sublicense of the rights and obligations granted to TIANSHI under Section 2.1 (Sublicense Grants to TIANSHI), TIANSHI will provide CASI with a copy of such sublicense; provided that TIANSHI may redact from such sublicense any information that is not necessary to verify the compliance of such sublicense agreement with the terms of this Section 2.2 (Sublicensing). |
2.2.2 | Subcontracting. In addition to TIANSHI’s right to grant sublicenses pursuant to Section 2.2.1 (Sublicense Rights), TIANSHI may Develop, Manufacture, perform Medical Affairs with respect to, Commercialize, and otherwise Exploit the Licensed Compounds and Licensed Products through one or more Affiliates or Third Party subcontractors (provided that no sublicense is granted, in which case the terms of Section 2.2.1 (Sublicense Rights) shall apply), and TIANSHI shall be fully responsible to CASI under this Agreement for all acts and omissions of any Affiliate or Third Party subcontractor as if TIANSHI were itself performing such subcontracted acts under this Agreement. |
2.3 | Non-Compete. |
2.3.1 | Covenant. Subject to Section 2.3.2 (Acquisitions by Third Parties), except as expressly permitted under this Agreement, during the Term TIANSHI will not, and will ensure that its Affiliates do not, independently or for or with any Third Party (including through the grant of any license or option to any Affiliate or Third Party), (a) Exploit any Competitive Product in the Territory, or (b) license, sell, assign, or otherwise grant rights to any Third Party under any Know-How, Patent Rights, or other intellectual property rights Controlled by CASI or any of its Affiliates to Exploit any Competitive Product in the Territory, (c) provide or otherwise make available to any Third Party any Competitive Product, or (d) engage in any Development activities that are primarily directed to CD38 (the “Competitive Activities”) other than the Licensed Compound or Licensed Product in accordance with this Agreement. |
2.3.2 | Acquisitions by Third Parties. Neither TIANSHI nor any of its Affiliates will be in breach of the restrictions set forth in Section 2.3.1 (Covenant) if such Person undergoes a Change of Control with a Third Party (together with such Third Party and its Affiliates following the closing of such Change of Control, the “Acquired Party”) that is (either directly or through an Affiliate, or in collaboration with such Third Party) actively performing Competitive Activities with respect to one or more Competitive Products immediately prior to the consummation of such Change of Control transaction (such Competitive Products being Exploited by the Acquired Party immediately prior to the consummation of such Change of Control, “Grandfathered Products”); provided that TIANSHI will (subject to any applicable confidentiality obligations) as soon as reasonably possible provide written notice to CASI of each such Change of Control and all Grandfathered Products. In such case, such Acquired Party may continue to perform the |
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applicable Competitive Activities with respect to such Grandfathered Products after such Change of Control only if and for so long as no CASI Technology is used by or on behalf of such Acquired Party or its Affiliates in connection with any subsequent performance of any such Competitive Activities with respect to any such Grandfathered Products.
2.4 | [***] |
2.5 | No Implied Licenses. Except as explicitly set forth in this Agreement, neither Party will be deemed to have granted the other Party any license or other right to any intellectual property of such Party, whether by estoppel, implication, or otherwise. |
ARTICLE 3
GOVERNANCE
3.1 | Joint Steering Committee. Within [***] days from the Effective Date or other period mutually agreed by the Parties, the Parties shall form a joint steering committee (the “JSC” or “Joint Steering Committee”) with equal representation of [***] representatives from each Party to provide a forum for data sharing, communication and issue management and to generally oversee the conduct of the collaboration pursuant to the Agreement, including exchange and coordination with respect to Development, regulatory, patent, Manufacturing and Commercialization strategies for the Licensed Compound and the Licensed Product in the Field. The Parties shall notify one another in writing of any change in the membership of the JSC. An alternate member designated by a Party may serve temporarily in the absence of a permanent member of the JSC for such Party. Each Party will designate one member of the JSC, which shall be drawn from the ranks of senior management of each Party, as a “Co-Chairperson.” |
3.2 | Joint Project Team. The JSC shall form sub-committees as mutually agreed upon by the Parties, including a joint project team (the “Joint Project Team”). The Joint Project Team and the sub-committees shall have representation appropriate for the given tasks and objectives. The JSC’s responsibilities shall include, without limitation, the following activities: [***] |
3.3 | Decisions. Decisions by the JSC shall be by consensus, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting. Decisions of the JSC can also be made by a written resolution, signed by a designated representative of each of the Parties. In the event the JSC is unable to reach consensus on a matter and such matter is unable to be resolved by the Senior Officers within the period of [***] Business Days then [***]. |
3.4 | Meetings of the JSC. Subject to the provisions in the next sentence, the JSC shall hold meetings at least once each Calendar Quarter (unless otherwise unanimously agreed by the JSC) at such times and places as shall be determined by the JSC (including by videoconference, telephone, or web conference), but in no event shall such meetings be held in person less frequently than once per Calendar Year (unless otherwise unanimously agreed by the JSC or for force majeure reasons such as travel restrictions from a pandemic). The first JSC meeting shall be held as soon as possible, but no later than [***] days after the Effective Date. At least [***] of the JSC will constitute a quorum for any meeting, provided that at least one (1) representative from each Party is present. Each Co-Chairperson will on an alternate basis be responsible for organizing the meetings of the JSC and for distributing the agenda of the meetings but will have no additional powers or rights beyond those held by the other representatives to the JSC. The responsible Co-Chairperson will include on the agenda any item within the scope of the responsibility of the JSC that is requested to be included by a Party and will distribute the agenda to the Parties no less than [***] Business Days before any meeting of the JSC. A Party may invite other senior personnel of their organization |
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to attend meetings of the JSC, as appropriate; provided, however, that such other senior personnel shall not have any duties of a JSC member. Each Party shall be responsible for its travel costs incurred for attending JSC meetings.
3.5 | Meeting Minutes. Minutes will be kept of all JSC meetings by the responsible Co-Chairperson for that JSC meeting and sent to all members of the JSC for review and approval within [***] Business Days after each meeting. Minutes will be deemed approved unless any member of the JSC objects to the accuracy of such minutes by providing written notice to the other members of the JSC within [***] Business Days of receipt of the minutes. In the event of any such objection that is not resolved by mutual agreement of the Parties, such minutes will be amended to reflect such unresolved dispute. |
ARTICLE 4
TRANSFERS TO TIANSHI
4.1 | Know-How Transfer. During the Technology Transfer Period, CASI shall transfer to TIANSHI certain information, data, materials and Know-How Controlled by CASI as of the Effective Date that are necessary or reasonably useful for the Development of the Licensed Compound and the Licensed Product in the Field. CASI shall provide TIANSHI with reasonable technical assistance to help TIANSHI to understand and use the materials and Know-How to Develop the Licensed Compound and the Licensed Product in the Field. CASI would provide TIANSHI with certain existing preclinical, CMC, clinical, and regulatory documentation and assistance as necessary to support Development and Regulatory Approval of the Licensed Compound and the Licensed Product in the Field. [***] |
4.2 | Assistance and Costs. During the Technology Transfer Period, CASI will cause employees of CASI who are familiar with the Licensed Compound and Licensed Product to use reasonable efforts to effect the transfer of Know-How in accordance with the terms of Section 4.1 (Know-How Transfer). [***] |
4.3 | Additional Assistance. Following the conclusion of the Technology Transfer Period, in addition to the assistance to be provided by CASI pursuant to Section 4.1 (Assistance and Costs), CASI will use its reasonable efforts to provide additional support to TIANSHI at TIANSHI’s sole cost and expense, to the extent agreed by the Parties and reasonably necessary for TIANSHI to obtain any Regulatory Approval for any Licensed Product, including clearance of all INDs and approval of all MAAs. [***] |
ARTICLE 5
EXPLOITATION OF LICENSED PRODUCT
5.1 | Overview. Subject to Section 3.3, Section 5.5 and Section 5.6, TIANSHI will have sole control over and decision-making authority with respect to, the Exploitation of the Licensed Compound and Licensed Product in the Field in the Territory, at TIANSHI’s cost and expense, including the preparation, filing, submission, and maintenance of all MAAs and other Regulatory Submissions and Regulatory Approvals in its own name (or the name of any designee of TIANSHI). |
5.2 | Development. TIANSHI shall have the sole responsibility to Develop the Licensed Product and to conduct (either by itself or through its Affiliates, agents, subcontractors or Sublicensees) all clinical trials and non-clinical studies, including the [***] , required for Regulatory Submissions and Regulatory Approvals for the Licensed Product in the Field in the Territory at TIANSHI’s cost and expense. During the Term, TIANSHI shall use Commercially Reasonable Efforts, including, |
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when appropriate in its discretion, the use of third party experts and external consultants at its own cost, to file and prosecute applications, documents, and other formalities that are necessary or reasonably useful for the registration with the relevant authorities in the Territory to research, Develop (including without limitation conduct clinical trials for), Commercialize, Manufacture, distribute, market and sell the Licensed Product in the Territory.
5.3 | Clinical Development Plan. Within [***] after the Effective Date, TIANSHI will provide CASI a clinical development plan and timelines for the Development of the Licensed Product in the Field in the Territory (the “TIANSHI CDP”). TIANSHI shall describe in reasonable details the Development activities within their corresponding estimated timelines to be performed as well as corresponding decision points and milestones to further the Development process and to obtain Regulatory Approval for the Licensed Product in each region in the Territory. TIANSHI will keep CASI regularly updated of any material changes or amendments to the TIANSHI CDP by providing CASI with an amended clinical development plan promptly after any such material changes or amendments are made. |
5.4 | Diligence Obligations. TIANSHI will, itself or through its Affiliates or Sublicensees, use Commercially Reasonable Efforts to Develop and seek Regulatory Approval for the Licensed Compound and the Licensed Product in at least two (2) indications in the Field in each of the U.S., China, Japan, and the E.U. Following Regulatory Approval for a Licensed Product in the Field in each of the U.S., China, Japan, or the E.U., TIANSHI will use Commercially Reasonable Efforts to Commercialize such Licensed Product in each such country or jurisdiction (as applicable) where such Regulatory Approval has been granted.[***] Nothing in this Section 5.4 (Diligence Obligations) shall derogate from TIANSHI’s obligation to comply with the diligence obligations under the Adimab Agreement, in particular Section 3.3 of such agreement. Schedule 1.4 (Adimab Agreement Key Terms) sets forth certain key terms in the Adimab Agreement with which TIANSHI agrees to comply. |
5.5 | [***] |
5.6 | Manufacturing and Supply. CASI shall be responsible for the manufacturing and supply of the Licensed Compound and the Licensed Product, both clinical trial material and commercial product. [***]In the event that CASI agrees to a technology transfer of the manufacturing process for the Licensed Compound or Licensed Product to TIANSHI or a third party subcontractor of TIANSHI, the Parties shall enter into a manufacturing supply agreement which will set out specific terms and conditions for: (a) the supply of the Licensed Compound and the Licensed Product by TIANSHI or a third party subcontractor of TIANSHI, to CASI, its Affiliates and any CASI Sublicensees; and (b) the sharing of manufacturing and batch data between TIANSHI and CASI. |
5.7 | Right of Reference. As of the Effective Date, CASI hereby grants to TIANSHI a “Right of Reference,” as that term is defined in 21 C.F.R. § 314.3(b) (or any successor rule or analogous Law recognized outside of the U.S.), to, and a right to copy, access, and otherwise use, all information and data for each Licensed Compound or Licensed Product included in any Regulatory Submissions Controlled by CASI or its (sub)licensees, or otherwise filed by or on behalf of CASI with any Regulatory Authority in any country in the Territory that relates to any Licensed Compound or Licensed Product, and CASI will provide a signed statement to this effect if requested by TIANSHI, in accordance with 21 C.F.R. § 314.50(g)(3) (or any successor rule or analogous Law outside of the U.S.). |
5.8 | Adverse Event Reporting. Subject to Section 3.3, TIANSHI will have sole control over, and decision-making with respect to, all processing of information related to any adverse events for the |
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Licensed Compound and Licensed Product in the Field, including any information regarding such adverse events that is received from a Third Party. TIANSHI will own the global safety database for the Licensed Product in the Field.
5.9 | Reports. No later than [***] days after the end of every Calendar Year, TIANSHI will furnish CASI with high level written reports summarizing TIANSHI’s and its Affiliates’ and Sublicensees’ efforts to Develop and Commercialize the Licensed Compound and Licensed Product in the Field in the Territory. From time to time, TIANSHI will notify CASI of any significant changes to TIANSHI’s or its Affiliates’ or its Sublicensees’ Development and Commercialization of the Licensed Compound and Licensed Product in the Field in the Territory. In addition, upon reasonable written request of CASI, TIANSHI will provide updates to CASI by telephone of TIANSHI’s Development and Commercialization activities. Each such update will summarize TIANSHI’s significant Development and Commercialization activities with respect to the Licensed Compound and Licensed Product in the Field in the Territory to the extent that TIANSHI has the right to disclose such information to CASI without violating any confidentiality or other obligations to any Third Party. If Adimab requires a face to face meeting with TIANSHI (in accordance with Section 3.3 of the Adimab Agreement) then TIANSHI will comply with such a request. For clarity, CASI shall have the right to provide a copy of any such report to Black Belt for CASI to comply with its obligations under the Black Belt License Agreement. |
ARTICLE 6
PAYMENTS
6.1 | Upfront Payment. TIANSHI shall pay CASI a non-refundable, non-creditable cash payment of [***] according to the following schedule: |
6.1.1 | TIANSHI shall pay CASI [***] no later than [***] |
6.1.2 | TIANSHI shall pay CASI [***] no later than [***] |
6.2 | [***] |
6.3 | Milestone Payments. |
6.3.1 | Development Milestones. In further consideration of the rights granted to TIANSHI hereunder, TIANSHI, its Affiliates, or Sublicensees, shall pay [***] of all the following Development Milestone Payments, as outlined in the Black Belt License Agreement (hereunder), including all pass-through milestone payments to Adimab and CellCa (each, a “TIANSHI Development Milestone Payment”). Each TIANSHI Development Milestone Payment by TIANSHI shall be paid directly to CASI at the time each Development Milestone Event is achieved by TIANSHI, CASI, or their Affiliates or sublicensees. If TIANSHI terminates this Agreement with CASI and all rights revert back to CASI, then TIANSHI shall no longer be responsible for paying [***] of any subsequent Development Milestones Payments from the time of this Agreement reversion back to CASI. TIANSHI, its Affiliates, or Sublicensees, shall pay [***] of the following Development Milestone Payments, as outlined in the Black Belt License Agreement, including all pass-through milestone payments to Adimab and CellCa, if CASI terminates its Development of the Licensed Compound or the Licensed Product outside the Field and TIANSHI continues to Develop the Licensed Compound or the Licensed Product in the Field. For clarity, TIANSHI shall not be responsible for paying any Development Milestone Payments that have already been paid by CASI as of the Effective Date. |
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(a) | Milestone Payments for Lyophilized Form. Subject to Section 6.3.1, TIANSHI will make the applicable TIANSHI Development Milestone Payments to CASI based on TABLE 6.3.1(a) (Lyophilization Milestone Payments) upon the achievement by TIANSHI, CASI or their Affiliates or sublicensees of each of the Development Milestone Events set forth in TABLE 6.3.1(a) (Lyophilization Milestone Payments) below. The Development Milestone Payments set forth in TABLE 6.3.1(a) (Lyophilization Milestone Payments) will each be payable one time in accordance with Section 6.3.1(f) (Notice and Payment) upon the first achievement of the applicable Development Milestone Event. If TIANSHI or its Affiliates or Sublicensees achieve all Development Milestone Events set forth in TABLE 6.3.1(a) (Lyophilization Milestone Payments) (regardless of the number of times such events occur or the number of Licensed Products that trigger such event), then the maximum amount payable by TIANSHI under this Section 6.3.1(a) (Milestone Payments for Lyophilized Form) is [***] For clarity, if CASI has not terminated its Development of the Licensed Compound or the Licensed Product, the maximum amount payable by TIANSHI under this Section 6.3.1(a) (Milestone Payments for Lyophilized Form) is [***] . |
Table 6.3.1(a) – Lyophilization Milestone Events | |
Development Milestone Event | Development Milestone Payments |
1. First Lyophilization Milestone | [***] |
2. Second Lyophilization Milestone | [***] |
(b) | Milestone Payments for Existing Licensed Products. Subject to Section 6.3.1, TIANSHI will make the applicable TIANSHI Development Milestone Payments to CASI based on TABLE 6.3.1(b) (Development Milestones for Existing Licensed Products) upon the achievement by TIANSHI, CASI or their Affiliates or sublicensees of each of the Development Milestone Events set forth in TABLE 6.3.1(b) (Development Milestones for Existing Products) below. The Development Milestone Payments set forth in TABLE 6.3.1(b) (Development Milestones for Existing Licensed Products) will be payable one-time in accordance with Section 6.3.1(f) (Notice and Payment) upon the achievement of the applicable Development Milestone Event by the first Existing Licensed Product. If TIANSHI or its Affiliates or Sublicensees achieve all Development Milestone Events set forth in TABLE 6.3.1(b) (Development Milestones for Existing Licensed Products) (regardless of the number of times such events occur or the number of Existing Licensed Products that trigger such event), then the maximum amount payable by TIANSHI under this Section 6.3.1(b) (Milestone Payments for Existing Licensed Products) is [***] . For clarity, if CASI has not terminated its Development of the Licensed Compound or the Licensed Product, the maximum amount payable by TIANSHI under this Section 6.3.1(b) (Milestone Payments for Existing Licensed Products) is [***] . |
Table 6.3.1(b) – Development Milestones for Existing Licensed Products | |
Development Milestone Event | Development |
1. Receipt of Regulatory Approval in the U.S. for the first Existing Licensed Product | [***] |
2. Receipt of Regulatory Approval for the first Existing Licensed Product in any country in the E.U. | [***] |
3. Receipt of Regulatory Approval in China for the first Existing Licensed Product | [***] |
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4. Receipt of Regulatory Approval in Japan for the first Existing Licensed Product | [***] |
(c) | Milestone Payments for Next Generation Licensed Products. Subject to Section 6.3.1, TIANSHI will make the applicable TIANSHI Development Milestone Payments to CASI based on TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products) upon the achievement by TIANSHI or CASI or their Affiliates or sublicensees, as applicable, of each of the Development Milestone Events set forth in TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products) below. The Development Milestone Payments set forth in TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products) will be payable in accordance with Section 6.3.1(f) (Notice and Payment) upon the achievement of the applicable Development Milestone Event by the first three Next Generation Licensed Products to achieve the applicable Development Milestone Event. No Development Milestone Payments will be payable in respect of the achievement of any Development Milestone Event set forth in TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products) by any subsequent Next Generation Licensed Product. If TIANSHI or its Affiliates or Sublicensees achieve all Development Milestone Events set forth in TABLE 6.3.1(c) (Development Milestones for Next Generation Licensed Products) (regardless of the number of times such events occur or the number of Next Generation Licensed Products that trigger such event), then the maximum amount payable by TIANSHI under this Section 6.3.1(c) (Milestone Payments for Next Generation Licensed Products) is [***] . For clarity, if CASI has not terminated its Development of the Licensed Compound or the Licensed Product, the maximum amount payable by TIANSHI under this Section 6.3.1(c) (Milestone Payments for Next Generation Licensed Products) is [***] . |
Table 6.3.1(c) – Development Milestones for Next Generation Licensed Products | |
Development Milestone Event | Development |
1. [***] | [***] |
2. [***] | [***] |
3. [***] | [***] |
4. [***] | [***] |
(d) | Milestone Payments Under the Adimab Agreement. Subject to Section 6.3.1, TIANSHI will make the applicable TIANSHI Development Milestone Payments to CASI based on milestone payments set forth in Section 4.4 of the Adimab Agreement (each, an “Adimab Milestone Payment”) upon the achievement by TIANSHI, CASI or its or their Affiliates or sublicensees of each of the milestone events set forth in Section 4.4 of the Adimab Agreement (each, an “Adimab Milestone Event”), in accordance with Section 6.3.1(f) (Notice and Payment) and all applicable terms and conditions set forth in the Adimab Agreement. |
(e) | Milestone Payments Under the Cellca Agreement. Subject to Section 6.3.1, TIANSHI will make the applicable TIANSHI Development Milestone Payments to CASI based on milestone payments set forth in Section 6 of the Work Order of the Cellca Agreement (each, a “Cellca Milestone Payment” and together with the Adimab Milestone Payments, the “Third Party Milestone Payments”) upon the achievement by TIANSHI, CASI or its or their Affiliates or sublicensees of each of the milestone events set forth in set forth in |
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Section 6 of the Work Order of the Cellca Agreement (each, a “Cellca Milestone Event”) in accordance with Section 6.3.1(f) (Notice and Payment) and all applicable terms and conditions set forth in the Adimab Agreement.
(f) | Notice and Payment. TIANSHI will notify CASI in writing of the achievement of each Development Milestone Event by TIANSHI or its Affiliates or Sublicensees no later than [***] days after TIANSHI becomes aware of the achievement thereof. CASI will provide TIANSHI with an invoice for the corresponding TIANSHI Development Milestone Payment, taking into account Milestone Payments triggered by the achievement of CASI, its Affiliates or sublicensees of the applicable Development Milestone Event. |
(i) | Third Party Milestone Payments to Black Belt. TIANSHI shall pay any Third Party Milestone Payment directly to CASI for CASI to pay to Black Belt (rather than making any such payments directly to Adimab or Cellca pursuant to Section 6.3.1(f)(i) (Third Party Milestone Payments to Adimab and Cellca)). |
(ii) | Development Milestone Payments for Lyophilized Form, Existing Licensed Products, and Next Generation Licensed Products. TIANSHI will pay to CASI the TIANSHI Development Milestone Payments set forth in Section 6.3.1(a) (Milestone Payments for Lyophilized Form), Section 6.3.1(b) (Milestone Payments for Existing Licensed Products), and Section 6.3.1(c) (Milestone Payments for Next Generation Licensed Products) (as applicable) no later than 30 days after TIANSHI’s receipt of an invoice for such TIANSHI Development Milestone Payments. |
6.3.2 | Sales Milestones. The following Sales Milestone Payments, as outlined in the Black Belt License Agreement, shall be paid by the Party (CASI or TIANSHI, their Affiliates or sublicensees) selling the Licensed Product. If both Parties are selling the Licensed Product, then each Party shall be responsible for the portion of the following Sales Milestones Payments that is proportional to the net sales of Licensed Product that each Party achieves for any given Sales Milestone Event. As between the Parties, with respect to each Sales Milestone Event set forth in TABLE 6.3.2(a) and TABLE 6.3.2(b) below, [***]its Affiliates (other than CASI) or Sublicensees (each such payment, a “TIANSHI Sales Milestone Payment”). |
(a) | Existing Licensed Products. On a region-by-region basis, TIANSHI will make the TIANSHI Sales Milestone Payments to CASI upon the achievement by TIANSHI or CASI, or its or their Affiliates or sublicensees of each of the Sales Milestone Events for the applicable region set forth in TABLE 6.3.2(a) (Existing Licensed Product Sales Milestones) below with respect to the aggregate annual Net Sales of Existing Licensed Products in each applicable region. Each of the Sales Milestone Payments set forth below in TABLE 6.3.2(a) (Existing Licensed Product Sales Milestones) will be payable only one time for all Existing Licensed Products in the first Calendar Year in which the corresponding Sales Milestone Event is achieved for the applicable region. If CASI and/or TIANSHI or its Affiliates or Sublicensees achieve all Sales Milestone Events set forth in TABLE 6.3.2(a) (Existing Licensed Product Sales Milestones) (regardless of the number of times such events occur), then the maximum amount payable by CASI and/or TIANSHI under this Section 6.3.2(a) (Existing Licensed Products) is [***] . |
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Table 6.3.2(a) –Existing Licensed Product Sales Milestones | ||||
|---|---|---|---|---|
Sales Milestone Event | Sales Milestone Payment | |||
| [***] | [***] | [***] | [***] |
1. [***] | [***] | [***] | [***] | [***] |
2. [***] | [***] | [***] | [***] | [***] |
3. [***] | [***] | [***] | [***] | [***] |
(b) | Next Generation Licensed Products. On a region-by-region basis, TIANSHI will make the TIANSHI Sales Milestone Payments to CASI upon the achievement by TIANSHI or CASI, or its or their Affiliates or sublicensees of each of the Sales Milestone Events for the applicable region set forth in TABLE 6.3.2(b) (Next Generation Licensed Product Sales Milestones) below with respect to the aggregate annual Net Sales of Next Generation Licensed Products in each applicable region. Each of the Sales Milestone Payments set forth below in TABLE 6.3.2(b) (Next Generation Licensed Product Sales Milestones) will be payable [***] If CASI and/or TIANSHI or its Affiliates or Sublicensees achieve all Sales Milestone Events set forth in TABLE 6.3.2(b) (Next Generation Licensed Product Sales Milestones) (regardless of the number of times such events occur), then the maximum amount payable by CASI and/or TIANSHI under this Section 6.3.2(b) (Next Generation Licensed Products) is [***] . |
(c) | Notice and Payment. TIANSHI will notify CASI in writing of the achievement of each Sales Milestone Event by TIANSHI or its Affiliates or Sublicensees no later than [***] days after the end of the Calendar Year in which such Sales Milestone Event is achieved. If CASI determines a Sales Milestone Event is achieved under the Black Belt License Agreement, CASI will provide TIANSHI with an invoice for the corresponding TIANSHI Sales Milestone Payment and subject to the terms of this Section 6.3.2(c) (Notice and Payment), TIANSHI will pay to CASI such TIANSHI Sales Milestone Payment no later than [***] days after TIANSHI’s receipt of invoice for such TIANSHI Sales Milestone Payment. |
6.4 | Royalties. |
6.4.1 | Royalty Payments. All the following royalty payments, including the royalty payments as outlined in the Black Belt License Agreement including all pass-through royalty payments to Adimab, shall be paid by the Party (CASI or TIANSHI, their Affiliates or sublicensees) selling the Licensed Product. As between the Parties, TIANSHI shall pay to CASI royalties that may become payable pursuant to this Section 6.4 as a result of Net Sales of Licensed Products generated by TIANSHI, its Affiliates or Sublicensees. For clarity, for purposes of this Section 6.4 (Royalties), CASI shall not be considered as an Affiliate of TIANSHI. |
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(a) | Royalty Payments under the Adimab Agreement. |
(i) | Adimab Royalty Payments. On an Adimab Product-by-Adimab Product and country-by-country basis, TIANSHI will pay to CASI all royalties payable pursuant to Section 4.5 of the Adimab Agreement in accordance with the applicable terms and conditions of the Adimab Agreement and in accordance with this Section 6.4 (Royalties). |
(ii) | Royalty Buy-Down. Pursuant to Section 4.5(b) of the Adimab Agreement, on an Adimab Product-by-Adimab Product basis, at any time prior to the first dosing of a patient in a Phase III Clinical Trial with a particular Adimab Product, TIANSHI may, at its sole discretion, make a one-time payment of [***] dollars ($[***] ) to CASI, and thereafter, notwithstanding the royalty rates set forth in Section 4.5 of the Adimab Agreement, with respect to such Adimab Product, the royalty rate will be [***] % instead of the royalty rates set forth in Section 4.5(a) of the Adimab Agreement, subject to further adjustment as set forth in Section 4.5(c) of the Adimab Agreement, as applicable. |
(b) | Region-Specific Royalty Rates for Existing Licensed Products. Subject to the provisions of Section 6.4.3 (Payment Adjustments), and in addition to the royalty payments to be made pursuant to Section 6.4.1(a)(i) (Adimab Royalty Payments), on an Existing Licensed Product-by-Existing Licensed Product and region-by-region basis, TIANSHI will pay to CASI royalties in the amount of the marginal royalty rates set forth in TABLE 6.4.1(b) (Existing Licensed Product Region-Specific Royalty Rates) below based on the aggregate Net Sales generated by TIANSHI or its Affiliates or Sublicensees of each Existing Licensed Product in the applicable region during each Calendar Year. TIANSHI will pay such royalty payments on an Existing Licensed Product-by-Existing Licensed Product and country-by-country basis during the applicable Royalty Term. |
(c) | Region-Specific Royalty Rates for Next Generation Licensed Products. Subject to the provisions of Section 6.4.3 (Payment Adjustments), and in addition to the royalty payments to be made pursuant to Section 6.4.1(a)(i) (Adimab Royalty Payments), on a Next Generation Licensed Product-by-Next Generation Licensed Product and region-by-region basis, TIANSHI will pay to CASI royalties in the amount of the marginal royalty rates set forth in TABLE 6.4.1(c) (Next Generation Licensed Product Region-Specific Royalty Rates) below based on the aggregate Net Sales of each Next Generation Licensed Product generated by TIANSHI or its Affiliates or Sublicensees in the applicable region during each Calendar Year of the applicable Royalty Term. |
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TABLE 6.4.1(c) –Next Generation Licensed Product Region-Specific Royalty Rates | ||
Annual Net Sales by Region | Marginal Royalty Rate | Marginal Royalty Rate |
[***] | [***] % | [***] % |
[***] | [***] % | [***] % |
[***] | [***] % | [***] % |
Each marginal royalty rate set forth in TABLE 6.4.1(b) (Existing Licensed Product Region-Specific Royalty Rates) and TABLE 6.4.1(c) (Next Generation Licensed Product Region-Specific Royalty Rates) above will apply only to that portion of annual Net Sales of the applicable Existing Licensed Product or Next Generation Licensed Product, as applicable, in the applicable region that falls within the indicated range. For example, if there is $ [***] in annual Net Sales of a given Existing Licensed Product in the E.U. (after conversion to U.S. Dollars of the Net Sales), then, subject to the provisions of Section 6.4.3 (Payment Adjustments), in addition to the Royalties owing to Adimab, TIANSHI would owe a royalty payment of [***].
(d) | Adimab Royalty Payments. On an Adimab Product-by-Adimab Product and country-by-country basis, TIANSHI’s obligation to pay Adimab Royalty Payments to CASI will be subject to the applicable terms and conditions of the Adimab Agreement, including Section 4.5 of the Adimab Agreement. Upon expiration of the Adimab Royalty Term for a given Adimab Product in a given country, no further Adimab Royalty Payments will be payable in respect of sales of such Adimab Product in such country. |
(e) | Black Belt Royalty Payments. On a Licensed Product-by-Licensed Product basis and country-by-country basis, TIANSHI’s obligation to pay Black Belt Royalty Payments to CASI will begin upon the First Commercial Sale of a Licensed Product in a country and will expire upon the expiration of the Black Belt Royalty Term for such Licensed Product in such country. Upon expiration of the Black Belt Royalty Term for a given Licensed Product in a given country, no further Black Belt Royalty Payments will be payable to CASI in respect of sales of such Licensed Product in such country. |
(f) | Expiration of Adimab Royalty Term and Black Belt Royalty Term. If a Licensed Product is also an Adimab Product, then upon the later of (i) the expiration of the Adimab Royalty Term for such product in a given country and (ii) the expiration of the Black Belt Royalty Term for such product in a given country, the licenses granted to TIANSHI under Section 2.1 (Sublicense Grants to TIANSHI) with respect to such product in such country will automatically become fully paid-up, perpetual, irrevocable, and royalty-free. If a Licensed Product is not an Adimab Product, then upon expiration of the Black Belt Royalty Term for such Licensed Product in a given country, the licenses granted to TIANSHI under Section 2.1 (Sublicense Grants to TIANSHI) with respect to such Licensed Product in such country will automatically become fully paid-up, perpetual, irrevocable, and royalty-free. |
6.4.2 | [***]Royalty Reports; Payments. |
(a) | Royalty Reports. No later than [***] days after the end of each Calendar Quarter during which any Black Belt Royalty Payments, Adimab Royalty Payments, [***] are owed, |
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TIANSHI will submit to CASI a written report stating the number and description of all Licensed Products sold by or on behalf of TIANSHI and its Affiliates and Sublicensees during the relevant Calendar Quarter; the gross sales associated with such sales; and (i) with respect to any Licensed Products sold during such Calendar Quarter, the calculation of Net Sales on such sales and (ii) with respect to any Adimab Products sold during such calendar quarter, the calculation of Adimab Net Sales on such sales, including the amount of any deduction provided for in the definition of Adimab Net Sales and the Black Belt Royalty Payments, Adimab Royalty Payments [***] (as applicable) payable on such Net Sales or Adimab Net Sales (as applicable) (the “Royalty Report”). For clarity, CASI shall have the right to provide a copy of any such Royalty Report to Black Belt for CASI to comply with its obligations under the Black Belt License Agreement.
(b) | Royalty Payments. |
(i) | Adimab Royalty Payments. All Adimab Royalty Payments will be payable in accordance with the time frames set forth in Section 4.6 of the Adimab Agreement. |
(ii) | Black Belt Royalty Payments. All Black Belt Royalty Payments will be payable on a Calendar Quarter basis and TIANSHI will make any such payments within [***] after the end of the Calendar Quarter, during which the applicable Net Sales of Licensed Products occurred. |
6.4.3 | [***] Payment Adjustments. |
(a) | Expiration of Valid Claims. |
(i) | Adimab Royalty Payments. On an Adimab Product-by-Adimab Product and country-by-country basis, the applicable royalty rates set forth in Section 6.4.1(a)(i) (Adimab Royalty Payments) with respect to Adimab Royalty Payments for a particular Adimab Product in a particular country shall be reduced in accordance with the terms set forth in Section 4.5(d) of the Adimab Agreement. |
(ii) | Black Belt Royalty Payments. In the U.S. or any other country in the Territory in which applicable Law prohibits a patent holder from receiving an unreduced royalty payment for sales of a product made in a country after expiration of all valid claims within the licensed patents Covering such product in such country, on a Licensed Product-by-Licensed Product and country-by-country basis, the applicable royalty rates set forth in Section 6.4.1(b) (Region-Specific Royalty Rates for Existing Licensed Products) and Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products) with respect to the Black Belt Royalty Payments for a particular Licensed Product in a particular country will be reduced by [***] during the Black Belt Royalty Term after the expiration of the last-to-expire Valid Claim of a Black Belt Patent Right or Joint Patent Right Covering the composition of matter formulation, use or manufacture of such Licensed Product in such country. |
(b) | Biosimilar Competition. If, in a particular country, Biosimilar Competition occurs in such country with respect to a Licensed Product in such country, then the Net Sales of such Licensed Product in such country otherwise payable under Section 6.4.1(b) (Region-Specific Royalty Rates) and Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products) will be reduced by [***] for the purposes of determining |
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the Black Belt Royalty Payments payable under Section 6.4.1(b) (Region-Specific Royalty Rates) and Section 6.4.1(c) (Region-Specific Royalty Rates for Next Generation Licensed Products), for the remainder of the Black Belt Royalty Term for such Licensed Product in such country but only while such Biosimilar Competition is in effect in such country, subject to Section 6.4.3(d) (Maximum Payment Adjustments).
(c) | Third Party Payments. |
(i) | Adimab Royalty Payments. If TIANSHI enters into any Third Party Patent License (as such term is defined in the Adimab Agreement) with a Third Party, then TIANSHI may offset [***] % of the royalties actually paid to such Third Party under such Third Party Patent License with respect to an Adimab Product in a given Calendar Quarter in a given country against the Adimab Royalty Payments otherwise due with respect to such Adimab Product in such Calendar Quarter in such country under Section 6.4.1(a)(i) (Adimab Royalty Payments), in accordance with Section 4.5(c) of the Adimab Agreement. |
(ii) | Black Belt Royalty Payments. If TIANSHI makes a payment under any agreement with a Third Party pursuant to which TIANSHI obtains rights (whether by acquisition or license) under any Patent Rights or other intellectual property rights owned or Controlled by such Third Party in a given county that Cover the composition of matter of a Licensed Product in that country and that is necessary for TIANSHI to Exploit such Licensed Product in that country, then TIANSHI may reduce the Black Belt Royalty Payments due to CASI by [***] of the amounts paid to such Third Party in respect of royalties under such agreement, subject to Section 6.4.3(d) (Maximum Payment Adjustments). |
(d) | Maximum Payment Adjustments. |
(i) | Black Belt Royalty Payments. In no event will the Black Belt Royalty Payments payable by TIANSHI in a given Calendar Quarter in a given country be reduced by more than [***] of the aggregate amount that would otherwise be payable by TIANSHI in respect to such Black Belt Royalty Payments in such Calendar Quarter in such country as a result of the reductions permitted under Section 6.4.3(a)(ii) (Black Belt Royalty Payments), Section 6.4.3(b) (Biosimilar Competition), and Section 6.4.5(c)(ii) (Black Belt Royalty Payments). TIANSHI may carry forward any such reductions permitted under Section 6.4.3(a)(ii) (Black Belt Royalty Payments), Section 6.4.3(b) (Biosimilar Competition), or Section 6.4.3(c)(ii) (Black Belt Royalty Payments) that are incurred or accrued in a Calendar Quarter but are not applied against Black Belt Royalty Payments due in such Calendar Quarter in such country as a result of the foregoing maximum payment adjustment and apply such amounts against Black Belt Royalty Payments due in subsequent Calendar Quarters (subject in all cases to the maximum payment adjustment set forth in this Section 6.4.3(d) (Maximum Payment Adjustments)) until the amount of such reduction has been fully applied against Black Belt Royalty Payments due. |
(ii) | Adimab Royalty Payments. Pursuant to Section 4.5(c) and Section 4.5(d) of the Adimab Agreement, in no event will the Adimab Royalty Payments payable by TIANSHI in a given Calendar Quarter in a given country be reduced by more than [***] % of the aggregate amount that would otherwise be payable by TIANSHI in |
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respect to such Adimab Royalty Payments in such Calendar Quarter in such country as a result of the reductions permitted under Section 6.4.3(a)(i) (Adimab Royalty Payments) and Section 6.4.3(c)(i) (Adimab Royalty Payments).
6.5 | Foreign Exchange. If any currency conversion shall be required in connection with the calculation of amounts payable hereunder, then such conversion shall be made using the exchange rates reported on the fifth Business Day prior the payment due date for the purchase and sale of U.S. dollars, as reported by the Wall Street Journal. With any payment in relation to which a currency conversion is performed to calculate the amount of payment due, TIANSHI shall provide to CASI a true, accurate, and complete copy of the exchange rates used in such calculation. |
6.6 | Payment Method; Late Payments. Except for payments due hereunder that are expressed specifically in Euros, TIANSHI will make all payments due to CASI hereunder in Dollars by check or wire transfer of immediately available funds into an account designated by CASI. Any amount owed by TIANSHI to CASI under this Agreement that is not paid within the applicable time period set forth herein will accrue interest at the rate of [***] above the then-applicable short-term three-month London Interbank Offered Rate (LIBOR) as quoted in the Wall Street Journal (or if it no longer exists, a similarly authoritative source) calculated on a daily basis, or, if lower, the highest rate permitted under applicable Law. |
6.7 | No Right to Offset. TIANSHI will have no right to offset any amount owed to CASI under or in connection with this Agreement, against any payments owed to TIANSHI by CASI under this Agreement. |
6.8 | Records. TIANSHI will keep (and will ensure that its Affiliates and Sublicensees keep) such records as are required to determine, in accordance with GAAP and this Agreement, the sums or credits due under this Agreement, including TIANSHI Development Milestone Payments, TIANSHI Sales Milestone Payments, and Net Sales (and including use of Licensed Products in clinical trials, or provision on a compassionate use basis or as marketing samples). With respect to any records that are required to determine Net Sales, TIANSHI Development Milestone Payments other than Adimab Milestone Payments, or TIANSHI Sales Milestone Payments due under this Agreement, TIANSHI will retain all such records until the later of (a) [***] years after the end of the period to which such books, records and accounts pertain and (b) the expiration of the applicable tax statute of limitations (or any extensions thereof), or for such longer period as may be required by Law. With respect to any records that are required to determine Adimab Royalty Payments or Adimab Milestone Payments due under this Agreement, TIANSHI will retain all such records indefinitely in accordance with Section 5.8 of the Adimab Agreement. |
6.9 | Audits. CASI may have an independent certified public accountant, reasonably acceptable to TIANSHI, access and examine during normal business hours and upon reasonable prior written notice, only those records of TIANSHI (and its Affiliates and Sublicensees, as applicable) retained pursuant to Section 6.8 (Records) as may be reasonably necessary to determine, the correctness or completeness of any Royalty Payment made under this Agreement, provided, however, that with respect to any Black Belt Royalty Payment, such independent certified public accountant may only inspect records of TIANSHI (and its Affiliates and Sublicensees, as applicable) retained pursuant to Section 6.8 (Records) in any Calendar Year ending not more than [***] years before such request. Prior to commencing any such audit under this Agreement, each such independent certified public accountant conducting an audit must enter into an appropriate and reasonable confidentiality agreement with TIANSHI pursuant to this Section 6.9 (Audits). The foregoing right of review may be exercised only once in any 12-month period and only once with respect to each such payment unless an issue is revealed by a subsequent audit. Such accountant will disclose only whether the |
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Royalty Payments are correct or not, and the specific details concerning any discrepancies. No other information will be shared and such results will be subject to Article 10 (Confidentiality). If the audit report concludes that (a) additional amounts were owed by TIANSHI, then TIANSHI will pay the additional amounts or (b) excess payments were made by TIANSHI, then such amounts will be deducted from future payments to CASI under this Agreement, in either case ((a) or (b)), within 30 days after the date on which such audit report is delivered to both Parties, unless disputed pursuant to Section 6.10 (Audit Dispute) below. CASI will bear the full cost of the performance of any such audit, unless such audit reveals that the undisputed monies owed by TIANSHI to CASI has been understated by more than [***] % for the period audited, in which case, TIANSHI shall pay the costs of such audit. CASI shall have the right to provide a copy of any such audit report or results to Black Belt for CASI to comply with its obligations under the Black Belt License Agreement. Upon prior notice by CASI, TIANSHI shall provide Black Belt’s independent certified public accountant access to such records retained by TIANSHI pursuant to Section 6.8 and shall permit such independent certified public accountant to directly inspect the books and records of TIANSHI under this Agreement in accordance with Section 5.9 of the Black Belt License Agreement.
6.10 | Audit Dispute. In the event of a dispute with respect to any audit under Section 6.9 (an “Audit Dispute”), CASI and TIANSHI will work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such Audit Dispute within 30 days after the initial discussion of such Audit Dispute, then the Audit Dispute will be submitted for resolution to a certified public accounting firm jointly selected by each Party’s certified public accountants or to such other Person as the Parties will agree (the “Audit Arbitrator”). The decision of the Audit Arbitrator will be final and the costs of such arbitration as well as the initial audit will be borne between the Parties in such manner as the Audit Arbitrator will determine. Not later than 30 days after such decision and in accordance with such decision, the audited Party will pay the additional amounts, with interest from the date originally due as provided in Section 6.6 (Payment Method; Late Payments), or the amounts will be deducted from future payments made to the auditing Party, as applicable. This Audit Dispute procedure shall not apply to sums owed under the Third Party Agreements. |
6.11 | Taxes. |
6.11.1 | All sums are expressed to be exclusive of sales taxes (including value added tax) howsoever arising, and TIANSHI shall pay to CASI in addition to those payments or, if earlier, on receipt of a tax invoice or invoices from CASI, all such sales taxes for which CASI is liable to account in relation to any supply made or deemed to be made for sales tax purposes pursuant to this Agreement. |
6.11.2 | Tax Withholding. All payments to CASI under this Agreement shall be made in cleared funds, without any deduction or set-off and free and clear of and without deduction for or on account of any taxes, levies, imports, duties, charges, fees and withholdings of any nature now or hereafter imposed by any governmental, fiscal or other authority save as required by law. If TIANSHI is compelled to make any such deduction, it will pay CASI such additional amounts as are necessary to ensure receipt by CASI of the full amount which it would have received but for the deduction. |
6.11.3 | Taxes on Income. Each Party will pay all taxes imposed on its share of income arising directly or indirectly from the efforts of, or the receipt of any payment by, such Party under this Agreement. |
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6.11.4 | Tax Cooperation. The Parties will cooperate and use reasonable efforts to reduce or eliminate tax withholding or similar obligations in respect of the upfront payments, Royalty Payments, Milestone Payments, and other payments made by TIANSHI to CASI under this Agreement. CASI will provide TIANSHI with any tax forms that may be reasonably necessary in order for TIANSHI not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty a reasonable time prior to the date the applicable payment is due. |
ARTICLE 7
INTELLECTUAL PROPERTY MATTERS
7.1 | Ownership of Intellectual Property. |
7.1.1 | General. Except as otherwise expressly set forth in this Agreement, CASI retains all rights, title, and interests in and to the CASI Technology. Each Party will own the entire right, title, and interest in and to any Invention or other Know-How (and Patent Rights claiming such Inventions) first developed or invented solely by or on behalf of such Party in the course of performing of activities under this Agreement. The Parties will jointly own an equal, undivided interest in any and all Joint Technology. Inventorship of patentable inventions conceived or reduced to practice in the course of performing activities under this Agreement will be determined in accordance with U.S. patent laws, including Title 35, United States Code. |
7.1.2 | Employees. Each Party will require all of its and its Affiliates’ employees to assign all Inventions that are developed or invented by such employees according to the ownership rules described in Section 7.1.1 (General). Each Party will use reasonable efforts to require any agents or independent contractors performing any activity pursuant to this Agreement to assign all Inventions that are developed or invented by such agents or independent contractors to TIANSHI or CASI, as applicable, according to the ownership rules described in Section 7.1.1 (General) provided that CASI is not required to amend any agreements that are already in place with its agents or independent contractors before the Effective Date. |
7.1.3 | Disclosure of Inventions. Each Party will promptly disclose to the other Party all Inventions within the Joint Know-How that such Party develops or invents, whether solely or jointly with others (in any event, prior to the filing of any patent application with respect to such Inventions), including all invention disclosures or other similar documents submitted to such Party by its or its Affiliates’ employees, agents, or independent contractors relating thereto. Each Party will also promptly respond to reasonable requests from the other Party for additional information relating thereto. |
7.1.4 | Right to Practice Joint Technology. Subject to the rights and licenses granted to, and the obligations of, each Party pursuant to this Agreement, the Parties will jointly own all Joint Technology, with each Party entitled to the free use and enjoyment of all such Joint Technology. Each Party will take (and cause its Affiliates and Sublicensees, and their respective employees, agents, and contractors, to take) such further actions reasonably requested by the other Party to evidence and assist the Parties in obtaining jointly-owned patent and other intellectual property rights protection for Joint Technology, including executing assignments, consents, releases, and other commercially reasonable documentation and providing good faith testimony by affidavit, declaration, in-person, or other proper means in support of any effort by the Parties to establish, perfect, defend, or |
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enforce their rights in any Joint Technology through prosecution of governmental filings, regulatory proceedings, litigation, and other means, including through the filing, prosecution, maintenance, and enforcement of any Joint Patent Rights. Without limitation, each Party will cooperate with the other Party if the Parties determine to apply for U.S. or foreign patent protection for Joint Technology and will obtain the cooperation of the individual inventors of any such Joint Technology. Neither Party will have a duty to account to the other or seek any consent with respect to the licensing or exploitation of Joint Technology. To the extent any further consent is required to enable a Party to so license or exploit its interest in the Joint Technology, the other Party hereby grants and will grant such consent promptly upon request.
7.2 | Patent Prosecution. |
7.2.1 | TIANSHI Inventions. TIANSHI will have the exclusive right (but not the obligation) to prepare, file, prosecute, maintain, and defend (including against any Third Party challenge to the validity, scope, or enforceability of any such Patent Right) any Patent Rights Covering any Invention invented or developed solely by or on behalf of TIANSHI in the course of performing activities under this Agreement. |
7.2.2 | Notice of Challenge. Each Party will promptly report in writing to the other Party any Third Party’s challenge to the validity, scope or enforceability of a CASI Patent Right or Joint Patent Right, or initiation by a Third Party of any opposition or inter partes review proceeding against any CASI Patent Right or Joint Patent Right, and will provide the other Party with all available evidence and information regarding any such challenge, opposition, or proceeding. |
7.2.3 | CASI Patent Rights and Joint Patent Rights. |
(a) | TIANSHI’s Rights. As between the Parties, TIANSHI will have the sole first right, but not the obligation, to prepare, file, prosecute, maintain, and defend, using counsel of TIANSHI’s choice, the CASI Patent Rights and the Joint Patent Rights. TIANSHI shall use diligent and reasonable efforts to prosecute and maintain the CASI Patent Rights in at least the US, all the Major European Countries, Japan, and China. TIANSHI will keep CASI informed of the status of each CASI Patent Right and Joint Patent Right and will provide to CASI, reasonably in advance of submission thereof, copies of all substantive filings and other documents to be submitted to any patent office in the Territory in connection with the filing, prosecution, maintenance, and defense of the CASI Patent Rights and Joint Patent Rights. TIANSHI shall notify CASI at least one (1) month (or such other shorter period as is required by the relevant patent office deadline) prior to any proposal by TIANSHI to restrict the scope of the claims of any of the CASI Patent Rights and the Joint Patent Rights. CASI will have the right to review and comment on any such substantive draft filings and claim restrictions to be made to any such patent office and TIANSHI will consider in good faith and incorporate where appropriate any comments offered by CASI concerning the preparation, filing, prosecution, maintenance, and defense of the CASI Patent Rights and the Joint Patent Rights in the Territory. TIANSHI shall not without the prior written consent of CASI (which shall not be unreasonably withheld or delayed) (i) file a request under 35 U.S.C. § 302 for re-examination of any Patent Rights, (ii) file a request under 35 U.S.C. § 251 for a reissue of any Patent Rights, or (iii) apply for any foreign equivalents of the foregoing clauses (i) or (ii) applicable in the Territory outside of the United States. |
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(b) | CASI’s Rights. If, during the Term, TIANSHI decides it is no longer interested in the preparation, filing, prosecution, or maintenance of a particular CASI Patent Right or Joint Patent Right (other than those Patent Rights which TIANSHI is obliged to continue to file, prosecute and maintain in accordance with Section 7.2.3(a) above), then TIANSHI will promptly provide written notice to CASI of such decision and in any event at least 45 days prior to the expiration of any applicable time bars. During the aforementioned 45 day notice period, TIANSHI shall retain the responsibility for the prosecution and maintenance of the CASI Patent Rights or the Joint Patent Rights in question. On the expiry of such notice period: |
(i) | TIANSHI shall, at CASI’s request, promptly assign its right, title and interest in such Joint Patent Right to CASI’s (or any Person nominated by CASI) sole ownership; |
(ii) | TIANSHI shall, at CASI’s request, promptly transfer to CASI (or any Person nominated by CASI) any and all documents and information in TIANSHI’s possession and Control relating to such Patent Right or Joint Patent Right; |
(iii) | CASI (or any Person nominated by CASI) shall be free to prosecute or abandon such Patent Right or Joint Patent Right at its sole discretion and to grant rights thereunder to any person without further reference to TIANSHI; and |
(iv) | the license granted pursuant to Section 2.1 (Sublicense Grants to TIANSHI) shall continue in respect of such CASI Patent Right or Joint Patent Right. |
7.2.4 | Cooperation. The Parties will cooperate in the preparation, filing, prosecution, maintenance, and defense of all CASI Patent Rights and Joint Patent Rights in accordance with this Section 7.2.4 (Cooperation) and will share all material information relating thereto promptly after receipt of such information, including obtaining and executing necessary powers of attorney and assignments by the named inventors, providing relevant technical reports to the filing Party concerning the Inventions disclosed in such Patent Rights, obtaining execution of such other documents that are needed in the preparation, filing, prosecution, maintenance, and defense of such Patent Rights, and, as requested by a Party, updating each other regarding the status of such Patent Rights, and will cooperate with the other Party so far as necessary with respect to furnishing all information and data in its possession necessary to obtain, maintain, or defend such Patent Rights. |
7.2.5 | Patent Expenses. TIANSHI shall be responsible for reimbursing CASI for [***] of all the expenses and costs incurred by CASI for the preparation, filing, prosecution, maintenance, or defense of any CASI Patent Rights or Joint Patent Rights. [***] |
7.3 | Defense Against Third Party Patent Claims. |
7.3.1 | Notice of Infringement Claims. CASI and TIANSHI will each promptly, but in any event no later than 10 days after receipt of notice of such action, notify the other in writing if either Party, or any of their respective Affiliates or a Sublicensee, will be individually named as a defendant in a legal proceeding by a Third Party alleging infringement of a Patent Right or infringement, misappropriation, or other violation of any other intellectual property right of such Third Party, in each case, as a result of the Exploitation of a Licensed Compound or Licensed Product hereunder in the Field in the Territory (each, an “Infringement Claim”). |
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7.3.2 | Defense of Infringement Claims. Except as otherwise provided in Article 9 (Indemnification), if CASI wishes to assume sole control of the defense of any Infringement Claim brought against CASI, then CASI may do so. In such event (a) CASI will at its own cost have the exclusive right (but not the obligation), at its cost, to hire, fire, and direct an attorney to represent itself with respect to such Infringement Claim, and (b) CASI will have the exclusive right (but not the obligation) to settle any Infringement Claim at the sole cost of CASI without the consent of TIANSHI, unless such settlement will have a material adverse impact upon any CASI Patent Right or relates to any remedy other than the payment of money, in which case, TIANSHI will not unreasonably withhold such consent. If CASI notifies TIANSHI that it does not wish to conduct the defense of any Infringement Claim brought against CASI, then CASI may notify TIANSHI. Upon receipt of such notice, if TIANSHI wishes to assume sole control of the defense of such Infringement Claim brought against CASI, then TIANSHI may do so upon written notice to CASI. In such event (i) TIANSHI will, at its own cost, have the exclusive right (but not the obligation), at its cost, to hire, fire, and direct an attorney to represent both it and CASI with respect to such Infringement Claim, and (ii) TIANSHI will have the exclusive right (but not the obligation) to settle any Infringement Claim, at the sole cost of TIANSHI, without the consent of CASI, unless such settlement will have a material adverse impact upon any CASI Patent Right, or relates to any remedy other than the payment of money, in which case, CASI will not unreasonably withhold such consent. |
7.3.3 | Cooperation. Except as otherwise provided in Article 9 (Indemnification), each Party will cooperate, and will cause its and its Affiliates’ employees to cooperate, with the other Party in all reasonable respects in connection with any Infringement Claim, including giving testimony and producing documents lawfully requested, and using its reasonable efforts to make available, at no cost to the other (other than reimbursement of actually incurred, reasonable out-of-pocket travel and lodging expenses), such employees who may be helpful with respect to such suit, investigation, claim, interference or other proceeding. |
7.4 | Prosecution of Infringers. |
7.4.1 | Notice. If either Party receives notice of or otherwise becomes aware of any alleged or threatened infringement or misappropriation of CASI Technology or Joint Technology (including any action, suit or proceeding under the Biologics Price Competition and Innovation Act in the U.S., or similar foreign Law related to the approval of biosimilars outside of the U.S.), in each case, with respect to the making, using, offering to sell, selling, or importing of a product in the Field in the Territory that would be competitive with a Licensed Product (a “Competing Infringement”), then it will promptly notify the other Party of such Competing Infringement, including providing evidence of infringement or the claim of invalidity or unenforceability reasonably available to such Party. |
7.4.2 | Enforcement Actions. |
(a) | TIANSHI First Enforcement Right. As between the Parties, TIANSHI will have the first right (but not the obligation) to take the appropriate steps to enforce any CASI Patent Right or Joint Patent Right against any Competing Infringement. TIANSHI may take steps including the initiation, prosecution, and control of any suit, proceeding or other legal action by counsel of its own choice. TIANSHI will bear the costs of any such enforcement. Notwithstanding the foregoing, CASI will have the right, at its own expense, to be represented in any such action with respect to any CASI Patent Right or Joint Patent Right by counsel of its own choice. |
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(b) | CASI Second Enforcement Right. If TIANSHI fails to take the appropriate steps to enforce any CASI Patent Right or Joint Patent Right pursuant to Section 7.4.2(a) (TIANSHI First Enforcement Right) against a Competing Infringement in the Territory within 90 days (or such shorter period as is necessary to preserve the rights of action, for example in respect of an interim injunction) after the date one Party has provided notice to the other Party pursuant to Section 7.4.1 (Notices) of such Competing Infringement, then CASI will have the second right (but not the obligation), at its own expense, to bring any such suit, action, or proceeding by counsel of its own choice and TIANSHI will have the right, at its own expense, to be represented in any such action by counsel of its own choice. |
(c) | Biosimilar Competition. Notwithstanding any provision to the contrary set forth in this Agreement, if either Party receives a copy of an Abbreviated Application submitted to the FDA under subsection (k) of Section 351 of the PHSA naming a Licensed Compound or Licensed Product as a reference product or otherwise becomes aware that such an Abbreviated Application has been filed (such as in an instance described in Section 351(l)(9)(C) of the PHSA), then either Party will, within 10 Business Days, notify the other Party so that the other Party may seek permission to view the application and related confidential information from the filer of the Abbreviated Application under Section 351(l)(1)(B)(iii) of the PHSA. If either Party receives a copy of any equivalent or similar Abbreviated Application or notice in any other jurisdiction in the Territory, then either Party will, within 10 Business Days, notify and provide the other Party with copies of such communication. Regardless of the Party that is the “reference product sponsor” for purposes of such Abbreviated Application, (i) CASI will have the sole right to designate pursuant to Section 351(l)(1)(B)(ii) of the PHSA the outside counsel and in-house counsel who will receive confidential access to the Abbreviated Application; (ii) CASI will have the sole right to list any Patent Rights, including CASI Patent Rights and Joint Patent Rights, insofar as they Cover the applicable Licensed Compound or Licensed Product as required pursuant to Section 351(l)(3)(A), Section 351(l)(5)(b)(i)(II), or Section 351(l)(7) of the PHSA, to respond to any communications with respect to such lists from the filer of the Abbreviated Application, and to negotiate with the filer of the Abbreviated Application as to whether to utilize a different mechanism for information exchange than that specified in Section 351(l) of the PHSA. |
(d) | Cooperation; Damages. |
(i) | If one Party brings any suit, action, or proceeding under Section 7.4.2 (Enforcement Actions) (the “Enforcing Party”), then the other Party agrees to be joined as party plaintiff or defendant (as appropriate to the relevant jurisdiction) if necessary to prosecute the suit, action, or proceeding and to give the Enforcing Party reasonable authority to file and prosecute the suit, action or proceeding; provided, however, that neither Party will be required to transfer any rights, title, or interests in or to any property to the other Party or any other party to confer standing on a Party and that the Enforcing Party shall indemnify the non-Enforcing Party against all Losses that arise out of the non-Enforcing Party being a party to the suit, action, or proceeding. |
(ii) | The Enforcing Party will keep the non-Enforcing Party informed of the status of each suit, action, or proceeding hereunder and will provide to the non-Enforcing Party reasonably in advance of submission thereof, copies of all substantive filings to be made in connection with each suit, action, or proceeding hereunder. The non-Enforcing Party will have the right to review and comment on any such substantive |
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draft filings and the Enforcing Party will consider in good faith any comments offered by the non-Enforcing Party concerning any such suit, action, or proceeding hereunder.
(iii) | The non-Enforcing Party will provide reasonable assistance to the Enforcing Party, including by providing access to relevant documents and other evidence and making its employees available, subject to the Enforcing Party’s reimbursement of any documented, reasonable external expenses incurred by the non-Enforcing Party in providing such assistance. |
(iv) | TIANSHI, if it is the Enforcing Party, will not settle any claim, suit, or action that it brought under Section 7.4 (Prosecution of Infringers) involving any CASI Patent Rights without the prior written consent of CASI, not to be unreasonably withheld. |
(v) | Any settlements, damages, or other monetary awards (a “Recovery”) recovered pursuant to a suit, action or proceeding brought pursuant to Section 7.4.2 (Enforcement of CASI Patent Rights and Joint Patent Rights) will be allocated first [***] and second, [***] , with any remaining amounts (if any) (A) if TIANSHI is the Enforcing Party, [***] and subject to TIANSHI’s royalty payment obligations under Section 6.4, and (B) if CASI is the Enforcing Party, [***] |
7.5 | Patent Listing. As between the Parties, CASI will have the full and exclusive right, in its sole discretion, to determine and control the listing of any Patent Right (including any CASI Patent Right or Joint Patent Right) in the then-current edition of the United States Food and Drug Administration publication “Lists of Licensed Biological Products” (the “Purple Book”) in connection with the Regulatory Approval of any Licensed Product, or in equivalent patent listings in any other country within the Territory in the Field. |
7.6 | Patent Term Extensions. CASI and TIANSHI will cooperate in good faith, including by providing necessary information and assistance as the other Party reasonably requests, in gaining Patent Term Extensions wherever applicable to the CASI Patent Rights and Joint Patent Rights in the Territory. However, CASI will have the sole discretion in determining for which CASI Patent Rights and Joint Patent Rights to seek Patent Term Extensions for any particular compound, protein, composition, article, product, process, or use. |
7.7 | Trademarks. TIANSHI grants CASI no rights to any Trademarks in this Agreement. TIANSHI will have the sole right to determine and own the Product Trademarks to be used with respect to the Exploitation of the Licensed Products in the Field in the Territory. TIANSHI will own all rights, title and interests in and to all Product Trademarks in the Field. CASI will not, and will not permit its Affiliates to use in their respective businesses, any Trademark that is confusingly similar to, misleading or deceptive with respect to or that dilutes any (or any part) of any Product Trademarks. CASI will not, and will not permit its Affiliates to, attack, dispute, or contest the validity of or ownership of any Product Trademark anywhere in the Territory or any registrations issued or issuing with respect thereto; provided that such Product Trademark is not identical or confusingly similar to any prior registered trademark of CASI or its Affiliates. |
7.8 | Ownership and Enforcement of Product Trademarks. |
7.8.1 | Ownership and Prosecution of Product Trademarks. TIANSHI will own all rights, title and interests in and to the Product Trademarks in the Field in the Territory, and will be responsible for the registration, prosecution, and maintenance thereof. All costs and |
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expenses of registering, prosecuting and maintaining the Product Trademarks will be borne solely by TIANSHI.
7.8.2 | Enforcement of Product Trademarks. TIANSHI will have the sole right and responsibility for taking such action as TIANSHI deems necessary against a Third Party based on any alleged, threatened, or actual infringement, dilution, misappropriation, or other violation of, or unfair trade practices or any other like offense relating to, the Product Trademarks by a Third Party in the Territory. TIANSHI will bear the costs and expenses relating to any enforcement action commenced pursuant to this Section 7.8.2 (Enforcement of Product Trademarks) and any settlements and judgments with respect thereto and will retain any damages or other amounts collected in connection therewith. |
7.8.3 | Third Party Claims. TIANSHI will have the sole right and responsibility for defending against any alleged, threatened, or actual claim by a Third Party that the use or registration of the Product Trademarks in the Territory infringes, dilutes, misappropriates, or otherwise violates any Trademark or other right of that Third Party or constitutes unfair trade practices or any other like offense, or any other claims as may be brought by a Third Party against a Party in connection with the use of the Product Trademarks with respect to a Licensed Product in the Territory. TIANSHI will bear the costs and expenses relating to any defense commenced pursuant to this Section 7.8.3 (Third Party Claims) and any settlements and judgments with respect thereto and will retain any damages or other amounts collected in connection therewith. |
7.8.4 | Notice and Cooperation. CASI will provide to TIANSHI prompt written notice if it becomes aware of any actual or threatened infringement, dilution, misappropriation, or other violation of the Product Trademarks in the Territory and of any actual or threatened claim that the use of the Product Trademarks in the Territory infringes, dilutes, misappropriates, or otherwise violates the rights of any Third Party. |
7.8.5 | Domain Names. TIANSHI may, at its cost, register as domain names the Product Trademarks in any country in the Territory using any available top-level domain or country-code top-level domain. |
ARTICLE 8
REPRESENTATIONS, WARRANTIES, AND COVENANTS
8.1 | Mutual Representations and Warranties. Each Party hereby represents and warrants (as applicable) to the other Party, as of the Effective Date, that: |
8.1.1 | Corporate Existence and Power. It is a company or corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including the right to grant the licenses granted by it hereunder. |
8.1.2 | Authority. It has (a) the corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (b) taken all necessary corporate action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. |
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8.1.3 | Binding Agreement. This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms, except as enforcement may be affected by bankruptcy, insolvency or other similar laws and by general principles of equity. |
8.1.4 | No Conflicts. The execution, delivery, and performance of this Agreement by it does not (a) conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound, or (b) violate any Laws. |
8.1.5 | No Debarments. Neither Party nor any of its Affiliates has been debarred or is subject to debarment pursuant to Section 306 of the FD&C Act, as amended, or that is the subject of a conviction described in such section. |
8.1.6 | All Consents and Approvals Obtained. Except with respect to Regulatory Approvals for the Exploitation of any Licensed Compound or Licensed Product or as otherwise described in this Agreement, (a) all necessary consents, approvals, and authorizations of, and (b) all notices to, and filings by such Party with, all Governmental Authorities required to be obtained or provided by such Party as of the Effective Date in connection with the execution, delivery, and performance of this Agreement have been obtained and provided, except for those approvals, if any, not required at the time of execution of this Agreement. |
8.2 | Additional Representations and Warranties of CASI. CASI hereby represents and warrants to TIANSHI as of the Effective Date that: |
8.2.1 | No MAAs. Neither CASI nor any of their respective Affiliates, have filed any MAAs with a Governmental Authority in the Field in the Territory for any Licensed Compound or Licensed Product. |
8.2.2 | Absence of Claims and Proceedings. Neither CASI nor any of their respective Affiliates have received written notice of any claim, demand, proceedings, investigation, or other legal action of any nature pending or threatened by any Regulatory Authority or Third Party with respect to any Licensed Compound or Licensed Product, the CASI Technology, or any facility where a Licensed Compound or Licensed Product is Manufactured, and to the Knowledge of CASI, there is no judgement or settlement against or owed by CASI or its Affiliate related to any Licensed Compound or Licensed Product or to the CASI Technology. There are no claims, judgments, or settlements against or owed by CASI or their respective Affiliates, nor any pending reissue, reexamination, inter partes review, interference, opposition, or similar proceedings, with respect to the CASI Patent Rights, and neither CASI, nor any of their respective Affiliates have received written notice as of the applicable date of any threatened claims or litigation or any reissue, reexamination, inter partes review, interference, opposition, or similar proceedings seeking to invalidate or otherwise challenge the CASI Patent Rights. |
8.2.3 | Infringement of Third Party Intellectual Property. To the Knowledge of CASI, the Licensed Compound and Licensed Product, in the form that such Licensed Compound and Licensed Product exist as of the Effective Date, in the Field in the Territory will not infringe, misappropriate, or otherwise violate the intellectual property rights of any Third Party. There has been no claim or demand of any Person asserted to CASI or to the Knowledge of CASI or any of their respective Affiliates that challenges the rights of CASI or to the Knowledge of CASI or any of their respective Affiliates to use, practice under, or license any of the CASI Technology. |
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8.2.4 | Infringement by Third Party. To the Knowledge of CASI, no Third Party is infringing, misappropriating, or otherwise violating any CASI Technology in derogation of the rights granted to TIANSHI under this Agreement. |
8.2.5 | No Unlicensed Intellectual Property. CASI has not been granted rights from any Third Party under any Know-How or Patent Rights that (a) are necessary to Exploit any Licensed Compound or Licensed Product in the Territory, and (b) are not included within the CASI Know-How or CASI Patent Rights, as applicable. In addition, CASI does not Control any CASI Know-How or any CASI Patent Rights pursuant to exclusive licenses granted by any Third Party. |
8.2.6 | Title to CASI Technology. (a) Schedule 1.31 (CASI Patent Right) sets forth a complete and accurate list of all Patent Rights existing as of the Effective Date that CASI owns or Controls and that are necessary to Exploit any Licensed Compound or Licensed Product in the Field in the Territory and (b), CASI exclusively owns or Controls all rights, title, and interests in and to such CASI Patent Right. |
8.2.7 | Licensed Product Supplies. CASI Controls all physical quantities of Licensed Compound and Licensed Product. |
8.2.8 | Assignment Agreements. CASI has entered into binding and enforceable agreements with all of their and their respective Affiliates’ employees, agents, and independent contractors performing any activity pursuant to this Agreement pursuant to which such employees, agents, and independent contractors assign all rights, title, and interests in and to all Inventions developed or invented in the performance of any activity pursuant to this Agreement by such employees, agents, and independent contractors according to the ownership rules described in Section 7.1.1 (General). |
8.2.9 | Status of CASI Patent Rights. To the Knowledge of CASI, each issued CASI Patent Right listed on Schedule 1.31 (CASI Patent Rights) is in full force and effect, and CASI or its Affiliates have paid all filing and renewal fees required to be paid on or before the Effective Date with respect to such Patent Rights. |
8.2.10 | Title under Bayh-Dole Act. Any academic institution or other licensor that owns any CASI Technology that is subject to the requirements of the Bayh-Dole Act or any similar provision of any Law, has, to the extent applicable, (a) disclosed all relevant inventions to the applicable government funding authority and (b) elected to retain title to such CASI Technology, in each case, in accordance with the Bayh-Dole Act and such similar provision, as applicable. |
8.2.11 | Prosecution and Maintenance. To the Knowledge of CASI, CASI and their respective Affiliates have complied with all Laws, including any duties of candor to applicable patent offices, in connection with the filing, prosecution, and maintenance of the CASI Patent Rights existing as of the Effective Date. All CASI Patent Rights existing as of the Effective Date have been duly filed and maintained in the Territory and are being diligently prosecuted in the Territory. |
8.2.12 | Third Party Agreements. With respect to the Adimab Agreement and Cellca Agreement: (a) each such Third Party Agreement are valid and enforceable; (b) neither of such Third Party Agreements contains provisions that conflict with the exclusive rights and licenses granted to TIANSHI hereunder; and (c) no written notice of default or termination has been |
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received or given under either such Third Party Agreement save in respect of work orders under them. To the Knowledge of CASI, there is no act or omission by CASI or their respective Affiliates, licensees, or sublicensees, or the applicable counterparty to such Third Party Agreements, in each case, that would provide a Person the right to terminate any Third Party Agreement.
8.2.13 | Protection of CASI Know-How. To the Knowledge of CASI, CASI and their respective Affiliates have taken commercially reasonable measures consistent with industry practices to protect the secrecy, confidentiality, and value of all CASI Know-How that constitutes trade secrets under Law (including requiring all employees, agents, and independent contractors to execute binding and enforceable agreements requiring all such employees, agents, and independent contractors to maintain the confidentiality of such CASI Know-How) and to the Knowledge of CASI such CASI Know-How has not been used, disclosed to, or discovered by any Third Party except pursuant to such confidentiality agreements and there has been no breach by any party to such confidentiality agreements. |
8.2.14 | No Investigations. To the Knowledge of CASI, there are no investigations, inquiries, actions, or other proceedings pending before or threatened by any Regulatory Authority or other Governmental Authority in the Territory with respect to any Licensed Compound or Licensed Product arising from any violation of Law by CASI or to the Knowledge of CASI or their respective Affiliates, licensees, or sublicensees, or a Third Party acting on its or their behalf, and neither CASI nor to the Knowledge of CASI, nor their respective Affiliates has received notice threatening any such investigation, inquiry, action, or other proceeding. |
8.2.15 | Conduct of Development. To the Knowledge of CASI, CASI and their respective Affiliates have conducted all Development of all Licensed Compounds and Licensed Products in accordance with all Laws, including GLP, as applicable and appropriate to the phase or stage of the relevant Development. To the Knowledge of CASI, CASI and their respective Affiliates have conducted any and all pre-clinical trials related to all Licensed Compounds or Licensed Products in accordance with all Laws, including GLP as applicable and appropriate to the phase or stage of the relevant trial. |
8.2.16 | Review of Data. CASI has provided TIANSHI with the opportunity to review all written material (such materiality being in the sole discretion of CASI) data in CASI’s Control relating to the subject matter of this Agreement, and has not intentionally concealed from TIANSHI any such material data. |
8.3 | Non Reliance; Disclaimer |
8.3.1 | The warranties and representations of each Party set forth in this Agreement are intended for the sole and exclusive benefit of the other Party, and may not be relied upon by any Third Party. |
8.3.2 | EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE LICENSED PRODUCTS OR ANY PATENTS, KNOW-HOW OR OTHER INTELLECTUAL PROPERTY DISCLOSED, DEVELOPED, OR LICENSED UNDER THIS AGREEMENT. EXCEPT TO THE EXTENT EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS REPRESENTATIONS OR |
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WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE LICENSED PRODUCTS OR ANY PATENT RIGHTS, KNOW-HOW OR OTHER INTELLECTUAL PROPERTY DISCLOSED, DEVELOPED, OR LICENSED UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OR REPRESENTATION OF NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.
8.4 | Covenants of CASI. |
8.4.1 | Title to CASI Technology. Subject to the rights granted to TIANSHI under this Agreement, during the Term, CASI will maintain exclusive ownership or Control of all CASI Technology that is prior to the Effective Date exclusively owned or Controlled by CASI and will not assign, transfer, encumber, or otherwise grant any Third Party any rights with respect thereto that would adversely affect the rights granted to TIANSHI under this Agreement. |
8.4.2 | Third Party Agreements. During the Term CASI will (a) not breach or be in default of the Third Party Agreements, nor take any acts that would result in a breach of such agreements, except to the extent that (i) any acts of CASI are carried out at the written request of TIANSHI or (ii) any breach arises as a result of any act or omission of TIANSHI, its Affiliates or Sublicensees, (b) maintain each of the Third Party Agreements in full force and effect, and (c) not terminate, amend, waive, or otherwise modify (or consent to any of the foregoing) any of the Third Party Agreements or any of its rights under any such agreements without the consent of TIANSHI. If CASI receives notice of any alleged material breach by CASI or its Affiliates under any of the Third Party Agreements, then CASI will promptly, but in no event more than five days thereafter, provide written notice thereof to TIANSHI and grant TIANSHI the right (but not the obligation) to cure any such alleged breach. If TIANSHI receives notice of any alleged material breach under any of the Third Party Agreements, then TIANSHI will promptly, but in no event more than five days thereafter, provide written notice thereof to CASI. |
8.5 | Covenants of TIANSHI. During the Term, TIANSHI will act, and shall procure that its Affiliates and Sublicensees shall act, in accordance with and comply with all of the terms of: |
8.5.1 | each of the Third Party Agreements that relates to its and their activities under this Agreement, including but not limited to milestone and royalty payments, diligence and patent prosecution and in respect of the Adimab Agreement, Section 9.4 and the limitations on the license in Section 3.2(b), and |
8.5.2 | the AGC Agreement. |
ARTICLE 9
INDEMNIFICATION
9.1 | Indemnification by CASI. CASI hereby agrees to indemnify, defend, and hold TIANSHI, its Affiliates, and their respective directors, officers and employees harmless from and against any and all Losses arising in connection with any and all Third Party Claims arising from or relating to (a) any breach by CASI or its Affiliates of any of its representations, warranties, covenants, or obligations under this Agreement, (b) any violation of Law, gross negligence, or willful misconduct by or on behalf of CASI or its Affiliates or their respective officers, directors or employees in performing any obligations or exercising any rights under this Agreement, in each case ((a)-(b)), |
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except to the extent that such Losses arise from (i) a breach by TIANSHI of any terms of this Agreement (including its obligations to comply with the terms of the Third Party Agreements), or (ii) the gross negligence or willful misconduct of TIANSHI or its Affiliates or (iii) claims for which TIANSHI is required to indemnify CASI pursuant to Section 9.1 (Indemnification by TIANSHI).
9.2 | Indemnification by TIANSHI. TIANSHI hereby agrees to indemnify, defend, and hold CASI, its Affiliates, and their respective directors, agents, and employees harmless from and against any and all Losses arising in connection with any and all Third Party Claims arising from or relating to (a) any breach by TIANSHI or its Affiliates or Sublicensees of any of its representations, warranties, covenants, or obligations under to this Agreement including any failure to comply with any obligations under or terms of the Adimab Agreement, Cellca Agreement or the AGC Agreement, (b) any violation of Law, gross negligence, or willful misconduct by TIANSHI or its Affiliates or Sublicensees or their respective officers, directors, employees, agents, or consultants in performing any obligations or exercising any rights under this Agreement, and (c) the Exploitation of the Licensed Compounds or Licensed Products by TIANSHI or its Affiliates or Sublicensees (including any product liability Losses resulting therefrom), in each case ((a)-(c)), except to the extent that such Losses arise from (i) a breach by CASI of any terms of this Agreement, or (ii) the gross negligence or willful misconduct of CASI or its Affiliate or (iii) claims for which CASI is required to indemnify TIANSHI pursuant to Section 9.1 (Indemnification by CASI). |
9.3 | Indemnification Procedures. |
9.3.1 | Notice of Claim. All indemnification claims in respect of any indemnitee seeking indemnity under Section 9.1 (Indemnification by CASI) or Section 9.2 (Indemnification by TIANSHI), as applicable (collectively, the “Indemnitees” and each, an “Indemnitee”) will be made solely by the corresponding Party (the “Indemnified Party”). The Indemnified Party will give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Losses and any legal proceeding initiated by a Third Party against the Indemnified Party as to which the Indemnified Party intends to make a request for indemnification under Section 9.1 (Indemnification by CASI) or Section 9.2 (Indemnification by TIANSHI), as applicable, but in no event will the Indemnifying Party be liable for any Losses that result from any delay in providing such notice that materially prejudices the defense of such proceeding. Each Indemnification Claim Notice will contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). Together with the Indemnification Claim Notice, the Indemnified Party will furnish promptly to the Indemnifying Party copies of all notices and documents (including court papers) received by any Indemnitee in connection with the Third Party Claim. |
9.3.2 | Control of Defense. At its option, the Indemnifying Party may assume the defense of any Third Party Claim subject to indemnification as provided for in Section 9.1 (Indemnification by CASI) or Section 9.2 (Indemnification by TIANSHI), as applicable, by giving written notice to the Indemnified Party within 30 days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel it selects, and such Indemnifying Party will thereafter continue to defend such Third Party Claim in good faith. Should the Indemnifying Party assume the defense of a Third Party Claim (and continue to defend such Third Party Claim in good faith), the Indemnifying Party will not be liable to the Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other Indemnitee in connection with the analysis, defense, or settlement of the Third |
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Party Claim, unless the Indemnifying Party has failed to assume the defense and employ counsel in accordance with this Section 9.3 (Indemnification Procedures).
9.3.3 | Right to Participate in Defense. Without limiting Section 9.3.2 (Control of Defense), any Indemnitee will be entitled to participate in the defense of a Third Party Claim for which it has sought indemnification hereunder and to employ counsel of its choice for such purpose; provided, however, that such employment will be at the Indemnitee’s own expense unless (a) the employment thereof has been specifically authorized by the Indemnifying Party in writing, or (b) the Indemnifying Party has failed to assume the defense (or continue to defend such Third Party Claim in good faith) and employ counsel in accordance with this Section 9.3 (Indemnification Procedures), in which case, the Indemnified Party will be allowed to control the defense. |
9.3.4 | Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnitee becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnitee in any manner, the Indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its reasonable discretion, will deem appropriate (provided, however, that such terms will include a complete and unconditional release of the Indemnified Party from all liability with respect thereto), and will transfer to the Indemnified Party all amounts that said Indemnified Party will be liable to pay prior to the time of the entry of judgment. With respect to all other Losses in connection with Third Party Claims, if the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 9.3.2 (Control of Defense), then the Indemnifying Party will have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, provided that it obtains the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld). The Indemnifying Party that has assumed the defense of (and continues to defend) the Third Party Claim in accordance with Section 9.3.2 (Control of Defense) will not be liable for any settlement or other disposition of a Loss by an Indemnitee that is reached without the written consent of such Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnitee will admit any liability with respect to, or settle, compromise, or discharge, any Third Party Claim without first offering to the Indemnifying Party the opportunity to assume the defense of the Third Party Claim in accordance with Section 9.3.2 (Control of Defense). |
9.3.5 | Cooperation. If the Indemnifying Party chooses to defend or prosecute any Third Party Claim, then the Indemnified Party will, and will cause each other Indemnitee to, cooperate in the defense or prosecution thereof and will furnish such records, information, and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested in connection with such Third Party Claim. Such cooperation will include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party will reimburse the Indemnified Party for all its documented, reasonable external expenses incurred in connection with such cooperation. |
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9.3.6 | Expenses of the Indemnified Party. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party Claim will be reimbursed on a Calendar Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party. |
9.4 | LIMITATION OF LIABILITY. NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES, OR INDIRECT LOST PROFITS OR INDIRECT LOST REVENUES, ARISING FROM OR RELATING TO THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, NOTHING IN THIS SECTION 9.4 (LIMITATION OF LIABILITY) IS INTENDED TO OR WILL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 9.1 (INDEMNIFICATION BY CASI) OR SECTION 9.2 (INDEMNIFICATION BY TIANSHI), OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER Article 10 (CONFIDENTIALITY) OR FOR CASI’S BREACH OF SECTION 2.3 (NON-COMPETE); PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL LIMIT TIANSHI’s LIABILITY TO CASI TO THE EXTENT THAT CASI INCURS LIABILTY UNDER EITHER OF THE THIRD PARTY AGREEMENTS OR THE AGC AGREEMENT AS A RESULT OF ANY ACT OR OMISSION OF TIANSHI, ITS AFFILIATES OR SUBLICENSEES AND CASI CANNOT LIMIT ITS LIABILITY UNDER SUCH THIRD PARTY AGREEMENT OR AGC AGREEMENT. |
ARTICLE 10
CONFIDENTIALITY
10.1 | Confidential Information. As used in this Agreement, the term “Confidential Information” means the terms of this Agreement and all information, whether it be written or oral, including all production schedules, lines of products, volumes of business, processes, new product developments, product designs, formulae, technical information, laboratory data, clinical data, patent information, know-how, trade secrets, financial and strategic information, marketing and promotional information and data, and other material relating to any products, projects, or processes of one Party (the “Disclosing Party”) that is provided to the other Party (the “Receiving Party”) in connection with this Agreement (including information exchanged prior to the date hereof in connection with the transactions set forth in this Agreement). Notwithstanding the foregoing sentence, Confidential Information will not include any information or materials that: |
10.1.1 | were already known to the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party, to the extent such Receiving Party has documentary evidence to that effect; |
10.1.2 | were generally available to the public or otherwise part of the public domain at the time of disclosure thereof to the Receiving Party; |
10.1.3 | became generally available to the public or otherwise part of the public domain after disclosure or development thereof, as the case may be, and other than through any act or omission of a Party in breach of such Party’s confidentiality obligations under this Agreement; |
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10.1.4 | were disclosed to a Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others; or |
10.1.5 | were independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the other Party, to the extent such Receiving Party has documentary evidence to that effect. |
Notwithstanding the foregoing or any provision to the contrary in this Agreement, (a) all reports provided by CASI or its Affiliates or Sublicensees regarding the Exploitation of any Licensed Compound or Licensed Product, Royalty Reports, Clinical Trial data, and other Know-How that exclusively pertains to Licensed Compound and is transferred or made available to TIANSHI pursuant to this Agreement will be deemed to be CASI’s Confidential Information under this Agreement, and (b) this Agreement and the terms hereof will be deemed to be both Parties’ Confidential Information under this Agreement.
10.2 | Confidentiality Obligations. Each of TIANSHI and CASI will keep all Confidential Information received from or on behalf of the other Party with the same degree of care with which it maintains the confidentiality of its own Confidential Information, but in all cases no less than a reasonable degree of care. Neither Party will use such Confidential Information for any purpose other than in the exercise of its rights or performance of its obligations under this Agreement or disclose the same to any other Person other than to such of its and its Affiliates’ and Sublicensee’s directors, managers, employees, independent contractors, agents, or consultants who have a need to know such Confidential Information to implement the terms of this Agreement or enforce its rights under this Agreement; provided, however, that a Receiving Party will advise any of its Affiliates’ and Sublicensee’s directors, managers, employees, independent contractors, agents, or consultants who receives such Confidential Information of the confidential nature thereof and of the obligations contained in this Agreement relating thereto, and the Receiving Party will ensure (including, in the case of a Third Party, by means of a written agreement with such Third Party having terms at least as protective as those contained in this Article 10 (Confidentiality)) that all such directors, managers, employees, independent contractors, agents, or consultants comply with such obligations. It is understood that receipt of Confidential Information under this Agreement will not limit the Receiving Party from assigning its employees to any particular job or task in any way it may choose, subject to the terms and conditions of this Agreement. |
10.3 | Permitted Disclosure and Use. Notwithstanding Section 10.2 (Confidentiality Obligations), (a) either Party may disclose Confidential Information belonging to the other Party only to the extent such disclosure is necessary to: (i) comply with or enforce any of the provisions of this Agreement; and (ii) comply with Laws or any listing agreement with a national securities exchange; and (b) each Party may disclose Confidential Information belonging to the other Party (including the applicable terms of this Agreement) to its lenders, prospective lenders, financing sources, prospective financing sources, actual or prospective investors and acquirers, Sublicensees, prospective Sublicensees, employees, consultants, financial or legal advisors, agents, or (Sub)contractors, in each case, pursuant to confidentiality and non-use obligations at least as protective as those contained in Article 10 (Confidentiality). If a Party deems it necessary to disclose Confidential Information of the other Party pursuant to clause (a)(ii) of this Section 10.3 (Permitted Disclosure and Use), then such Party will give reasonable advance written notice of such disclosure (to the extent practicable) to the other Party to permit such other Party sufficient opportunity to object to such disclosure or to take measures to ensure confidential treatment of such information, including seeking a protective order or other appropriate remedy. In addition, CASI may, upon reasonable request, disclose any milestone reports or Royalty Reports to Black Belt, |
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Cellca or Adimab, provided, however, that CASI will advise Black Belt, Cellca or Adimab of the confidential nature thereof and of the obligations contained in this Agreement relating thereto.
10.4 | Notification. The Receiving Party will notify the Disclosing Party promptly upon discovery of any unauthorized use or disclosure of the Disclosing Party’s Confidential Information and will cooperate with the Disclosing Party in any reasonably requested fashion to assist the Disclosing Party to regain possession of such Confidential Information and to prevent its further unauthorized use or disclosure. |
10.5 | Publicity. Except as otherwise provided in Article 10 (Confidentiality), TIANSHI will not make any other public statement or disclosure of, or concerning, the terms of this Agreement, either directly or indirectly, without first obtaining the written approval of CASI. Notwithstanding any provision in this Agreement to the contrary, TIANSHI may issue a press release regarding the signing of this Agreement, provided that CASI will have the right to review such press release prior to its release. Once any public statement or disclosure has been approved or reviewed in accordance with Section 10.3 (Disclosure and Use), then either Party may appropriately communicate information contained in such permitted statement or disclosure. |
10.6 | Use of Names. Except as otherwise set forth in this Agreement, neither Party will use the name of the other Party in relation to this transaction in any public announcement, press release, or other public document without the written consent of such other Party, which consent will not be unreasonably withheld; provided, however, that subject to Section 10.5 (Publicity), either Party may use the name of the other Party in any document filed with any Governmental Authority, including the U.S. Securities and Exchange Commission. |
10.7 | Survival. The obligations and prohibitions contained in this Article 10 (Confidentiality) as they apply to Confidential Information will survive the expiration or termination of this Agreement for a period of 10 years. |
ARTICLE 11
TERM; TERMINATION
11.1 | Term. This Agreement will become effective on the Effective Date and, unless earlier terminated pursuant to this Article 11 (Term; Termination), will continue, on a Licensed Product-by-Licensed Product and country-by-country basis, until the expiration of the Royalty Term with respect to such Licensed Product in such country, and will expire in its entirety upon the expiration of the last to expire Royalty Term (the “Term”). Upon expiration of the Royalty Term for a Licensed Product in a country in the Territory, all licenses granted to TIANSHI under this Agreement will become fully-paid, irrevocable, and perpetual for such Licensed Product in such country. |
11.2 | Termination for Breach. |
11.2.1 | Breach by TIANSHI. Subject to Section 13.3 (Tolling), CASI may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety by providing written notice of termination to TIANSHI in the event that TIANSHI has materially breached this Agreement and failed to cure such breach within [***] days after written notice thereof was provided to TIANSHI by CASI; provided that if such breach cannot be cured within such [***] -day period, then such termination will not be effective if such breach has been cured within [***] days after such notice if TIANSHI commences actions to cure such default within such [***] -day period and thereafter diligently continues such action. |
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11.2.2 | Breach by CASI. Subject to Section 13.3 (Tolling), TIANSHI may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety by providing written notice of termination to CASI in the event that CASI has materially breached this Agreement and failed to cure such breach within [***] days after written notice thereof was provided to CASI by TIANSHI; provided that if such breach cannot be cured within such [***] -day period, then such termination will not be effective if such breach has been cure within [***] days after such notice if CASI commences actions to cure such default within such [***] -day period and thereafter diligently continues such action. |
11.3 | Termination for Convenience by TIANSHI. TIANSHI may elect, upon [***] days’ prior written notice to CASI, to terminate this Agreement for any reason or no reason in its entirety. |
11.4 | Termination by TIANSHI for Safety Reasons. TIANSHI may terminate this Agreement immediately upon written notice to CASI in its entirety, or on a country-by-country basis with respect to any country to which the applicable event set forth under the following clause (b) relates, if (a) TIANSHI reasonably determines based upon its review of clinical data or upon a determination by an applicable drug safety monitoring board or Governmental Authority that a Licensed Compound or Licensed Product caused or is likely to cause a fatal, life-threatening, or other serious adverse event that is reasonably expected, based upon then-available data, to materially impair continued Development or Commercialization of such Licensed Compound or Licensed Product, or (b) a Regulatory Authority has placed a clinical hold on the conduct of a Clinical Trial for such Licensed Compound or Licensed Product. |
11.5 | Termination for Patent Challenge. Without prejudice to any other rights of CASI, if TIANSHI or any of its Affiliates institutes a Patent Challenges of any CASI Patent Right in any country in the Territory, then CASI may, following written notice to TIANSHI and provided that TIANSHI or its Affiliate does not withdraw such Patent Challenge within [***] days after receipt of such notice, terminate this Agreement with respect to such country by providing written notice of termination to TIANSHI. Notwithstanding anything to the contrary set forth in this Agreement, this Section 11.5 (Termination for Patent Challenge) will not apply to, and CASI may not terminate this Agreement with respect to (a) any claim or proceeding that would otherwise be a Patent Challenge hereunder to the extent commenced by a Third Party that after the Effective Date acquires or is acquired by TIANSHI or its Affiliates or its or their business or assets, whether by stock purchase, merger, asset purchase, or otherwise; provided that such proceeding commenced prior to the closing of such acquisition, (b) any Patent Challenge instituted as a defense to an allegation of infringement by CASI; or (c) any Patent Challenge that is commenced by a Sublicensee; provided that TIANSHI demands that such Sublicensee withdraw such Patent Challenge promptly after TIANSHI becomes aware of such Patent Challenge and terminates the sublicense agreement with the applicable Sublicensee if such Sublicensee does not withdraw such Patent Challenge within [***] days after receipt of notice from TIANSHI. |
ARTICLE 12
EFFECTS OF TERMINATION
12.1 | General Effects of Termination. Upon termination of this Agreement for any reason, without limiting any other legal or equitable remedies that a Party may have, the following provisions will apply: |
12.1.1 | Termination of Rights and Licenses. All rights and licenses granted by one Party to the other Party hereunder will immediately terminate and be of no further force and effect. |
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12.1.2 | Accrued Payments. Any Royalty Payments, Development Milestone Payments, Sales Milestone Payments, and other sums that accrued to the benefit of CASI prior to the effective date of such termination shall become payable to CASI immediately upon notice of termination of this Agreement and TIANSHI shall also pay all sums that become payable during the applicable termination notice period (including during any sell off period in accordance with Section 12.2.4 (Disposition of Inventory)). |
12.1.3 | Licenses. TIANSHI shall consent to the revocation of any confirmatory patent license relating to the CASI Patent Rights and the cancellation of the registration of any such license in any register. |
12.1.4 | Prosecution and Maintenance. TIANSHI shall promptly transfer to CASI (or any person nominated by CASI) any and all documents and information in TIANSHI’s control or possession relating to the CASI Patent Rights and CASI may assume responsibility for the prosecution and maintenance of the same. |
12.1.5 | Destruction of Know-How. TIANSHI shall, at the request and option of CASI, return or destroy the CASI Know-How in its possession or control. |
12.1.6 | Sublicense Continuation Upon Termination. Upon the request of a Sublicensee not then in breach of the applicable sublicense agreement, CASI will enter into a direct license from CASI to such Sublicensee on the same terms as this Agreement, taking into account any difference in license scope, territory, and duration of sublicense grant (each a “New License Agreement”). Under any New License Agreement between CASI and a former Sublicensee, such Sublicensee will be required to pay to CASI the same amounts in consideration for such direct grant as CASI would have received from TIANSHI pursuant to this Agreement on account of such Sublicensee’s Exploitation of the Licensed Products had this Agreement not been terminated. Under such New License Agreement, CASI will not be bound by any grant of rights broader than, and will not be required to perform any obligation other than those rights and obligations contained in this Agreement and all applicable rights of CASI and obligations of TIANSHI (including under the Third Party Agreements) set forth in this Agreement will be included in such New License Agreement. At the request of TIANSHI, CASI will issue a comfort letter directly to any potential Sublicensee confirming the terms of this Section 12.1.7 (Sublicense Continuation upon Termination). |
12.1.7 | Return or Destruction of Confidential Information. Upon termination of this Agreement, the Receiving Party will return or destroy all documents, tapes or other media containing Confidential Information of the Disclosing Party that remain in the possession of the Receiving Party or its directors, managers, employees, independent contractors, agents, or consultants, except that the Receiving Party may keep one copy of the Confidential Information in the legal department files of the Receiving Party, solely for archival purposes. Such archival copy will be deemed to be the property of the Disclosing Party, and will continue to be subject to the provisions of Article 10 (Confidentiality). |
12.2 | Termination by CASI for TIANSHI’s Breach or by TIANSHI for Convenience. In addition to the general effects of termination set forth in Section 12.1 (General Effects of Termination), and without limiting any other legal or equitable remedies that a Party may have, if (i) this Agreement is terminated (A) by CASI pursuant to Section 11.2.1 (Breach by TIANSHI), or Section 11.5 (Termination for Patent Challenge), or (B) by TIANSHI pursuant to Section 11.2.2 (Termination for Convenience by TIANSHI) or Section 11.4 (Termination by TIANSHI for Safety Reasons), |
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and (ii) CASI notifies TIANSHI that CASI desires to proceed with the Development or other Exploitation of any Licensed Products and the Sublicensee is not continuing in accordance with Section 12.1.6 (Sublicense Continuation Upon Termination), then the following provisions will apply:
12.2.1 | Exclusive License Under Arising Intellectual Property. Effective as of the effective date of such termination, TIANSHI hereby grants to CASI an exclusive, worldwide, sublicensable license under all Arising Intellectual Property to the extent necessary for, or to the extent it has been used by its Affiliates or any Sublicensee in, the Exploitation of the Licensed Products to Exploit such Licensed Products in the form that such Licensed Products exists as of the applicable effective date of termination of this Agreement. |
12.2.2 | Regulatory Materials. TIANSHI shall, [***] , transfer to CASI (or its nominee) as soon as practicable any Regulatory Approvals, Reimbursement Approvals for the relevant Licensed Products. |
12.2.3 | Technology Transfer. Solely within the scope of the license granted in Section 12.2.1 (Exclusive License Under Arising Intellectual Property), TIANSHI shall, within one month following the effective date of termination of this Agreement, transfer to CASI (or CASI’s designee) copies of all Know-How included in the in Arising Intellectual Property licensed to CASI under Section 12.2.1 (Exclusive License Under Arising Intellectual Property) and all documents and information within TIANSHI’s control relating to the filing and prosecution of any Patent Rights comprised in Arising Intellectual Property. |
12.2.4 | Disposition of Inventory. For [***] full months following the effective date of the applicable termination, TIANSHI and its Affiliates will have the right to sell any inventory of any Licensed Product that remains on hand as of the applicable effective date of the termination, so long as TIANSHI pays to CASI, Adimab, and Cellca the Milestone Payment, Royalty Payments, and other amounts payable hereunder that are applicable to such subsequent sales of such Licensed Product in accordance with the terms of this Agreement including under the applicable Third Party Agreements. If TIANSHI provides CASI with written notice that it does not wish to exercise such right, then CASI will have the option, exercisable within [***] days following the date on which TIANSHI notifies CASI of TIANSHI’s intention not to exercise such right, to purchase any inventory of any Licensed Product that remains on hand as of the date of such option exercise at TIANSHI’s fully-burdened manufacturing cost for such Licensed Product. CASI may exercise such option by written notice to TIANSHI during such [***] -day period. |
12.3 | Accrued Rights. Termination or expiration of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a Party prior to the effective date of such termination, including any rights accrued to the benefit of a Party during the applicable termination notice period and any payment obligation that accrued prior to the effective date of such termination or expiration. Such termination will not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. |
12.4 | Termination Sole Remedy. Termination of this Agreement pursuant to Section 11.2 (Breach by TIANSHI) will be CASI’s sole remedy under this Agreement with respect to TIANSHI’s breach of its obligations under Section 5.4 (Diligence Obligations). |
12.5 | Survival. Notwithstanding any provision to the contrary contained herein, the following provisions will survive any expiration or termination of this Agreement: Article 1 (Definitions), Article 9 |
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(Indemnification), Article 10 (Confidentiality), Article 12 (Effects of Termination), Article 13 (Dispute Resolution) and Article 14 (Miscellaneous), and Sections 6.4.2(a) (Royalty Reports), 6.5 (Foreign Exchange), 6.6 (Payment Method), 6.7 (No Right to Offset), 6.8 (Records), 6.9 (Audits), 6.10 (Audit Dispute), 6.11 (Taxes), 7.1.1 (General), 7.1.4 (Right to Practice Joint Technology), 7.8 (Ownership and Enforcement of Product Trademarks), and 8.3 (Non-Reliance, Disclaimer). Except as set forth in this Section 12.5 (Survival) or otherwise expressly set forth herein, upon termination or expiration of this Agreement all other rights and obligations of the Parties will cease.
ARTICLE 13
DISPUTE RESOLUTION
13.1 | Disputes. In the event of any disputes, controversies, or differences between the Parties, arising out of, in relation to, or in connection with this Agreement, including any alleged failure to perform, or breach, of this Agreement, or any issue relating to the validity, construction, interpretation, enforceability, breach, performance, application, or termination of this Agreement a (“Dispute”), then upon the written request of either Party, other than disputes to be resolved in accordance with Section 6.10 (Audit Dispute), the Dispute will be first submitted to the Executive Officers of each Party for attempted resolution by good faith negotiations within [***] days of the Dispute being so submitted. |
13.2 | Binding Arbitration. If the Dispute is not resolved within [***] days following the written request for amicable resolution, then, except for Audit Disputes, which will be resolved in accordance with Section 6.10 (Audit Dispute) and patent validity disputes that are the subject of Section 13.4 (Patent Right Dispute Resolution) and will be resolved in accordance with Section 13.4 (Patent Right Dispute Resolution), any Dispute shall be determined by arbitration administered by the International Centre for Dispute Resolution in accordance with its International Arbitration Rules as supplemented by the matters set out in Schedule 13.2 (Arbitration Procedures) hereto. The number of arbitrators shall be three. The place of arbitration shall be Delaware and the language of the arbitration shall be English. Notwithstanding anything herein to the contrary, nothing in Section 13.1 (Disputes) or this Section 13.2 (Binding Arbitration) will preclude either Party from seeking from any court of competent jurisdiction interim or provisional relief, including a temporary restraining order, preliminary injunction or other interim equitable relief concerning a Dispute in accordance with Section 13.5 (Equitable Remedies), if necessary to protect the interests of such Party. This Section 13.2 (Binding Arbitration) will be specifically enforceable. |
13.3 | Tolling. The Parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches), as well as all time periods in which a Party must exercise rights or perform obligation hereunder, will be tolled once the dispute resolution procedures set forth in this Article 13 (Dispute Resolution) have been initiated and for so long as they are pending, and the Parties will cooperate in taking all actions reasonably necessary to achieve such a result. In addition, during the pendency of any Dispute under this Agreement initiated before the end of any applicable cure period (a) this Agreement will remain in full force and effect, (b) the provisions of this Agreement relating to termination for material breach with respect to such Dispute will not be effective, (c) the time periods for cure under Section 11.2 (Termination for Breach) as to any termination notice given prior to the initiation of the dispute resolution process set forth in this Article 13 (Dispute Resolution) will be tolled, (d) any time periods to exercise rights or perform obligations will be tolled, and (e) neither Party will issue a notice of termination pursuant to this Agreement based on the subject matter of the Dispute, until the arbitrators have confirmed the material breach and the existence of the facts claimed by a Party to be the basis for the asserted material breach in a final, unappealable decision; provided that if such breach can be cured by (i) the payment of money, then the defaulting Party will have an additional 10 days within its receipt of the arbitrator’s decision to |
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pay such amount, or (ii) the taking of specific remedial actions, then the defaulting Party will have a reasonably necessary period to diligently undertake and complete such remedial actions within such reasonably necessary period or any specific timeframe established by such arbitrator’s decision before any such notice of termination can be issued. Further, with respect to any time periods that have run during the pendency of the Dispute, the applicable Party will have a reasonable period of time or any specific timeframe established by such arbitrator’s decision to exercise any rights or perform any obligations affected by the running of such time periods.
13.4 | Patent Right Dispute Resolution. Notwithstanding any provision to the contrary set forth in this Agreement, any Dispute or claim relating to the scope, validity, enforceability, or infringement of any Patent Rights Covering the Exploitation of any Licensed Compound or Licensed Product will be submitted to a court of competent jurisdiction in the Territory in which such Patent Rights were granted or arose. |
13.5 | Equitable Remedies. Notwithstanding any provision to the contrary set forth in this Agreement, the Parties each stipulate and agree that a breach of Section 2.3 (Non-Compete) or Article 10 (Confidentiality) by a Party will cause irrevocable harm for which monetary damages would not provide a sufficient remedy, and in such case, the non-breaching Party will be entitled to equitable relief, including a specific performance, temporary or permanent restraining orders, preliminary injunction, or permanent injunction, or other equitable relief without the posting of any bond or other security, from any court of competent jurisdiction. In addition, and notwithstanding any provision to the contrary set forth in this Agreement, in the event of any other actual or threatened breach hereunder, the aggrieved Party may seek equitable relief (including specific performance, temporary or permanent restraining orders, or other equitable relief) from any court of competent jurisdiction without first submitting to the dispute resolution procedures set forth in Article 13 (Dispute Resolution). |
ARTICLE 14
MISCELLANEOUS
14.1 | Entire Agreement; Amendment. This Agreement, including the Schedules hereto, sets forth the complete, final, and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions, and understandings between the Parties with respect to the subject matter hereof and supersedes, as of the Effective Date, all prior term sheets, agreements and understandings between the Parties with respect to the subject matter hereof. No subsequent alteration, amendment, change, or addition to this Agreement will be binding upon the Parties unless reduced to writing and signed by an authorized representative of each Party. |
14.2 | Force Majeure. Neither Party will be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performance of its obligations under this Agreement to the extent that such performance is caused by or results from causes beyond reasonable control of the affected Party and the nonperforming Party promptly provides notice of the prevention to the other Party. Such excuse will be continued so long as the condition constituting force majeure continues and the nonperforming Party makes reasonable efforts to remove the condition. For purposes of this Agreement, force majeure will include conditions beyond the control of the Parties, including an act of God, war (whether war be declared or not), civil commotion, terrorist act, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm, or like catastrophe. |
14.3 | Notices. Any notice required or permitted to be given under this Agreement will be in writing, will specifically refer to this Agreement, and will be addressed to the appropriate Party at the address |
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specified below or such other address as may be specified by such Party in writing in accordance with this Section 14.3 (Notices), and will be deemed to have been given for all purposes (a) when delivered, if hand-delivered, or sent by email on a Business Day, (b) on the next Business Day if sent by a reputable international overnight courier service, or (c) five Business Days after mailing, if mailed by first-class certified or registered airmail, postage prepaid, return receipt requested. Unless otherwise specified in writing, the mailing addresses of the Parties will be as described below:
14.4 | No Strict Construction; Interpretation. This Agreement has been prepared jointly and will not be strictly construed against either Party. Any ambiguities in this Agreement will not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “include,” “includes,” and “including” are not limiting; (b) “hereof,” “hereto,” “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) words of one gender include the other gender; (d) references to a contract or other agreement mean such contract or other agreement as from time to time amended, modified or supplemented; (e) references to a Person are also to its permitted successors and assigns; (f) references to an “ARTICLE,” “Section,” or “Schedule” refer to an ARTICLE or Section of, or Schedule to, this Agreement, unless expressly stated otherwise; (g) the word “or” will not be exclusive; (h) references to “written” or “in writing” include in electronic form; (i) the word “will” will be construed to have the same meaning and effect as the word “shall”; (j) references to a law include any amendment or modification to such law and any rules and regulations issued thereunder, whether such amendment or modification is made, or issuance of such rules and regulations occurs, before or after the date of this Agreement; and (k) headings of each ARTICLE and Section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular ARTICLE or Section. |
14.5 | Assignment. CASI may not assign or transfer this Agreement (in whole or in part) or any rights or obligations hereunder without the prior written consent of TIANSHI, except that CASI may make such an assignment (in whole or in part) without TIANSHI’s consent to (a) Affiliates or (b) a successor to all or substantially all of the business of CASI to which this Agreement relates, whether by merger, sale of stock, sale of assets, license, or other transaction or series of transactions; provided that any permitted assignee undertakes to TIANSHI to be bound by the terms of this Agreement and perform all the obligations of CASI hereunder. TIANSHI may not assign or transfer this Agreement (in whole or in part) or any rights or obligations hereunder without the |
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prior written consent of CASI, except that TIANSHI may make such an assignment (in whole or in part) without CASI’s consent to (a) its Affiliates or (b) a successor to all or substantially all of the business of TIANSHI to which this Agreement relates, whether by merger, sale of stock, sale of assets, license, or other transaction or series of transactions but only if such assignee undertakes to CASI in writing to be bound by the terms of this Agreement and perform all the obligations of TIANSHI hereunder. Any assignment or attempted assignment by either Party in violation of the terms of this Section 14.5 (Assignment) will be null, void, and of no legal effect.
14.6 | Performance by Affiliates. TIANSHI may discharge any obligations and exercise any right hereunder through any of its Affiliates. TIANSHI hereby guarantees the performance by its Affiliates of TIANSHI’s obligations under this Agreement, and will cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by TIANSHI’s Affiliates of any of TIANSHI’s obligations under this Agreement is a breach by TIANSHI, and CASI may proceed directly against TIANSHI without any obligation to first proceed against TIANSHI’s Affiliates. |
14.7 | Further Actions. Each Party agrees to execute, acknowledge, and deliver such further instruments, and to perform all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. |
14.8 | Severability. If any one or more of the provisions of this Agreement are held to be invalid or unenforceable by any court of competent jurisdiction from which no appeal can be or is taken, then such provision or provisions will be considered severed from this Agreement and will not serve to invalidate any remaining provisions hereof. The Parties will make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the Parties when entering this Agreement may be realized. |
14.9 | Binding Effect; No Third Party Beneficiaries. As of the Effective Date, this Agreement will be binding upon and inure to the benefit of the Parties and their respective permitted successors and permitted assigns. Except as expressly set forth in this Agreement, no Person other than the Parties and their respective Affiliates and permitted assignees hereunder will be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement. |
14.10 | No Implied Waivers; Rights Cumulative. No failure on the part of CASI or TIANSHI to exercise, and no delay in exercising any Party’s rights, powers, remedies, or privileges under this Agreement, or provided by Law (whether at law, in equity, or otherwise), will impair, prejudice or constitute a waiver as to a particular default or breach of this Agreement, nor will any single or partial exercise of any such right, power remedy or privilege preclude any other or further exercise thereof such Party’s rights to the future enforcement of its rights under this Agreement, except with respect to an express written and signed waiver relating to a particular matter for a particular period of time. The rights and remedies of the Parties under this Agreement are cumulative and not exclusive and, accordingly, are in addition to and not in lieu of any other rights and remedies of the Parties at law or in equity. |
14.11 | Independent Contractors. Each Party will act solely as an independent contractor, and nothing in this Agreement will be construed to give either Party the power or authority to act for, bind, or commit the other Party in any way. Nothing herein will be construed to create the relationship of partners, principal and agent, or joint venture partners between the Parties. |
14.12 | English Language; Governing Law. This Agreement was prepared in the English language, which language will govern the interpretation of, and any dispute regarding, the terms of this |
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Agreement. This Agreement and all disputes arising out of or related to this Agreement or any breach hereof will be governed by and construed under the laws of the State of Delaware, without giving effect to any choice of law principles that would require the application of the laws of a different state or country. Subject to Article 13 (Dispute Resolution), the Parties hereby submit to the sole and exclusive jurisdiction of the federal and state courts in Wilmington, Delaware, for any action, suit, or other proceeding arising under or relating to this Agreement, and the Parties hereby irrevocably waive any right to object to the personal jurisdiction of such courts over the Parties, venue in such courts, or service of process issued or authorized by such courts.
14.13 | Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. This Agreement may be executed by facsimile or electronically transmitted signatures and such signatures will be deemed to bind each Party as if they were original signatures. |
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized officers as of the Effective Date.
CASI PHARMACEUTICALS, INC. | |
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By: | |
Name: Larry ZHANG | |
Title: President | |
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BEIJING TIANSHI TONGDA PHARMACEUTICALS TECHNOLOGY CO., LTD | |
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By: | |
Name: [***] | |
Title: [***] | |
[Signature Page to Sublicense Agreement]
SCHEDULE 1.4
ADIMAB AGREEMENT KEY TERMS
ARTICLE 1
DEFINITIONS
Capitalized terms not defined in this Schedule 1.4 (Adimab Agreement Key Terms) will have the meaning set forth in the Adimab Agreement.
1.4“Adimab Materials” means any tangible biological or chemical materials (including all vectors, antibodies and other Know-How in the form of tangible biological or chemical materials) provided by Adimab to (a) Tusk under the Original Tusk Agreement or (b) Black Belt under a Research Program (other than commercially or publicly available materials), including quantities of Program Antibodies (and DNA encoding these Program Antibodies), but excluding from and after the time of Option exercise for the relevant Target any quantities of Optioned Antibodies (and DNA encoding these Optioned Antibodies) provided to (a) Tusk under the Original Tusk Agreement or (b) Black Belt for such Target.
1.5“Adimab Platform Patents” means all Patents Adimab or any of its Affiliates Controls during the term of this Agreement that claim or Cover Adimab Platform Technology. For clarity, Adimab Platform Patents exclude Program Antibody Patents.
1.6“Adimab Platform Technology” means (a) the discovery and optimization of antibodies via methods proprietary to Adimab that include the use of synthetic DNA antibody libraries and engineered strains of yeast, (b) all methods, materials and other Know-How proprietary to Adimab used in the foregoing and (c) platforms embodying, components, component steps and other portions of any of the foregoing in (a) or (b). For clarity, Adimab Platform Technology includes Adimab proprietary technology used in the discovery and optimization of any Program Antibody, but does not include the specific composition of such Program Antibody (or product containing a Program Antibody). For further clarity, Adimab’s proprietary Bispecific constructs are not considered Adimab Platform Technology.
1.7“Adimab Platform Technology Improvement” means all Know-How developed or discovered in the course of a Research Program, and all Program Inventions (and Patents claiming them), in each case that constitute. Cover, claim or are directed to Adimab Platform Technology, including any and all improvements, enhancements, modifications, substitutions, alternatives or alterations to Adimab Platform Technology.
1.9“Affiliate” means an entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with a Party. For this purpose, “control” means the ownership of fifty percent (50%) or more of the voting securities entitled to elect the directors or management of the entity, or the actual power to elect or direct the management of the entity. For clarity, neither DROIA Invest nor any of its portfolio companies shall be deemed an Affiliate of BLACK BELT solely by reason of DROIA Invest’s equity ownership in BLACK BELT and/or such other portfolio companies.
1.12“Back-Up Candidate” has the meaning set forth in Section 4.4 (Milestone Payments).
1.13“Bispecific” means an antibody with at least two binding regions which are distinct from one another. For example, the format commonly known as a “Morrison Construct” is a Bispecific. It expected that Bispecifics created under this Agreement and/or the Original Tusk Agreement will have at least one binding region directed to a Target in a Research Program (i.e., CD38) and [***]
Schedule 1.4 - 1
1.17“BLACK BELT Materials” means (a) any tangible biological or chemical materials (including antigen samples, antibodies and other Know-How in the form of tangible biological or chemical materials, including related sequences, clinical, biological or structural information) provided by (a) Tusk under the Original Tusk Agreement or (b) BLACK BELT, in each case to Adimab under a Research Program (other than commercial material purchased by BLACK BELT or Tusk and delivered to Adimab), and (b) from and after the time of the Option exercise for a Target, the quantities of Optioned Antibody to such Target provided to (a) Tusk under the Original Tusk Agreement or (b) BLACK BELT by Adimab under this Agreement. For clarity, any physical quantities of, and the sequence of, any antibodies against the BLACK BELT Target shall constitute BLACK BELT Materials.
1.19“BLACK BELT Target” means a Target selected by BLACK BELT as the second Target for Bispecifics to be generated under the Research Program (in addition to the first Target, CD38). As of the Original Tusk Agreement Date, the Parties expect that the BLACK BELT Target shall be [***] . During the Research Term, BLACK BELT may substitute the BLACK BELT Target by written notification to Adimab; provided, however, that, if such substitution substantially changes the scope or complexity of any of the Research Programs, the Parties will discuss and agree on an amendment of a Research Plan (including the budget contained therein) to reflect such substitution.
1.25“Combination Product” means a product containing an Optioned Antibody as well as one or more other active therapeutic ingredient or a device or other component sold as a single product. Notwithstanding the foregoing, antibody-drug conjugates and Bispecifics shall be deemed not to be Combination Products.
1.26“Confidential Information” has the meaning set forth in Section 6.1(a) (General Confidentiality Obligations).
1.27“Control” means, with respect to any Know-How or Patent, possession by a Party, whether by ownership or license (other than pursuant to this Agreement) of the ability to grant a license or sublicense as provided for in this Agreement without violating the terms of any written agreement with any Third Party.
1.28“Cover” means, with respect to a particular item and a particular Patent, that such Patent claims, in any of the countries of manufacture, use, and/or sale, (a) the composition of such item; and/or (b) a method of making or using such item.
1.33“Excluded Technology” means technology (and the Patents that Cover such technology) related to anything other than the manner in which Adimab constructed its antibody libraries, the manner in which Adimab discovers and/or optimizes the antibody, the Adimab Platform Technology, or its operation generally. Excluded Technology includes:
(a)product formulation;
(b)manufacturing or production;
(c) | the sequence of the CDRs of, or any modification to, a Program Antibody [***] |
(d) | technology used in activities performed by or on behalf of BLACK BELT or its Licensees, including assays, in vivo testing, and modifications to Program Antibodies; |
(e) | any Target (including the BLACK BELT Target and CD38) or any mechanism of action via interaction with a Target or claiming antibodies based on their interaction with a Target or their having been tested for their activity against a Target in a biological assay; and |
Schedule 1.4 - 2
(f) | any particular Bispecific construct, but excluding any antibody framework common in Adimab’s antibody library(ies). |
1.34“Field” means all diagnostic, therapeutic or prophylactic uses for human and/or animals.
1.42“Know-How” means all technical information and know-how, including (i) inventions, discoveries, trade secrets, data, specifications, instructions, processes, formulae, materials (including cell lines, vectors, plasmids, nucleic acids and the like), methods, protocols, expertise and any other technology, including the applicability of any of the foregoing to formulations, compositions or products or to their manufacture, development, registration, use or marketing or to methods of assaying or testing them or processes for their manufacture, formulations containing them or compositions incorporating or comprising them, and (ii) all data, instructions, processes, formula, strategies, and expertise, whether biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, analytical, clinical or otherwise and whether related to safety, quality control, manufacturing or other disciplines.
1.43“Lead Product” has the meaning set forth in Section 4.4 (Milestone Payments).
1.44“Licensee” means a Third Party to whom BLACK BELT has granted, directly or indirectly, rights to research, develop, manufacture, and/or commercialize Program-Benefited Antibodies; provided however, that Licensees shall exclude fee-for-service contract research organizations or contract manufacturing organizations acting in such capacity. For clarity, sublicensees of the license granted by Adimab to BLACK BELT pursuant to Section 3.2 (Commercial Rights) shall be Licensees.
1.46“Marketing Approval” each means, with in any given country, approval to market a Product legally as a drug or biologic, including approval of a Biologic License Application (as defined in the U.S. Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder (21 C.F.R. §§ 600-680)) in the United States, or approval of a comparable filing in the United States or any other jurisdiction. Pricing approval need not be obtained in order for Marketing Approval to be achieved.
1.47“Milestone Event” has the meaning set forth in Section 4.4 (Milestone Payments).
1.48“Milestone Payment” has the meaning set forth in Section 4.4 (Milestone Payments).
1.50“Net Sales” means the gross amounts invoiced for a Program Antibody or Product by BLACK BELT, its Affiliates and Licensees for sales or other commercial disposition of such Program Antibody or Product to a Third Party purchaser, less the following:
(a) | trade and quantity discounts (other than early pay cash discounts) actually allowed with respect to such sales which effectively reduce the selling price and are appropriately deducted from sales under appropriate accounting principles, consistently applied; |
(b) | returns, rebates, chargebacks and other allowances actually allowed with respect to such sales; |
(c)retroactive price reductions that are actually allowed or granted;
(d) | deductions to the gross invoice price of Program Antibody or Product imposed by regulatory authorities or other governmental entities; |
(e) | sales (such as VAT or its equivalent) and excise taxes, other consumption taxes, and customs duties (excluding any taxes paid on the income from such sales) to the extent the selling person is not otherwise entitled to a credit or a refund for such taxes or duties; and |
Schedule 1.4 - 3
(f) | a fixed amount equal to two percent (2%) of the amount invoiced to cover bad debt, early payment cash discounts, transportation and insurance. |
If any Optioned Antibody is sold as part of a Combination Product, the Net Sales for such Optioned Antibody shall be determined by multiplying the applicable Net Sales of the Optioned Antibody (as determined without the application of this paragraph) by the fraction, A/(A+B), where A is the average per unit sale price of the Optioned Antibody component of the Combination Product when sold separately as a stand-alone product in finished form in the country in which the Combination Product is sold and B is the average per unit sale of the other active ingredients, device and/or component contained in the Combination Product when sold separately as stand-alone products in finished form in the country in which the Combination Product is sold, in each case during the applicable royalty reporting period or if sales of such stand-alone products did not occur in such country in the applicable period, then in the most recent royalty reporting period in which such sales of such stand-alone products occurred in such country. If such average sale prices cannot be determined. Net Sales shall be mutually agreed upon by the Parties based on the relative value contributed by each component, such agreement not to be unreasonably withheld.
1.51“Option” has the meaning set forth in Section 3.2(a) (Option).
1.54“Optioned Antibody” means any Program Antibody (a) selected by BLACK BELT pursuant to Section 3.2(a) (Option) or (b) have been selected by Tusk pursuant to Section 3.2(a) (Option) of the Original Tusk Agreement, and any Program-Benefited Antibody generated from such Program Antibody. For clarity, the Optioned Antibodies for the CD38 Research Program include the [***] Program Antibodies listed in Exhibit A. BLACK BELT may option an additional [***] Program Antibodies.
1.56“Original Tusk Agreement” has the meaning set forth in the recitals.
1.58“Party” means Adimab or BLACK BELT.
1.59“Patent” means any patent application or patent anywhere in the world, including all of the following categories of patents and patent applications, and their foreign equivalents: provisional, utility, divisional, continuation, continuation-in-part, and substitution applications; and utility, re-issue, re-examination, renewal and extended patents, and patents of addition, and any Supplementary Protection Certificates, restoration of patent terms and other similar rights.
1.63“Product” means any actual or potential product (including formulation) that comprises or contains one or more Optioned Antibodies (whether or not such product is currently under evaluation for safety, efficacy, or other factors). For clarity, it is possible that there will be multiple Products against a single Target and for further clarity, a Bispecific is a distinct Product from Products comprised of IgGs against one of the Targets engaged by the Bispecific.
1.64“Program Antibody” means (a) each antibody that has the same sequence of any antibody generated from use of the Adimab Platform Technology and delivered by Adimab to Tusk and/or BLACK BELT under the CD38 Research Program or [***] (including Bispecifics) and (b) each antibody that has the same sequence of any antibody generated from use of the Adimab Platform Technology and delivered by Adimab to BLACK BELT under a Research Program (including Bispecifics). It is understood and agreed that (i) it is the intention of the Parties that Adimab will send samples as well as sequence information with respect to each Program Antibody as agreed upon by the Parties; and (ii) even if Adimab sends only nucleic acid sequences to BLACK BELT (or has sent such nucleic acid sequences to Tusk under the Original Tusk Agreement), antibodies encoded by such nucleic acid sequences are Program Antibodies in addition to antibodies samples of which are physically delivered to BLACK BELT under this Agreement (or to Tusk under the Original Tusk Agreement) so long as: (a) Adimab first coordinates with BLACK BELT prior to sending such sequences to confirm that BLACK BELT wishes to receive such sequences; and (b) if BLACK
Schedule 1.4 - 4
BELT identifies any sequences with respect to which Adimab did not deliver protein, then Adimab delivers to BLACK BELT the protein samples of such antibodies within thirty (30) days after BLACK BELT’s identification.
1.65“Program Antibody Patents” means, for each Target, Patents that (a) Cover a Program-Benefited Antibody or any Product and (b) do not Cover Adimab Platform Technology or Adimab Platform Technology Improvements. For clarity, Patents Covering the composition or sequence of a Program-Benefited Antibody, the nucleic acid sequence encoding such Program- Benefited Antibody, and/or any use of such Program-Benefited Antibody in the Field shall be deemed a Program Antibody Patent.
1.66“Program-Benefited Antibody” means any Program Antibody and any modified or derivative form (including chemically modified versions) of any such Program Antibody created by or on behalf of BLACK BELT (or Tusk under the Original Tusk Agreement) or its Licensees using the materials and/or sequence of such Program Antibody, including (a) any fragment of, pegylated version of (whether or not including amino acid changes) of a Program Antibody, (b) any chemically-modified versions (including associated amino acid substitutions) of any Program Antibody or the nucleic acid coding for it designed or derived using the materials and/or sequence of any Program Antibody, and (c) an antibody designed or derived using the sequence of any Program Antibody or the nucleic acid coding for it.
1.68“Program Inventions” means, for each Target, any invention, whether or not patentable, that is conceived and/or first reduced to practice in the course of or as a result of the activities conducted by the Parties in the course of the Research Program under this Agreement pursuant to a Research Plan.
1.72“Research Program” means a program of research conducted under this Agreement (or under the Original Tusk Agreement) in accordance with a Research Plan. For clarity, the Research Programs completed under the Original Tusk Agreement discovered antibodies against CD38 [***] . This Agreement contemplates [***] additional Research Programs, each of which may include one (1) or more Discovery Campaign(s) and one (1) or more Bispecific Campaign(s), as agreed to by the Parties and set forth in a Research Plan.
1.74“Research Term” means the period beginning on the Original Tusk Agreement Date and ending, on a Research Program-by-Research Program basis, when Adimab delivers final antibodies (including Bispecifics) against the applicable Target under a Research Plan; provided, however, that in no event will a Research Term exceed [***] without the Parties’ mutual written agreement [***]
1.73“Royalty Payment” has the meaning set forth in Section 4.5(a) (Royalties).
1.77“Target” means a target selected by (a) BLACK BELT pursuant to Section 2.1 (Research Programs) or (b) Tusk under the Original Tusk Agreement. For clarity, CD38 [***] are Targets.
1.78“Third Party” means an entity other than a Party or a Party’s Affiliates.
1.80“Third Party Patent Licenses” means Patent licenses obtained by BLACK BELT after BLACK BELT determines in good faith that one or more such Patent licenses from Third Parties are reasonably required by BLACK BELT because such Patents Cover the way in which Program Antibodies were discovered or optimized using Adimab Platform Technology under a Third Party Patent Covering the Adimab Platform Technology (including the construction of Adimab’s proprietary libraries), in order to avoid Third Party claims of patent infringement relating to the discovery or optimization of a Optioned Antibody. For clarity, Third Party Patent Licenses explicitly excludes licenses to any Excluded Technology.
1.81“Tusk” means TUSK Therapeutics n.v., a Belgian corporation with a principal office at Brusselsesteenweg 11, 1860 Meise, Belgium.
Schedule 1.4 - 5
1.82“Valid Claim” means a claim of an Option Antibody Program Patent, which claim (i) is issued and unexpired and has not been found to be unpatentable, invalid or unenforceable by a court or other authority having jurisdiction, from which decision no appeal is taken, will be taken or can be taken; or (ii) is pending and has not been finally abandoned or finally rejected and has been pending for no more than eight (8) years.
ARTICLE 2
RESEARCH PROGRAMS
2.6Certain Restrictions on the Use of Antibodies
(b) | BLACK BELT Restrictions. BLACK BELT hereby covenants that it will not, and it will not grant any right to its Affiliates and its Licensees to, develop or commercialize any Program-Benefited Antibody, or product containing any Program-Benefited Antibody (other than the activities permitted hereunder during the Research Term and the Evaluation Term for the purpose of determining whether or not to exercise the Option for such Target) except as Optioned Antibodies and Products under this Agreement. |
ARTICLE 3
LICENSES; OPTION; DEVELOPMENT & COMMERCIALIZATION
3.1Commercial Rights
(b)Development and Commercialization License and Assignment
(ii) | License. Adimab hereby, effective on (a) BLACK BELT’s exercise of the Option and (b) Tusk’s exercise of the Option under the Original Tusk Agreement in respect of the Optioned Antibodies against CD38 listed in Exhibit A (together with all of those further up to [***] CD38 Antibody sequences that are specified by BLACK BELT to be Optioned Antibodies), grants to BLACK BELT a worldwide, royalty-bearing during the Royalty Term, non-exclusive, sublicenseable (solely as provided in Section 3.2(b)(iii) (Licensees)) license under the Adimab Platform Patents, if any, which are not assigned to BLACK BELT pursuant to Section 3.2(b)(i) (Assignment), in the Field, to research, develop, have developed, make, have made, use, sell, offer to sell, import and export the Optioned Antibodies and Products during the term of this Agreement. For clarity, the license to BLACK BELT excludes the right to [***] |
(c) | Licensees. Any license of any Optioned Antibody and any sublicense of the rights granted under Section 3.2(b)(ii) (License) shall be made solely pursuant to agreements that are consistent with all relevant terms and conditions of this Agreement and to Licensees who explicitly agree in writing to comply with all applicable terms, including Section 9.3 (Commitments Regarding Program-Benefited Antibodies) of this Agreement hereof. BLACK BELT shall remain responsible for all payments and other performance obligations due under this Agreement, notwithstanding any license or sublicense that it may grant. |
3.3Diligent Development and Commercialization. BLACK BELT shall devote Commercially Reasonable Efforts to preclinically and if it exercises the Option, clinically develop, seek Marketing
Schedule 1.4 - 6
Approval for, and launch and actively commercialize at least one (1) Optioned Antibody discovered in each Research Program. Annually, BLACK BELT will provide Adimab with a written report of Product progress in development and commercialization, BLACK BELT’s activities in that regard. If requested by Adimab, BLACK BELT shall meet with Adimab to discuss such report at least annually.
ARTICLE 4
FINANCIAL TERMS
4.4Milestone Payments. BLACK BELT shall report in writing to Adimab the achievement of each event (each, a “Milestone Event”) and pay the corresponding milestone payment (each, a “Milestone Payment”) to Adimab, each within [***] days after the achievement of the corresponding Milestone Event in the following table:
Milestone Event | Milestone Payment |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
Milestones Payments are payable [***] per Product, the first time each is achieved for such Product. If a subsequent Milestones Event is achieved for any Product without a prior Milestone Event having been achieved for that Product, then BLACK BELT shall pay the Milestone Payment for such previous Milestone Event along with the payment for the most recently achieved Milestone Event.
In the event that a milestone event that was already achieved with respect to a Lead Product is also achieved with respect to a Back-Up Candidate to such Lead Product prior to receipt of Marketing Approval for the Lead Product, then BLACK BELT’s obligation to pay the corresponding Milestone Payment with respect to the achievement of the applicable milestone event with respect to such Back-Up Candidate shall be . If BLACK BELT continues to develop such Back-Up Candidate after receipt of Marketing Approval for the Lead Product, [***] If BLACK BELT promptly discontinues all development activities with respect to a Back-Up Candidate upon Marketing Approval of the Lead Product and provides Adimab with written notice thereof within [***] days after such Marketing Approval, BLACK BELT will not be obligated to pay the deferred Milestone Payments for such Back-Up Candidate. If BLACK BELT continues to develop such Back-Up Candidate after discontinuation of development of the Lead Product (but prior to Marketing Approval of such Lead Product), [***] “Back-Up Candidate” means a Product that (a) is directed to the same Target (or, with respect to a Bispecific, the same set of targets) as another Product (the “Lead Product”), and (b) has been selected by BLACK BELT as a back-up to the Lead Product for development and commercialization.
4.5Royalties.
(a) | Royalty Payments. As to each Product sold during the applicable Royalty Term, on a Product-by-Product basis, BLACK BELT shall pay Adimab the following royalties, based on the royalty rate applicable to the relevant portion of annual worldwide Net Sales for such Product (“Royalty Payments”): |
Schedule 1.4 - 7
(b) | Royalty Buy-Down. [***]and then, with respect to such Product, the royalty rate shall be [***] instead of the royalty rates described in Section 4.5(a) (Royalty Payments), subject to further adjustment as set forth in Section 4.5(c) (Adjustment for Third Party IP), as applicable. |
(c) | Adjustment for Third Party IP. If BLACK BELT enters into any Third Party Patent Licenses, then [***] of the net sales royalties actually paid to the Third Party under the Third Party Patent License with respect to Net Sales of any given Product in any given calendar quarter in any given country may be offset against the Royalty Payment, if any, that would otherwise have been payable to Adimab with respect to such same Net Sales; provided, however, that in no event shall the royalty owed to Adimab be reduced by more than [***] than the payment which would otherwise be due hereunder. |
[***]
(d) | Adjustment for Lack of Patent Protection. [***] |
4.6Quarterly Payment Timings. All royalties due under Section 4.5 (Royalties) shall be paid quarterly within [***] days after the end of the relevant calendar quarter for which royalties are due.
4.8Payment Method. All payments due under this Agreement to Adimab shall be made by bank wire transfer in immediately available funds to an account designated by Adimab. All payments hereunder shall be made in the legal currency of the United States of America, and all references to or “dollars” shall refer to United States dollars (i.e., the legal currency of the United States).
4.9Taxes. [***]
4.10Records; Inspection.
(a) | BLACK BELT shall keep complete and accurate records of its sales and other dispositions (including use in clinical trials, or provision on a compassionate use basis or as marketing samples) of Program Antibody and Product including all records that may be necessary for the purposes of calculating all payments due under this Agreement. BLACK BELT shall make such records available for inspection by an accounting firm selected by Adimab at BLACK BELT’s premises on reasonable notice during regular business hours no more frequently than once per calendar year. Adimab shall keep complete and accurate records of its FTEs expended on each Research Program. Adimab shall make such records available for inspection by an accounting firm selected by BLACK BELT at Adimab’s premises on reasonable notice during regular business hours no more frequently than once per calendar year. |
(b) | At Adimab’s expense no more than [***], Adimab has the right to retain an independent |
Schedule 1.4 - 8
certified public accountant from a nationally recognized (in the U.S.) accounting firm to perform on behalf of Adimab an audit, conducted in accordance with U.S. generally accepted accounting principles (GAAP), of such books and records of BLACK BELT as are deemed necessary by the independent public accountant to report on Net Sales for the period or periods requested by Adimab and the correctness of any report or payments made under this Agreement.
(c) | If the audit reveals an underpayment, BLACK BELT shall promptly pay to Adimab the amount of such undisputed underpayment plus interest in accordance with Section 4.14 (Late Payments). If the audit reveals that the undisputed monies owed by BLACK BELT to Adimab has been understated by more than [***] for the period audited, BLACK BELT shall, in addition, pay [***] . If the audit reveals an overpayment, Adimab shall promptly refund BLACK BELT the amount of such undisputed overpayment. |
4.12Foreign Exchange. If any currency conversion shall be required in connection with the calculation of amounts payable hereunder, such conversion shall be made using the exchange rates reported on the [***] business day prior the payment due date for the purchase and sale of U.S. dollars, as reported by the Wall Street Journal. With any payment in relation to which a currency conversion is performed to calculate the amount of payment due, BLACK BELT shall provide to Adimab a true, accurate and complete copy of the exchange rates used in such calculation.
4.13Non-refundable, non-creditable payments. Each payment that is required under this Agreement is non-refundable (except as set forth in Section 4.10(c)) and non-creditable except to the extent set forth in Section 4.5(c) (Adjustment for Third Party IP).
4.14Late Payments. Any amount owed by BLACK BELT to Adimab under this Agreement that is not paid within the applicable time period set forth herein will accrue interest at the rate of [***]
ARTICLE 6
CONFIDENTIALITY; PUBLICITY
6.1General Confidentiality Obligations.
(a) | Any and all information disclosed or submitted in writing or in other tangible form (or if disclosed orally, that is indicated to be confidential at the time of disclosure) to one Party by or on behalf of the other Party under this Agreement or by Tusk under the Original Tusk Agreement or that certain Confidentiality Agreement between Tusk and Adimab dated September 22, 2014 is the “Confidential Information” of the disclosing Party and any such Confidential information of Tusk shall be the Confidential Information of BLACK BELT. In addition, information embodied in Adimab Materials is Adimab’s Confidential Information, and information embodied in the BLACK BELT Materials is BLACK BELT’s Confidential Information. For clarity. [***] |
(b) | To avoid doubt, sequence information [***] with respect to Program Antibodies shall be deemed the Confidential Information of both BLACK BELT and Adimab with the confidentiality and non-use obligations set forth in this ARTICLE 6 being applicable to both Parties, except that [***]. |
(c) | Each Party shall receive and maintain the other Party’s Confidential Information in strict confidence. Neither Party shall disclose any Confidential Information of the other Party to |
Schedule 1.4 - 9
any Third Party. Neither Party shall use the Confidential Information of the other Party for any purpose other than as required to perform its obligations or exercise its rights hereunder. Each Party may disclose the other Party’s Confidential Information to the receiving Party’s employees and Third Party contractors (including collaborators, consultants and advisors, and in the case of BLACK BELT, including DROIA n.v.) requiring access thereto for the purposes of this Agreement, provided, however, that prior to making any such disclosures, each such person shall be bound by written agreement to maintain Confidential Information in confidence and not to use such information for any purpose other than in accordance with the terms and conditions of this Agreement. Each Party agrees to take all steps necessary to ensure that the other Party’s Confidential Information shall be maintained in confidence including such steps as it takes to prevent the disclosure of its own proprietary and confidential information of like character. Each Party agrees that this Agreement shall be binding upon its employees and contractors involved in the Research Program. Each Party shall take all steps necessary to ensure that its employees and contractors shall comply with the terms and conditions of this Agreement. The foregoing obligations of confidentiality and non-use shall survive, and remain in effect for a period of [***] years from, the termination or expiration of this Agreement in accordance with ARTICLE 9 (Term).
6.2Exclusions from Nondisclosure Obligation. The nondisclosure and nonuse obligations in Section 6.1 (General Confidentiality Obligations) shall not apply to any Confidential Information to the extent that the receiving Party can establish by competent written proof that it:
(a)at the time of disclosure is publicly known;
(b) | after disclosure, becomes publicly known by publication or otherwise, except by breach of this Agreement by such Party; |
(c) | was in such Party’s possession in documentary form at the time of the earlier of disclosure hereunder and disclosure under the agreement referred to in Section 6.1 (General Confidentiality Obligations); |
(d) | is received by such Party from a Third Party who has the lawful right to disclose the Confidential Information and who shall not have obtained the Confidential Information either directly or indirectly from the disclosing Party; or |
(e) | is independently developed by such Party (i.e., without reference to Confidential Information of the disclosing Party). |
6.3Required Disclosures. If either Party is required, pursuant to a governmental law, regulation or order, to disclose any Confidential Information of the other Party, the receiving Party (i) shall give advance written notice to the disclosing Party, (ii) shall make a reasonable effort to assist the other Party to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the law or regulation required and (iii) shall use and disclose the Confidential Information solely to the extent required by the law or regulation.
6.4Terms of Agreement. The terms of this Agreement are the Confidential Information of both Parties. However, each Party shall be entitled to disclose the terms of this Agreement under legally binding obligations of confidence and limited use to: legal, financial and investment banking advisors; and potential and actual investors, acquirers and licensees or sublicensees doing diligence and counsel for the foregoing. In addition, if legally required, a copy of this Agreement may be filed by either Party with the SEC (or
Schedule 1.4 - 10
relevant ex-U.S. counterpart). In that case, the filing Party will if requested by the other Party diligently seek confidential treatment for terms of this Agreement for which confidential treatment is reasonably available, and shall provide the non-filing Party reasonable advance notice of the terms proposed for redactions and a reasonable opportunity to request that the filing Party make additional redactions to the extent confidential treatment is reasonably available under the law. The filing Party shall seek and diligently pursue such confidential treatment requested by the non-filing Party.
6.5Return of Confidential Information. Promptly after the termination or expiration of this Agreement for any reason, each Party shall return to the other Party all tangible manifestations of such other Party’s Confidential Information at that time in the possession of the receiving Party.
6.6Publicity. Adimab may publish a press release, the text of which will be agreed by the Parties after the Effective Date. Other than repeating information in such press release (or any subsequent mutually agreed press release), neither Party will generate or allow any further publicity regarding this Agreement or the transaction or research contemplated hereunder in which the other Party is identified, without giving the other Party the opportunity to review and comment on the press release. The Parties recognize the importance of announcing Option and the achievement of Milestones, and that Adimab is entitled to disclose these occurrences. Accordingly, the Parties hereby agree that each such event shall be publicly announced by the Parties if requested by Adimab, and the Parties shall mutually agree upon the text of a press release to announce each such event. BLACK BELT shall not unreasonably withhold its consent to the manner in which Adimab proposes to make such disclosure. [***]
6.7Certain Data. [***]
ARTICLE 8
INDEMNIFICATION
8.2Indemnification by BLACK BELT. BLACK BELT hereby agrees that it and its Licensees shall Indemnify Adimab, its Affiliates and its and their directors, officers, agents and employees (collectively, “Adimab Indemnitees”) from and against any and all Losses they may suffer as the result of Third-Party Claims arising out of or relating to (a) any breach of a representation or warranty made by BLACK BELT under ARTICLE 7 (Representations and Warranties), (b) BLACK BELT’s research, testing, development, manufacture, use, sale, distribution, licensing and/or commercialization of Program Antibodies and/or Products (or Program-Benefited Antibodies or products incorporating them), (c) the use by BLACK BELT or its Licensees of any Excluded Technology, and (d) contractual obligations of BLACK BELT and its Affiliates, except in each case to the extent of any Losses (i) attributable to the negligence or intentional misconduct of any Adimab Indemnitee, or (ii) arising out of any breach of a representation or warranty made by Adimab in ARTICLE 7 (Representations and Warranties).
Schedule 1.4 - 11
SCHEDULE 1.31
CASI PATENT RIGHTS
Filing date | Application no. | Status | Subject matter |
|---|---|---|---|
08 June 2017 | [***] | [***] | [***] |
08 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
09 June 2017 | [***] | [***] | [***] |
16 August 2017 | [***] | [***] | [***] |
16 August 2017 | [***] | [***] | [***] |
16 August 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
07 November 2017 | [***] | [***] | [***] |
8 June 2018 | [***] | [***] | [***] |
8 June 2018 | [***] | [***] | [***] |
8 June 2018 | [***] | [***] | [***] |
16 August 2018 | [***] | [***] | [***] |
16 August 2018 | [***] | [***] | [***] |
Schedule 1.31 - 1
SCHEDULE 1.38
CELLCA AGREEMENT KEY TERMS
6.License Fee, Down-Payment
(1) | In consideration of the License granted by CELLCA to TUSK under the FSLA in relation to this Work Order TUSK agrees to pay CELLCA a license fee and therefore agrees to pay to CELLCA a Down-Payment in an overall amount of: |
[***]
(2) | The Down-Payment shall become due and payable by TUSK to CELLCA |
(a) | in the amount of and |
(b) | in the amount of [***] |
(3) | The Down-Payment is payable [***] |
Schedule 1.38 - 1
SCHEDULE 1.73
LYOPHILIZATION MILESTONE SPECIFICATIONS
First Milestone Criteria:
[***]
Second Milestone Criteria:
[***]
Schedule 1.73 - 1
SCHEDULE 1.150
TSK011010 COMPOUND (ADI-19348)
[***]
Schedule 1.150 - 1
SCHEDULE 13.2
ARBITRATION PROCEDURES
The Parties have agreed the following matters in respect of any Dispute referred to arbitration under this Agreement:
1. | Number and Selection of Arbitrators. The number of arbitrators will be three, who will be selected as follows: each of TIANSHI and CASI will nominate one arbitrator, in the case of the claimant at the same time as serving the Notice of Arbitration and, in the case of the respondent, at the same time as serving the Answer, and those Party-nominated arbitrators will unanimously nominate the third arbitrator (who will act as president of the Arbitral Tribunal, referred to in this clause 1 as the “President Arbitrator”), within 10 Business Days after the appointment of the last Party-nominated arbitrator. Each of the three arbitrators will have the following qualifications (as applicable, the “Qualifications”): for any other dispute, the Qualifications must be an attorney who has been admitted to practice law for at least 10 years and who has significant experience in the pharmaceutical or biologics industry; provided that if a Party is unable to find an arbitrator with the applicable Qualifications to nominate with respect to a particular Dispute, then it may request the Administrator of the ICDR to find and appoint such an arbitrator on its behalf. If the Party-nominated arbitrators are unable to agree upon the nomination of the President Arbitrator within 10 Business Days after the nomination of the last Party-nominated arbitrator, then the Administrator of the ICDR will appoint such President Arbitrator (with the applicable Qualifications) within 10 Business Days thereafter. |
2. | Limitation of Damages. The Arbitral Tribunal will be empowered to award damages only to the extent of actual damages suffered, and only to the extent consistent with Section 9.4 (Limitation of Liability) of this Agreement, in each case, regardless of whether any such damages are contained in a proposal submitted by a Party. The Arbitral Tribunal will not be authorized to reform, modify, or materially change this Agreement. Each Party will bear an equal share of the arbitrators’ fees and any administrative fees of arbitration. |
3. | Evidence. Notwithstanding any provision of the Arbitration Rules each Party will be permitted to obtain production of documents pursuant to ARTICLE 3 of the International Bar Association Rules on the Taking of Evidence in International Arbitration as current on the date of this Agreement (the “IBA Rules”). |
Schedule 13.2 - 1
Exhibit 10.2
Certain confidential information contained in this document, marked by brackets and asterisk, has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K, because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
BUSINESS LOAN AGREEMENT
Borrower: | CASI PHARMACEUTICALS, INC |
| Lender: | East West Bank |
THIS BUSINESS LOAN AGREEMENT dated May 18, 2022, is made and executed between CASI PHARMACEUTICALS, INC ("Borrower") and East West Bank ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of May 18, 2022 and continue to the expiration date as may be extended to April 30, 2024 if through Borrower’s partner [******], NDA submission for [******] is no later than [******] as provided in this Agreement, and shall also continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.
LINE OF CREDIT. The Indebtedness includes a revolving line of credit. Advances under the Indebtedness, as well as directions for payment from Borrower's accounts, may be requested either orally or in writing by Borrower. Lender may, but need not require that all non-written requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person as described in the "Advance Authority" section below or (B) credited to any of Borrower's accounts with Lender.
ADVANCE AUTHORITY. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: WEI-WU HE, CEO/Chairman of CASI PHARMACEUTICALS, INC.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender's Security Interests; (4) evidence of insurance as required below; (5) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 9620 MEDICAL CENTER DR, STE 300, ROCKVILLE, MD 20850. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower's state of organization or any change in Borrower's name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.
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Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of
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the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.
Certification of Beneficial Owner(s). If Borrower is requested by Lender to provide a Certification of Beneficial Owner(s), the information included in the Certification of Beneficial Owner(s) is true and correct in all respects. “Certification of Beneficial Owner(s)” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially in form and substance satisfactory to Lender. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Additional Requirements. Borrower understands and agrees that while this Agreement is in effect, Borrower will maintain a financial condition indicated by the following statements at all times, unless otherwise noted:
Corporate Borrower Annual Statements. As soon as available, but in no event later than one hundred twenty ( 120 ) days after the end of each fiscal year, Borrower shall provide Lender with Borrower's balance sheet, income and expense statements, reconciliation of net worth and statement of cash flows and a certificate of compliance, with notes thereto for the year ended, audited by a certified public accountant satisfactory to Lender.
Corporate Borrower Interim Statements. As soon as available, but in no event later than thirty ( 30 ) days after the end of each month, Borrower shall provide Lender with sales, balance sheet, income and expense statements, reconciliation of net worth and statement of cash flows, with notes thereto for the period ended, prepared by Borrower.
Agings. Within thirty ( 30 ) days, or sooner, after the end of each month, Borrower shall provide Lender with a listing and aging by invoice date of all accounts receivable in detailed format acceptable to Lender.
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Projections. As soon as available, but in no event later than sixty (60) days after each year end, a twelve month company-prepared projections of the Borrower's operations in form and substance satisfactory to the Lender. .
All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Additional Requirements. Borrower understands and agrees that while this Agreement is in effect, Borrower will maintain a financial condition indicated by the following ratios at all times, unless otherwise noted:
Asset Coverage Ratio. Maintain an Asset Coverage Ratio (defined as sum of cash held at Lender, 80% of eligible accounts receivable and assets held for sale public securities divided by the outstanding balance on the Note) of not less than 1.20 to 1.00, tested monthly.
Liquidity. Maintain liquidity of greater than (i) [******] or (ii) [******] Remaining Months Liquidity (defined as the sum of cash held at all banks plus excess availability on the revolving line of credit evidenced by the Note divided by Average Monthly Cash Burn (defined as net income plus depreciation and amortization, plus share-based compensation, less unfunded capital expenditures) over last 3 months), tested monthly.
Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.
Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.
Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower's chief
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financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.
Depository Relationship. Maintain one or more deposit account(s) at Lender.
Compliance with "Know Your Customer" Requirements. Promptly following any request therefor, Borrower shall provide information and documentation reasonably requested by Lender for purposes of compliance with applicable “know your customer” requirements under the PATRIOT Act, the Beneficial Ownership Regulation or other applicable anti-money laundering laws, including but not limited to a Certificate of Beneficial Owner(s) acceptable to Lender if applicable.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation, guideline, or generally accepted accounting principle, or the interpretation or application of any thereof by any court, administrative or governmental authority, or standard-setting organization (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender's capital as a consequence of Lender's obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender's written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes, with the exception of insurance premiums paid by Lender with respect to motor vehicles, but including the payment of attorneys' fees and expenses, will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or
(3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.
Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral
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securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account and whether evidenced by a certificate of deposit). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.
Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within fifteen (15) days; or
(2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
Other Defaults Modified. Notwithstanding the section above entitled “Other Defaults”, Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or Agreement or in any of the Related Documents between Lender and Borrower; or any shareholder, member, trustor, or any owner of the Borrower also holding a controlling interest in any given entity’s common stock, membership interest, trust interest, or any other ownership interest (“Related Entity”), fails to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between Lender and the Related Entity.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.
CHOICE OF VENUE. If there is a lawsuit, the undersigned, and if more than one, each of the undersigned, agree upon Lender's request to submit to the jurisdiction of the courts of such county as Lender shall designate in the State of New York.
ELECTRONIC INSTRUCTIONS. Borrower desires to apply for Advances and instruct Lender regarding all other aspects of the Loan electronically, including but not limited to by electronic mail, internet, telex, telefax, facsimile and/or telecopy. Borrower agrees that Lender may act in accordance with electronically transmitted applications and instructions ("Electronic Instructions") subject to the following provisions: 1) Borrower's Electronic Instructions must be sent to Lender electronically only by means of such services and in such format(s) as may be approved from time to time by Lender
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in its sole discretion; 2) Borrower will provide to Lender, in writing and duly signed by Borrower, any reasonable security or verification procedures, and Lender may require additional security or verification procedures in its sole discretion; 3) Borrower hereby authorizes and instructs Lender to take all actions requested in any and all Electronic Instructions and agrees that each such Electronic Instruction will be deemed an original and, if sent in lieu of manually signed instructions, will be deemed to incorporate all of the terms and provisions of the Lender's standard form or format, if any, for such instructions; 4) Borrower recognizes and agrees that it will be obligated for any loan advance request and/or instruction pursuant to Electronic Instructions to the same extent as if such advance request and/or instruction were provided pursuant to Lender's standard form or Lender approved format(s) manually signed by Borrower; 5) Borrower agrees to indemnify and hold harmless Lender, its officers, directors, employees and affiliates against any and all liability, loss, cost, damages, attorneys' fees and other expenses which Lender may incur in reliance upon and pursuant to any and all of the Electronic Instructions received by Lender and purported to be sent by Borrower; 6) Lender is not responsible for checking electronic communications devices on a regular basis, and Borrower will make arrangements to assure Electronic Instructions have been sent to a current employee of Lender, and the employee of Lender has received and read the Electronic Instructions; 7) Lender is not responsible for delays, errors or omissions resulting from malfunction of electronic communications devices or from other conditions beyond the control of Lender; and 8) Lender is not responsible for misuse of or wrongful access to electronic communications devices by Borrower's representatives and employees nor for any delay in acting on Electronic Instructions caused by Electronic Instructions which Lender deems to be uncertain or unclear or incomplete.
USA PATRIOT ACT. Lender hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Act. Borrower shall, promptly following a request by Lender, provide all documentation and other information that Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act. For legal entity borrowers, Lender will require the legal entity to provide identifying information about each beneficial owner and/or individuals who have significant responsibility to control, manage or direct the legal entity.
CASH COLLATERAL ACCOUNT. Loan closing is subject to Borrower depositing $2,500,000.00 into an account maintained at Lender as additional collateral for the Loan pursuant to an assignment of deposit account executed by Borrower, in form and substance acceptable to Lender (“Cash Collateral Account”). Lender agrees to partially or fully release the Cash Collateral Account, as applicable, at such time Borrower complies with all of the following conditions to Lender’s satisfaction: (i) partial release of $1,500,000.00 within three (3) business days if through Borrower’s partner [******], [******]’s NDA application is submitted to [******] no later than [******] and performance meets projection; and (ii) full release of the Cash Collateral Account if Borrower complies with an EBITDA leverage ratio of not more than [******].
SALE OF SECURITIES. Within five (5) business day from Borrower’s request, Lender agrees to provide consent to the sale of available-for-sale publicly traded securities held by Borrower (i.e., [******] and [******]) subject to all of the following conditions: (i) No Event of Default has occurred or exists under the Agreement or Related Documents; and (ii) Borrower shall deposit all sale proceeds into an account maintained at Lender as additional collateral for the Loan pursuant to an assignment of deposit account executed by Borrower, in form and substance acceptable to Lender (“Proceeds Account”). At Borrower’s request, Lender agrees to release any funds in excess of $5,000,000.00 maintained in the Proceeds Account to support Borrower’s working capital needs.
REMITTANCE/CONTROL ACCOUNT. At all times while this Agreement is in effect, Borrower shall cause the payments and other proceeds of Borrower’s accounts receivable to be paid by the account debtors under a remittance/control account maintained with Lender pursuant to an assignment of deposit account executed by Borrower, in form and substance acceptable to Lender.
GUARANTIES. At all times while this Agreement is in effect, Borrower shall cause all of its wholly owned subsidiaries to promptly execute a guaranty in favor of Lender, in form and substance acceptable to Lender.
NO STOCK BUYBACK/DISTRIBUTIONS. At all times while this Agreement is in effect, Borrower shall not buy back shares, pay out dividends or make distributions without Lender’s prior written consent.
CASH AT LENDER. At all times while this Agreement is in effect, Borrower shall maintain substantially all of its cash in deposit account(s) with Lender.
NO ACQUISITIONS. At all times while this Agreement is in effect, Borrower shall not make any acquisitions or engage in any new in-licensing of any drugs for development without Lender’s prior written consent.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives
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all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of New York without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of New York.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
Counterparts; Electronic Signatures. This Note or Agreement and all other Related Documents may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Note, Agreement or Related Documents, as applicable. The words “execution,” “signed,” “signature,” (delivery,” and words of like import in or relating to this Note or Agreement and all other Related Documents and the transactions contemplated hereby shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. As used herein, “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record. If any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing this Note or Agreement and all other Related Documents (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original hereof or thereof.
Additional Related Documents. “Related Documents” shall also include all agreements and instruments executed by Borrower in connection with prior indebtedness by Borrower to Lender which, by the terms of such agreements and/or instruments, apply to all or part of Borrower’s underlying obligations of this Indebtedness and/or applies to all future indebtedness of Borrower to Lender.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this
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Agreement:
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.
Borrower. The word "Borrower" means CASI PHARMACEUTICALS, INC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means East West Bank, its successors and assigns.
Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note dated May 18, 2022 and executed by CASI PHARMACEUTICALS, INC in the principal amount of
$10,000,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.
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BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MAY 18, 2022.
BORROWER: | |
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CASI PHARMACEUTICALS, INC | |
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By: /s/ Wei-Wu He | |
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WEI-WU HE, | |
CEO/Chairman of CASI PHARMACEUTICALS, INC | |
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LENDER: | |
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EAST WEST BANK | |
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By: /s/ Frank Xin | |
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Frank Xin, Vice President | |
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LaserPro, Ver. 21.3.11.003 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. - NY E:\PROD\LOANDOC\CFI\LPL\C40.FC TR-35213 PR-7 (M)
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Exhibit 10.3
COMMERCIAL SECURITY AGREEMENT
| Grantor: | CASI PHARMACEUTICALS, INC | Lender: | East West Bank |
| | 9620 MEDICAL CENTER DR, STE 300 | | Loan Servicing Department |
| | ROCKVILLE, MD 20850 | | 9300 Flair Drive, 6th Floor El |
| | | | Monte, CA 91731 |
THIS COMMERCIAL SECURITY AGREEMENT dated May 18, 2022, is made and executed between CASI PHARMACEUTICALS, INC ("Grantor") and East West Bank ("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:
All inventory, equipment, accounts (including but not limited to all health-care-insurance receivables), chattel paper, instruments (including but not limited to all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money, other rights to payment and performance, and general intangibles (including but not limited to all software and all payment intangibles); all oil, gas and other minerals before extraction; all oil, gas, other minerals and accounts constituting as-extracted collateral; all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all or any part of the foregoing property; all insurance refunds relating to the foregoing property; all good will relating to the foregoing property; all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to utilize, create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing property; all whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of or relating to the foregoing property.
In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:
(A)All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.
(B) | All products and produce of any of the property described in this Collateral section. |
(C)All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.
(D)All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.
(E)All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:
Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender, unless this Agreement is terminated by mutual written consent.
Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any (1) change in Grantor's name; (2) change in Grantor's assumed business name(s); (3) change in the
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management of the Corporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization; (7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor's name or state of organization will take effect until after Lender has received notice.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender's prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.
Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Delaware, without Lender's prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.
Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.
Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, reasonable attorneys' fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for
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indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral if the estimated cost of repair or replacement exceeds $10,000.00, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.
Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes, with the exception of insurance premiums paid by Lender with respect to motor vehicles, but including the payment of attorneys' fees and expenses, will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon the occurrence of any Event of Default.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender
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and Grantor.
Default in Favor of Third Parties. Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Grantor's property or ability to perform Grantor's obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Cure Provisions. If any default, other than a default in payment, is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.
Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver.
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall
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be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.
Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.
CHOICE OF VENUE. If there is a lawsuit, the undersigned, and if more than one, each of the undersigned, agree upon Lender's request to submit to the jurisdiction of the courts of such county as Lender shall designate in the State of New York.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Lender may also recover from Grantor all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by Lender.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware. In all other respects, this Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of New York without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Agreement is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of New York.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor's interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.
Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor's Indebtedness shall be paid in full.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
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Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
Additional Related Documents. “Related Documents” shall also include all agreements and instruments executed by Borrower in connection with prior indebtedness by Borrower to Lender which, by the terms of such agreements and/or instruments, apply to all or part of Borrower’s underlying obligations of this Indebtedness and/or applies to all future indebtedness of Borrower to Lender.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.
Borrower. The word "Borrower" means CASI PHARMACEUTICALS, INC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Grantor. The word "Grantor" means CASI PHARMACEUTICALS, INC.
Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.
Lender. The word "Lender" means East West Bank, its successors and assigns.
Note. The word "Note" means the Note dated May 18, 2022 and executed by CASI PHARMACEUTICALS, INC in the principal amount of $10,000,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 18, 2022.
THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
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GRANTOR: | | ||||||
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CASI PHARMACEUTICALS, INC | | ||||||
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By: | /s/ Wei-Wu He | | |||||
| | | |||||
WEI-WU | HE, | CEO/Chairman | of | CASI | | ||
PHARMACEUTICALS, INC | | ||||||
(Seal)
LaserPro, Ver. 21.3.11.003 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. - DE/NY E:\PROD\LOANDOC\CFI\LPL\E40.FC TR-35213 PR-7 (M)
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Exhibit 10.4
COMMERCIAL PLEDGE AGREEMENT
Certain confidential information contained in this document, marked by brackets and asterisk, has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K, because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
Grantor: | CASI PHARMACEUTICALS, INC | Lender: | East West Bank |
THIS COMMERCIAL PLEDGE AGREEMENT dated May 18, 2022, is made and executed between CASI PHARMACEUTICALS, INC (“Grantor”) and East West Bank (“Lender).
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security Interest in the Collateral to secure the indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word “Collateral” as used in this Agreement means Grantor’s present and future rights, title and interest in and to the following described investment property, together with any and all present and future additions thereto, substitutions therefor, and replacements thereof, together with any and all present and future certificates and/or instruments evidencing any stock and further together with all Income and Proceeds as described herein:
[******] Shares of [******] Stock
[******] Shares of [******] Stock
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether he obligation to repay such amounts may be or hereafter may become otherwise unenforceable.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account and whether evidenced by a certificate of deposit). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor represents and warrants to Lender that:
Ownership. Grantor is he lawful owner of the Collateral free and clear of all security interests, liens, encumbrances and claims of others except as disclosed to and accepted by Lender in writing prior to execution of this Agreement.
Right to Pledge. Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral.
Authority; Binding Effect. Grantor has the full right, power and authority to enter into this Agreement and to grant a security interest in the Collateral to Lender. This Agreement is binding upon Grantor as well as Grantor's successors and assigns, and is legally enforceable in accordance with its terms. The foregoing representations and warranties, and all other representations and warranties contained in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement Is terminated or cancelled as provided herein.
No Further Assignment. Grantor has not, and shall not, sell, assign, transfer, encumber or otherwise dispose of any of Grantor's rights in the Collateral except as provided in this Agreement.
No Defaults. There are no defaults existing under the Collateral, and there are no offsets or counterclaims to the same. Grantor will strictly and promptly perform each of the terms, conditions, covenants and agreements, if any contained in the Collateral which are to be performed by the Grantor.
No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement.
Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other
COMMERCIAL PLEDGE AGREEMENT | ||
Loan No. 769628758 | (Continued) | Page 2 |
fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lender may hold the Collateral until all Indebtedness has been paid and satisfied. Thereafter Lender may deliver the Collateral to Grantor or to any other owner of the Collateral. Lender shall have the following rights in addition to all other rights Lender may have by law:
Maintenance and Protection of Collateral. Lender may, but shall not be obligated to, take such steps as it deems necessary or desirable to protect, maintain, insure, store, or care for the Collateral, Including paying of any liens or claims against the Collateral. This may include such things as hiring other people, such as attorneys, appraisers or other experts. Lender may charge Grantor for any cost Incurred in so doing. When applicable law provides more than one method of perfection of Lender's security interest, Lender may choose the method(s) to be used. If the Collateral consists of stock, bonds or other investment properly for which no certificate has been issued, Grantor agrees, at Lender's request, either to request issuance of an appropriate certificate or to give instructions on Lender's forms to the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on Its books or records Lender's security interest in the Collateral. Grantor also agrees to execute any additional documents, including but not limited to, a control agreement, necessary to perfect Lender’s security interest as Lender may desire.
Income and Proceeds from the Collateral. Lender may receive all Income and Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender Immediately upon receipt, In the exact form received and without commingling with other property, all Income and Proceeds from the Collateral which may be received by, paid, or delivered to Grantor or for Grantor's account, whether as an addition to, in discharge of, in substitution of, or in exchange for any of the Collateral.
Application of Cash. At Lender's option, Lender may apply any cash, whether included In the Collateral or received as Income and Proceeds or through liquidation, sale, or retirement, of the Collateral, to the satisfaction of the indebtedness or such portion thereof as Lender shall choose, whether or not matured.
Transactions with others. Lender may (1) extend time for payment or other performance, (2) grant renewal or change in terms or conditions, or (3) comprise, compound or release any obligation, with any one or more Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems advisable, without obtaining the prior written consent of Grantor, and no such act or failure to act shall affect Lender's rights against Grantor or the Collateral.
All Collateral Secures Indebtedness. All Collateral shall be security for the Indebtedness, whether the Collateral Is located at one or more offices or branches of Lender. This will be the case whether or not the office or branch where Grantor obtained Grantor's loan knows about the Collateral or relies upon the Collateral as security.
Collection of Collateral. Lender at Lender's option may, but need not, collect the Income and Proceeds directly from the Obligors. Grantor authorizes and directs the Obligors, if Lender decides to collect the Income and Proceeds, to pay and deliver to Lender all Income and Proceeds from the Collateral and to accept Lender's receipt for the payments.
Power of Attorney. Grantor Irrevocably appoints Lender as Grantor's attorney-in-fact, with full power of substitution, (a) to demand, collect, receive, receipt for, sue and recover all Income and Proceeds and other sums of money and other property which may now or hereafter become due, owing or payable from the Obligors in accordance with the terms of the Collateral; (b) to execute, sign and endorse any and all instruments, receipts, checks, drafts and warrants issued in payment for the Collateral; (c) to settle or compromise any and all claims arising under the Collateral, and in the place and stead of Grantor, execute and deliver Grantor's release and acquittance for Grantor; (d) to file any claim or claims or to take any action or institute or take part in any proceedings, either in Lender's own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem to be necessary or advisable; and (e) to execute in Grantor’s name and to deliver to the Obligors on Grantor's behalf, at the time and in the manner specified by the Collateral, any necessary instruments or documents.
Perfection of Security Interest. Upon Lender’s request, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral. When applicable law provides more than one method of perfection of Lender’s security interest, Lender may choose the method(s) to be used. Upon Lender’s request, Grantor will sign and deliver any writings necessary to perfect Lender’s security interest. If any of the Collateral consists of securities for which no certificate has been issued, Grantor agrees, at Lender’s option, either to request issuance of an appropriate certificate or to execute appropriate instructions on Lender’s forms instructing the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its books or records, by book-entry or otherwise, Lender’s security interest in the Collateral. Grantor hereby appoints Lender as Grantor’s irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. This is a continuing Security Agreement and will continue in effect even though all or part of the indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes, with the exception of insurance premiums paid by Lender with respect to motor vehicles, but including the payment of attorneys' fees and expenses, will then bear interest at the rate charged under the Note from the date Incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a
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part of the indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Agreement also will secure the payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon the occurrence of any Event of Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care in the physical preservation and custody of the Collateral in Lender's possession, but shall have no other obligation to protect the Collateral or its value. In particular, but without limitation, Lender shall have no responsibly for (A) any depreciation in value of the Collateral or for the collection or protection of any income and Proceeds from the Collateral, (B) preservation of rights against parties to the Collateral or against third persons, (C) ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to any of the Collateral, or (D) informing Grantor about any of the above, whether or not Lender has or is deemed to have knowledge of such matters. Except as provided above, Lender shall have no liability for the deprecation or deterioration of the Collateral.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.
Default In Favor of Third Parties, Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Grantor's property or ability to perform Grantor's obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (Including failure of any collateral document to create a valid and perfected security Interest or lien) at any time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any collateral securing the indebtedness. This includes a garnishment of any of Grantor's accounts, Including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and If Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surely, or accommodation party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Cure Provisions. If any default, other than a default in payment, is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems In Lender's sole discretion to be sufficient to cure the default and thereafter continues and compiles all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Declare all Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.
Collect the Collateral. Collect any of the Collateral and, at Lender's option and to the extent permitted by applicable law, retain possession of the Collateral while suing on the Indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit or in parcels, at one or more public or private sales. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give or mail to the Grantor, and other persons as required by law, notice at least ten (10) days in advance if the time and place of the public sale, or of the time after which any private sales may be made. However, no notice need be provided to any person who, after
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an Event of Default occurs, enters Into and authenticates an agreement waiving that person's right to notification of sale. Grantor agrees that any requirement of reasonable notice as to Grantor is satisfied If Lender malls notice by ordinary mall addressed to Grantor at the last address Grantor has given Lender In writing. If a public sale is held, there shall be sufficient compliance with all requirements of notice to the public by a single publication in any newspaper of general circulation in the county where the Collateral is located, setting forth the time and place of sale and a brief description of the property to be sold. Lender may be a purchaser at any public sale.
Sell Securities. Sell any securities included in the Collateral in a manner consistent with applicable federal and state securities laws. If, because of restrictions under such laws, Lender is unable, or believes Lender is unable, to sell the securities in an open market transaction, Grantor agrees that Lender will have no obligation to delay sale until the securities can be registered. Then Lender may make a private sale to one or more persons or to a restricted group of persons, even though such sale may result in a price that is less favorable than might be obtained in an open market transaction. Such a sale will be considered commercially reasonable. If any securities held as Collateral are "restricted securities" as defined in the Rules of the Securities and Exchange Commission (such as Regulation D or Rule 144) or the rules of state securities departments under state "Blue Sky" laws, or if Grantor or any other owner of the Collateral is an affiliate of the Issuer of the securities, Grantor agrees that neither Grantor, nor any member of Grantor's family, nor any other person signing his Agreement will sell or dispose of any securities of such issuer without obtaining Lender's prior written consent.
Rights and Remedies with Respect to Investment Property, Financial Assets and Related Collateral. In addition to other rights and remedies granted under this Agreement and under applicable law, Lender may exercise any or all of the following rights and remedies: (1) register with any issuer or broker or other securities intermediary any of the Collateral consisting of investment properly or financial assets (collectively herein, “investment property”) in Lender’s sole name or in the name of the Lender’s broker, agent, or nominee; (2) cause any issuer, broker or other securities intermediary to deliver to Lender any of the Collateral consisting of securities, or investment property capable of being delivered; (3) enter into a control agreement or power of attorney with any issuer or securities intermediary with respect to any Collateral consisting of investment property, on such terms as Lender may deem appropriate, in Its sole discretion, including without limitation, an agreement granting to Lender any of the rights provided hereunder without further notice to or consent by Grantor; (4) execute any such control agreement on Grantor’s behalf and in Grantor’s name, and hereby irrevocably appoints Lender as agent and attorney-in-fact, coupled with an interest, for the purpose of executing such control agreement on Grantor's behalf; (5) exercise any and all rights of Lender under any such control agreement or power of attorney; (6) exercise any voting, conversion, registration, purchase, option, or other rights with respect to any Collateral; (7) collect, with or without legal action, and issue receipts concerning any notes, checks, drafts, remittances or distributions that are paid or payable with respect to any Collateral consisting of Investment property. Any control agreement entered with respect to any investment property shall contain he following provisions, at Lender discretion. Lender shall be authorized to Instruct the Issuer, broker or other securities intermediary to take or to refrain from taking such actions with respect to the investment properly as Lender may instruct, without further notice to or consent by Grantor. Such actions may include without limitation the issuance of entitlement orders, account instructions, general trading or buy or sell orders, transfer and redemption orders, and stop loss orders. Lender shall be further entitled to Instruct the Issuer, broker or securities intermediary to sell or to liquidate any investment property, or to pay the cash surrender or account termination value with respect to any and all investment property, and to deliver all such payments and liquidation proceeds to Lender. Any such control agreement shall contain such authorizations as are necessary to place Lender in "control" of such investment collateral, as contemplated under the provisions of the Uniform Commercial Code, and shall fully authorize Lender to Issue "entitlement orders" concerning the transfer, redemption, liquidation or disposition of investment collateral, In conformance with the provisions of the Uniform Commercial Code.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the Collateral.
Transfer Title. Effect transfer of title upon sale of all or part of the Collateral. For this purpose, Grantor Irrevocably appoints Lender as Grantor's attorney-In-fact to execute endorsements, assignments and Instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable.
Other Rights and Remedies, Have and exercise any or all of the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, at law, In equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the Collateral, or which is received from the collection or sale of the Collateral, to reimbursement of any expenses, including any costs for registration of securities, commissions incurred in connection with a sale, reasonable attorneys’ fees and court costs, whether or not there is a lawsuit and including any fees on appeal, incurred by Lender in connection with the collection and sale of such Collateral and to the payment of the indebtedness of Grantor to Lender, with any excess funds to be paid to Grantor as the interests of Grantor may appear. Grantor agrees, to the extent permitted by law, to pay any deficiency after application of the proceeds of the Collateral to the Indebtedness.
Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to lake action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.
CHOICE OF VENUE. If there is a lawsuit, the undersigned, and if more than one, each of the undersigned, agree upon Lender's request to submit to the Jurisdiction of the courts of such county as Lender shall designate in the State of New York.
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MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees: Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else lo help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (Including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-Judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the state of New York without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State and New York.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver ls given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise lo demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent Is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mall postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all limes of Grantor's current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, Invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor's interest, this Agreement shall be binding upon and inure to the benefit of the parles, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement and the indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
Additional Related Documents. "Related Documents" shall also include all agreements and instruments executed by Borrower in connection with prior indebtedness by Borrower to Lender which, by the terms of such agreements and/or instruments, apply to all or part of Borrower's underlying obligations of this Indebtedness and/or apples to all future indebtedness of Borrower to Lender.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement” means this Commercial Pledge Agreement, as this Commercial Pledge Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Pledge Agreement from time to time.
Borrower. The word "Borrower" means CASI PHARMACEUTICALS, INC and includes all co-signors and co-makers signing the Note and all their successors and assigns.
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Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.
Event of Default. The words "Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Grantor. The word "Grantor" means CASI PHARMACEUTICALS, INC.
Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including without limitation a guaranty of all or part of the Note.
Income and Proceeds. The words "Income and Proceeds" mean all present and future income, proceeds, earnings, increases, and substitutions from or for the collateral of every kind and nature, including without limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock dividends, stock splits, stock rights, regulatory dividends, subscriptions, monies, claims for money due and to become due, proceeds of any Insurance on the collateral, shares of stock of different par value or no par value issued in substitution or exchange for shares included in the Collateral, and all other property Grantor is entitled to receive on account of such Collateral, including accounts, documents, instruments, chattel paper, Investment property, and general intangibles.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, indebtedness includes all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.
Lender. The word "Lender" means East West Bank, its successors and assigns.
Note. The word "Note" means the Note dated May 18, 2022 and executed by CASI PHARMACEUTICALS, INC in the principal amount of $10,000,000.00, together with all renewals of, extensions of, modifications of, refinancing of, consolidations of, and substitutions for the note or credit agreement.
Obligor. The word "Obligor" means without limitation any and all persons obligated to pay money or to perform some other act under the Collateral.
Property: The word *Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, securely deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE AGREEMENT AND AGREES TO ITS TERMS, THIS AGREEMENT IS DATED MAY 18, 2022.
GRANTOR:
CASI PHARMACEUTICALS, INC.
By: /s/ Wei-Wu He
WEI-WU HE
CEO/Chairman of CASI PHARMACEUTICALS, INC.
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Date: August 12, 2022 |
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| |
| |
/s/ Wei-Wu He | |
Wei-Wu He |
|
Chief Executive Officer |
|
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Date: August 12, 2022 |
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| |
| |
/s/ Larry (Wei) Zhang | |
Larry (Wei) Zhang |
|
Principal Financial Officer |
|
Exhibit 32.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wei-Wu He, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: August 12, 2022 | /s/ Wei-Wu He |
| Wei-Wu He |
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Larry (Wei) Zhang, as Principal Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: August 12, 2022 | /s/ Larry (Wei) Zhang |
| Larry (Wei) Zhang |
| Principal Financial Officer |