Exhibit 10.2
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LICENSE, DEVELOPMENT, MANUFACTURING AND SUPPLY
AGREEMENT
THIS LICENSE, DEVELOPMENT, MANUFACTURING AND
SUPPLY AGREEMENT (this “Agreement”), dated as of November
2, 2018 (the “Effective
Date”), by and between TRIS Pharma, Inc., a New Jersey
corporation, with corporate offices at 2033 Route 130, Suite D,
Monmouth Junction, New Jersey 08852 (“TRIS”), and AYTU BioScience, Inc.,
a Delaware corporation, with its principal offices at 373 Inverness
Parkway, Suite 206, Englewood, CO (“AYTU”). (AYTU and TRIS are
sometimes referred to herein individually as a “Party” and collectively as the
“Parties”).
RECITALS
WHEREAS, TRIS
conducts pharmaceutical research and development, and develops
proprietary drug delivery technologies that have application to a
variety of pharmaceutical products and manufactures pharmaceutical
products;
WHEREAS, TRIS has
developed and received Regulatory Approval for Tuzistra XR, and
reacquired the NDA for Tuzistra XR from the Former
Owner;
WHEREAS, TRIS has
developed and filed an NDA for CCP-08, a branded Product, for which
it has received a complete response letter from the FDA dated
August 4, 2017 and for which it intends to continue to pursue
Regulatory Approval;
WHEREAS, AYTU
develops, manufactures and distributes pharmaceutical products; and
WHEREAS, AYTU desires to distribute the Products in the
Territory.
Accordingly, in
consideration of the mutual promises, covenants and agreements
hereinafter set forth, the Parties, intending to be legally bound,
agree to the following terms and conditions:
ARTICLE I - DEFINITIONS
“AAA” has the meaning set
forth in Section 14.3.
“Adjusted Number of Units”
means that number of Units of Product based upon each Unit being a
16 ounce bottle, so that, for example, a five ounce bottle of
Product equals 0.3125 Unit, provided that one ounce bottles shall
not be included in Adjusted Number of Units.
“Administrative Fee” means
for any period, [**] of Net Sales of AG Product for such period,
which amount is to be retained by TRIS.
“Affiliate” means any
Person, firm, corporation (including, without limitation, service
corporation and professional corporation), partnership (including,
without limitation, general partnership, limited partnership and
limited liability partnership), limited liability company, joint
venture, business trust, association or other entity that now or in
the future, directly or indirectly, controls, is controlled by or
is under common control with a party. For purposes of the
foregoing, “control” shall mean, with respect to: (a) a
corporation, the ownership, directly or indirectly, of greater than
fifty percent (50%) of the voting power to elect the directors
thereof (without regard to the occurrence of any contingency); and
to (b) any other entity, managerial control by virtue of a written
agreement.
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“AG Product” means any
product, promoted, distributed, marketed, offered for sale and/or
sold as a branded or non-branded generic product, or any Private
Label product, under or pursuant to an approved Product
NDA.
“AG Product Royalty
Payments” has the meaning set forth in Section
6.9(a).
“Agency” means any
Governmental Authority responsible for granting approvals for the
sale of a Product.
“Agreement” means this
agreement, together with all Exhibits attached hereto.
“ANDA” means an
“abbreviated new drug application,” as defined in 21
U.S.C. Section 355(j) of the FD&C Act and applicable FDA rules
and regulations.
“API” means an active
pharmaceutical ingredient of a particular product.
“Applicable Law” means, with
respect to any Person, any domestic or foreign, federal, state or
local statute, treaty, law, ordinance, rule, regulation,
administrative interpretation, order, writ, injunction, judicial
decision, decree or other requirement of any Governmental Authority
applicable to such Person or any of such Person’s respective
properties, assets, officers, directors, employees, consultants or
agents (in connection with such officers’, directors’,
employees’, consultants’ or agents’ activities on
behalf of such Person).
“Applicable Make Whole Payment per
Unit” means for each Make Whole Payment Commercial
Year, commencing with the second Make Whole Payment Commercial Year
and ending with, and including, the tenth Make Whole Payment
Commercial Year, the following respective amounts: [**] for the
second Make Whole Payment Commercial Year; [**] for the third Make
Whole Payment Commercial Year; and [**] for each Make Whole Payment
Commercial Year commencing with the fourth Make Whole Payment
Commercial Year through the tenth Make Whole Payment Commercial
Year.
“Applicable Royalty
Percentage” means with respect to a Product and the
applicable period described the respective percentage set forth:
[**] until no further royalty payments are due from TRIS to the
Former Owner, or any assignee thereof with respect to such Product
and thereafter [**] ;provided
however that (i) if no royalty payments are due to the
Former Owner as a result of the acquisition and ownership of such
rights to such royalty payments of such Former Owner by TRIS, then
the Applicable Royalty Percentage shall remain at [**] for the
remaining period for which the Former Owner would have been
entitled to royalty payments with respect to a Product (e.g., until
[**], in the case of Tuzistra XR, and [**]), and thereafter as if
no such acquisition had taken place (e.g., [**] or as provided in
the last sentence of this definition); and (ii) if (and only while)
no royalty payments are due to the Former Owner as a result of the
acquisition and ownership of such rights to such royalty payments
of such Former Owner by AYTU (and in order to avoid AYTU paying a
[**] royalty to TRIS and then TRIS repaying [**] thereof back to
AYTU), then the Applicable Royalty Percentage shall equal [**] for
the remaining period for which the Former Owner would have been
entitled to royalty payments with respect to a Product (e.g., until
[**], in the case of Tuzistra XR and [**]), and thereafter as if no
such acquisition had taken place (e.g., [**] or as provided in the
last sentence of this definition). Notwithstanding the foregoing,
after the expiration of the last to expire TRIS Patent containing a
claim Covering a Product, whether or not such Patent is listed in
the FDA’s Orange Book, the Applicable Royalty Percentage
shall be fixed at [**] with respect to such Product.
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“Approved Manufacturer” has
the meaning set forth in Section 5.6.
“Article” means any article
of this Agreement.
“Asset Sale Agreement” means
that certain Asset Sale Agreement dated as of June 13, 2018,
between TRIS and the Former Owner.
“AYTU’s Fault” has the
meaning set forth in Section 5.5(b).
“AYTU Indemnified Party” has
the meaning set forth in Section 13.1(b).
“AYTU Marks” has the meaning
set forth in Section 4.10(a).
“AYTU Non-Product Specific
Trademark” has the meaning set forth in Section
4.10(b).
“AYTU Patent Challenge” has
the meaning set forth in Section 9.2(d).
“AYTU Product Trademark” has
the meaning set forth in Section 4.10(b).
“AYTU Regulatory
Documentation” means, with respect to a Product, the
Regulatory Documentation prepared for such Product by or on behalf
of AYTU.
“AYTU” has the meaning set
forth in the preamble.
“Bankruptcy Code” means 11
USC §§ 101, et
seq.
“Branded Prescription Drug
Fee” means the annual fee imposed on covered entities
engaged in the business of manufacturing or importing branded
prescription drugs by section 9008 of the Patient Protection and
Affordable Care Act (ACA), Public Law 111-148 (124 Stat. 119
(2010)), as amended by section 1404 of the Health Care and
Education Reconciliation Act of 2010 (HCERA), Public Law 111-152
(124 Stat. 1029 (2010)), as the same may be further
amended.
“Business Day” means a day
other than a Saturday, Sunday or other day on which commercial
banks in New York, New York, USA are authorized or required by law
to close.
“CCP-08” is defined in the
definition of Products.
“cGMP” means the current
Good Manufacturing Practices regulations of the FDA set forth in 21
C.F.R. pts. 210 and 211, as amended from time to time.
“CMC” means the chemistry,
manufacturing and controls of a Product, as specified by the
FDA.
“Commercially Reasonable
Efforts” means exercising such reasonable efforts and
diligence in accordance with a Party’s reasonable business,
legal, medical and scientific judgment and in a manner consistent
with and in accordance with the efforts and resources such Party
would use for a pharmaceutical product owned, licensed in, or
controlled by such Party which is of similar market potential at a
similar stage of its product life, taking into account the
competitiveness of the marketplace (including the number of
competing products), the proprietary position of such product,
issues of safety and efficacy, the regulatory environment, and the
profitability of such product.
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COMMISSION.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means
AYTU’s Common Stock, par value $0.0001 per
share.
“Competing Product” has the
meaning set forth in Section 3.3.
“Confidential Information”
has the meaning set forth in Section 10.1(a).
“Control” means, with
respect to an item of information or Intellectual Property Right,
the possession of the ability by ownership, license or otherwise
(other than by operation of the license and other rights pursuant
to this Agreement) to assign or grant a license or sublicense as
provided for herein under such item or right without violating the
terms of any agreement or other arrangement, express or implied,
with any Third Party.
“Cover” means, with respect
to a claim of a Patent and a Product, that such claim would be
infringed, absent a license, by the manufacture, use, offer for
sale, sale or importation of such Product (considering claims of
patent applications as issued with the then-pending claims even
though pending).
“Development” means
pre-clinical and clinical drug development activities which occur
prior to or as a condition of Regulatory Approval including, among
other things: test method development and stability testing,
formulation, process development, manufacturing scale-up,
development-stage manufacturing, analytical method validation,
manufacturing process validation, cleaning validation, scale-up and
post approval changes and requirements, pre- clinical and clinical
studies, regulatory filing submissions and pre-approvals, and
regulatory affairs related to the foregoing. When used as a verb,
“Develop” means to engage in Development.
“Disclosing Party” has the
meaning set forth in Section 10.1(a).
“Dispute” has the meaning
set forth in Section 14.3.
“Drug Master File” or
“DMF” means a
drug master file, as further described in 21 C.F.R. 314.420, that
is intended for submission or submitted to the FDA in support of an
IND and/or NDA and containing detailed information regarding the
CMC of a drug product.
“Effective Date” has the
meaning set forth in the preamble.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Executive Resolution
Period” has the meaning set forth in Section
14.3.
“Expense Allocation” means
fifty percent (50%) with respect to each of TRIS and
AYTU.
“Facility” means the
manufacturing facility(ies) of TRIS at which the Product is
manufactured.
“FD&C Act” means the
Federal Food, Drug, and Cosmetic Act, as amended, and the rules and
regulations of the FDA promulgated thereunder.
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“FDA” means the United
States Food and Drug Administration, or any successor
thereto.
“FDA Fiscal Year” means a
twelve (12) month period, commencing on October 1 and ending on
September 30. For purposes of this Agreement: the 2019 FDA Fiscal
Year shall be deemed to have commenced on October 1,
2018.
“FDA Letter” means the FDA
warning letter dated March 26, 2018.
“Firm PO” has the meaning
set forth in Section 5.2(a).
“First Commercial Sale”
means, for each Product, the first sale by AYTU, its Subsidiaries
or its sublicensees after the Effective Date for end use or
consumption of such Product in an arm’s length sale in the
United States, and in the case of CCP-08, after the FDA has
approved the NDA for such Product.
“Fiscal Quarter” means each
period of three (3) months ending on March 31, June 30, September
30 or December 31.
“Force Majeure Event” has
the meaning set forth in Section 14.1.
“Forecast” has the meaning
set forth in Section 5.1.
“Forecast Delivery Date” has
the meaning set forth in Section 5.1.
“Former Owner” means
Vernalis (R&D) Limited, or any permitted assignee or successor
of the Former Owner’s rights under the Asset Sale
Agreement.
“Freight Charges” has the
meaning set forth in Section 5.3.
“GAAP” means generally
accepted accounting principles in effect in the United States from
time to time applied on a consistent basis.
“Generic Equivalent” means
with respect to a product, a generic pharmaceutical product that is
therapeutically equivalent to such product, where
“therapeutically equivalent” means: an AA or AB rating
is assigned to such product’s entry in the list of drug
products with effective approvals published in the then-current
edition of FDA’s publication “Approved Drug Products
with Therapeutic Equivalence Evaluations” and any current
supplement to the publication (also known as the
“Orange Book”)
referred to in 21 C.F.R. 314.3 and such product is covered by an
ANDA.
“Governmental Authority”
means any foreign, domestic, federal, territorial, state or local
governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization
(including any securities exchange), commission, tribunal or
organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of
the foregoing.
“Gross Margin”: means (x)
Net Sales of the AG Products by TRIS or its Subsidiaries
(calculated in the same manner as set forth in the definition of
“Net Sales,” which shall apply mutatis mutandis as if
such sales were sales by AYTU, its Subsidiaries and sub-licensee),
minus (y) the sum of (j) the Administrative Fee; (k) the Transfer
Price; and (l) royalties payable to the Former Owner.
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COMMISSION.
“Hatch-Waxman Act” means the
Drug Price Competition and Patent Restoration Act of 1984, as
amended.
“Hatch-Waxman Certification”
has the meaning set forth in Section 7.2(a).
“HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
“IND” means an
Investigational New Drug Application, as described in 21 CFR part
312, or other equivalent name that is defined by the Regulatory
Authority, which must be approved by Regulatory Authority or
otherwise go into effect prior to conducting clinical trials with
respect to a Product in the Territory.
“Ineligible Month” has the
meaning set forth in Section 6.4(a).
“Initial Forecast” has the
meaning set forth in Section 5.1.
“Initial Launch Quantities”
means the Launch quantities of Product ordered by AYTU for Tuzistra
XR on the Effective Date or within one Business Day thereafter,
consisting of [**] bottles, and one batch of one ounce bottles of
Tuzistra XR, and the labels for which may be stickered over to
reflect, among other things, AYTU’s NDC code.
“Intellectual Property
Rights” means, with respect to a Person, any and all
existing and future proprietary rights (whether owned by or
licensed to such Person), including property rights, know-how
rights (including without limitation, manufacturing, mixing and
production procedures, all in
vivo or clinical, pharmacology, toxicology, safety and
efficacy data, formulary submissions, pharmaco-economic data, and
other such information useful or required in preparing applications
for or obtaining or maintaining Regulatory Approval and/or for the
manufacturing, packaging, marketing and/or testing of a product),
trade secret rights, manufacturing, mixing and production
copyrights, design rights, any existing or future patents and
patent applications in the Territory and all continuations,
continuations-in-part, divisions, reissues, reexaminations,
extensions or other government actions which extend the subject
matter of the foregoing, and any corresponding patents, patents of
addition, granted or registered and all other intellectual property
rights in the Territory (including without limitation the right, if
any, to sue or bring other actions for past, present and future
infringement of such Intellectual Property Rights) as well as any
rights that accrue under supplementary protection certificates or
the like.
“Inventory Reports” has the
meaning set forth in Section 5.1.
“Knowledge” means for
purposes of Article XI: when used with respect to TRIS, the actual
knowledge of the representatives of TRIS listed in Schedule I, as
of the Effective Date; and when used with respect to AYTU, means
the actual knowledge of the representatives of AYTU listed in
Schedule II, as of the Effective Date.
“Label”, “Labeled” or “Labeling” means, when used
as a noun, all labels and other written, printed or graphic matter
upon (i) the Product or any container or wrapper utilized with such
Product, or (ii) any written material accompanying such Product,
including, without limitation, package inserts, in each case that
is subject to FDA review. When used as verb, Label means to affix
or insert a Label.
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“Launch” means the first
commercial shipment of a Product by AYTU or its Subsidiaries to
Third Party customers in the Territory, and in the case of CCP-08,
after receipt by TRIS of Regulatory Approval for such Product from
the relevant Agency in the Territory.
“Launch Date” means the date
of the Launch of a Product.
“Loss” or “Losses” has the meaning set
forth in Section 13.1(a).
“Make Whole Payment Commercial
Year” means (x) the period from the first day of the
calendar month in which the Launch of the first Product to be
launched occurs and ending the earlier of (i) twelve months
thereafter or (ii) the termination or expiration of the Term of
this Agreement with respect to both Products and (y) each period
while the Term of either Product is in effect beginning on an
anniversary of a Make Whole Payment Commercial Year and ending the
earlier of (i) twelve months thereafter or (ii) the termination or
expiration of the Term of this Agreement with respect to both
Products.
“Market” means to promote,
advertise, distribute, market, offer to sell and/or sell for
purposes of a commercial sale, and “Marketing” and “Marketed” have a
corresponding meaning.
“Marketing Plan” has the
meaning set forth in Section 4.2.
“Medium Bottle Size” has the
meaning set forth in Section 3.4.
“Minimum Unit Sales
Commitment” means with respect to each Make Whole
Payment Commercial Year, commencing with the second Make Whole
Payment Commercial Year and ending with, and including, the tenth
Make Whole Payment Commercial Year, the following respective number
of Units of [**] bottles of Product: [**] for the second Make Whole
Payment Commercial Year; [**] for the third Make Whole Payment
Commercial Year; and [**] for each of the fourth through the tenth
Make Whole Payment Commercial Years.
“Minimum Unit Sales Commitment
Shortfall” means with respect to each Make Whole
Payment Commercial Year, commencing with the second Make Whole
Payment Commercial Year and ending with, and including, the tenth
Make Whole Payment Commercial Year, the difference of (i) the
Minimum Unit Sales Commitment for such Make Whole Payment
Commercial Year, minus (ii) the Adjusted Number of Units sold
during such Make Whole Payment Commercial Year which were included
in the Net Sales reported for such Make Whole Payment Commercial
Year and included in the calculation of Royalty
Payments.
“NDA” means a New Drug
Application filed with the FDA pursuant to and under 21 U.S.C.
Section 355(b) of the FD&C Act.
“NDA Approval” means with
respect to a Product the FDA has granted approval to Market such
Product that is the subject of an NDA in the United
States.
“NDA Approval Milestone” is
defined in Section 2.1(b).
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“Net Sales” means with
respect to each Product, the gross amount invoiced for sales of
such Product in arm’s length sales by AYTU, its Subsidiaries
and licensees, if any, to Third Parties, commencing with the First
Commercial Sale of such Product, less the following deductions from
such gross amounts which are actually incurred, allowed, accrued or
specifically allocated: (i) credits, price adjustments or
allowances for damaged products (to the extent not covered by
insurance), returns, rejections or recalls of Product, and related
destruction and processor fees; (ii) normal and customary trade,
cash and quantity discounts, off-invoice discounts, allowance for
doubtful accounts or other allowances and credits (other than price
discounts granted at the time of invoicing which have been already
included in the gross amount invoiced); (iii) chargeback payments
and rebates (or the equivalent thereof) granted to group purchasing
organizations, managed health care organizations, administrators of
the Medicare Coverage Gap Discount program or to federal,
state/provincial, local and other governments, including their
agencies, or to trade customers; (iv) any invoiced freight,
postage, shipping, insurance and other transportation charges; (v)
sales, value-added (to the extent not refundable in accordance with
Applicable 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). Net Sales
shall not include samples where no value is paid. Net Sales, as set
forth in this definition, shall be calculated, in accordance with
GAAP. For purposes of determining Net Sales, (a) any Product shall
be deemed to be sold when invoiced; and (b) sales between or among
AYTU, its licensees and their respective Affiliates shall be
excluded from the computation of Net Sales, but shall be included
in Net Sales upon first sale to a Third Party. For the avoidance of
doubt, the Branded Prescription Drug Fee shall not be deducted in
computing Net Sales. It is the expectation of the Parties that
deductions from gross sales in determining net sales will be made
to reflect the categories of deductions historically made that are
listed on Schedule 11.2(l).
“Orange Book” is defined in
the definition of Generic Equivalent.
“Package” or “Packaging” means, when used
as a noun, all primary and secondary containers, including cartons,
shipping cases and other like matter used in packaging or
accompanying the Product. When used as a verb,
“Package” means to insert into a Package.
“Party” has the meaning set
forth in the preamble.
“Patents” means (a) all
United States patents and patent applications, including
provisional patent applications, (b) all patent applications filed
either from such patents, patent applications or provisional
applications or from an application claiming priority from any of
these, including divisionals, continuations, continuations-in-part,
provisionals, converted provisionals, and continued prosecution
applications, (c) any and all patents that have issued or in the
future issue from the foregoing patent applications ((a) and (b)),
(d) any and all extensions or restorations by existing or future
extension or restoration mechanisms, including reissues, re-
examinations interpartes review, post-grant review, supplemental
reviews and extensions (including any patent term extensions,
patent term adjustments or similar) of the foregoing patents or
patent applications ((a), (b) and (c)) and (e) any similar rights,
including so-called pipeline protection, or any importation to any
of such foregoing patent applications and patents.
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COMMISSION.
“PDUFA Program Fees” means
the annual fee assessed by the FDA on prescription drugs pursuant
to Section 736(a) of the FD&C Act and any successor or similar
fees.
“Person” means an
individual, a corporation, a general partnership, a limited
partnership, a limited liability company, a limited liability
partnership, an association, a trust or any other entity or
organization, including a Governmental Authority.
“Pharmaceutical Producer Price
Index” means the “Producer Price Index –
Pharmaceutical Preparations” (Code PCU325412325412) published
by the U.S. Bureau of Labor Statistics (which as of the Effective
Date is available via the following link: https://data.bls.gov/timeseries/PCU325412325412)
or, if same is no longer published, the successor index published
by the U.S. Bureau of Labor Statistics.
“Pricing Approval” means any
approval or authorization of any Governmental Authority
establishing prices for the Product in a jurisdiction in the
Territory.
“Private Label” means
Product resold under the trade name or house brand name of a retail
store or chain.
“Products” means (i)
Tuzistra XR having as its active ingredients codeine polistirex and
chlorpheniramine polistirex in an extended release oral suspension
(“Tuzistra XR”)
and (ii) CCP-08 (“CCP-08”), for which marketing
approval has been sought by TRIS in the United States under NDA #
209561, in each case formulated to be orally consumed, and to be
supplied by TRIS hereunder. Unless the context indicates otherwise
the term “Product” refers to both AG Product, if any,
and Product that is not AG Product. Each of Tuzistra XR and CCP-08
is referred to as a Product.
“Product Claim” has the
meaning set forth in Section 13.3.
“Product NDA” means the NDA
obtained by TRIS related to a Product.
“Product Specifications”
means the specifications for a Product set forth by TRIS in the NDA
for such Product, as the same may be amended by TRIS from time to
time based on FDA input, and otherwise.
“Product Technology” with
respect to a Product means TRIS’ Intellectual Property Rights
with respect to such Product.
“Quality Agreement” is
defined in Section 8.3.
“Quarterly Payment Report”
has the meaning set forth in Section 6.3(b).
“Recall” has the meaning set
forth in Section 5.5.
“Receiving Party” has the
meaning set forth in Section 10.1(a).
“Regulatory Approval” means
the license or marketing approval by the FDA that is necessary as a
prerequisite for marketing the Product in the
Territory.
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“Reimbursement Approval”
means any approval or authorization of any Governmental Authority
establishing a health insurance or drug reimbursement scheme for
the Product in a jurisdiction in the Territory.
“Regulatory Authority” means
the FDA, and/or any successor official body, whose approval is
required by Applicable Law to Market, manufacture, test and/or
Package a Product in any jurisdiction in the
Territory.
“Regulatory Documentation”
means all applications, registrations, licenses, authorizations and
approvals (including all INDs and Regulatory Approvals), all
correspondence submitted to or received from Regulatory Authorities
(including minutes and official contact reports relating to any
communications with any Regulatory Authority) and all supporting
documents and all clinical studies and tests, solely relating to a
Product, and all data contained in any of the foregoing, including
all INDs, drug approval applications, regulatory drug lists,
advertising and promotion documents, clinical data, adverse event
files and complaint files but excluding Drug Master
Files.
“Rejection Notice” has the
meaning set forth in Section 5.4(a).
“Royalty Make Whole Payment”
has the meaning set forth in Section 6.4(a).
“Royalty Payment” has the
meaning set forth in Section 6.3(e).
“Royalty Term” means with
respect to each Product the period from the Effective Date and
shall expire, on a Product-by-Product basis, upon the later of (i)
twenty (20) years from such Product’s First Commercial Sale,
(ii) the last to expire TRIS Patent containing a claim Covering
such Product, or (iii) a Third Party Generic Launch of a Generic
Equivalent of such Product.
“SEC Reports” shall have the
meaning ascribed to such term in Section 11.3.
“Section” means any section
of this Agreement.
“Securities” means the
Shares and the common stock into which the Shares are
convertible.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Series D Preferred Stock”
means AYTU’s Series D Convertible Preferred Stock, par value,
$0.0001 per share.
“Service Level” means, with
respect to a Product, for any period of consecutive months, the
quotient resulting from dividing (a) the actual quantity of
conforming Product that TRIS delivers to AYTU during that period in
fulfillment of AYTU’s Firm POs for such Product, by (b) the
total quantity of such Product that AYTU requests, in accordance
with the delivery terms specified in Section 5.2 (and the forecast
requirement of Section 5.1), to be delivered to AYTU during that
period based on AYTU’s ordered quantities, expressed as a
percentage, after giving effect to the last sentence of the first
paragraph of Section 5.3.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
“Shares” means the shares of
Series D Preferred Stock issued or issuable to TRIS pursuant to
this Agreement.
“Sublicensee” is defined in
Section 3.1.
“Subsequent Forecast” has
the meaning set forth in Section 5.1.
“Subsidiary” means, with
respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (i) if
a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or
trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business
entity (other than a corporation), a majority of partnership or
other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof and for this
purpose, a Person or Persons own a majority ownership interest in
such a business entity (other than a corporation) if such Person or
Persons shall be allocated a majority of such business
entity’s income, gains and losses and shall be the sole
managing director, manager or general partner of such business
entity (other than a corporation), as applicable, or control the
majority of managing directors, managers or general partners of
such business entity (other than a corporation), as applicable, and
such sole, or majority of, the managing directors, managers or
general partners control such business entity. The term
“Subsidiary” shall include all Subsidiaries of such
Subsidiary.
“Supply Interruption” has
the meaning set forth in Section 5.7(b).
“Supply Resumption Notice”
has the meaning set forth in Section 5.7(c).
“Take and Pay Event” has the
meaning set forth in Section 9.3(a)(v).
“Term” means the period of
time specified in Section 9.1.
“Territory” means the United
States (including all of its states, territories and
possessions).
“Third Party” means any
entity other than TRIS or AYTU, and their respective
Subsidiaries.
“Third Party Generic Launch”
means with respect to a Product, the first commercial shipment of
Generic Equivalent of such Product by a Third Party to customers in
the Territory.
“Trademark” shall include
any word, name, symbol, color, designation or device or any
combination thereof, including any trademark, trade dress, brand
mark, service mark, trade name, brand name, logo or business
symbol, whether or not registered.
“Transfer Price” has the
meaning set forth in Section 6.1(a).
“Triggering Event” has the
meaning set forth in Section 5.7.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
“TRIS” has the meaning set
forth in the preamble.
“TRIS’ Fault” has the
meaning set forth in Section 5.5(a).
“TRIS Indemnified Party” has
the meaning set forth in Section 13.1(a).
“TRIS Marks” has the meaning
set forth in Section 4.10(a).
“TRIS Patent Rights” has the
meaning provided in Section 9.2(d).
“TRIS Regulatory
Documentation” means, with respect to a Product, the
Regulatory Documentation prepared for such Product by or on behalf
of TRIS.
“TRIS Royalty Payments” has
the meaning provided in Section 6.9(c).
“Tuzistra XR” is defined in
the definition of Product.
“Unit” means, a [**] bottle
or such alternative bottle size as set forth in the applicable
Product Specifications.
“Upfront Cash Payment” means
a payment of [**] from AYTU to TRIS on the Effective
Date.
“Upfront Stock Issuance”
means the issuance on the Effective Date of 400,000 shares of
Series D Preferred Stock to TRIS.
“WAC” means wholesale
acquisition cost.
ARTICLE II – REGULATORY
2.1 General.
(a) On
or promptly following the Effective Date, as consideration for the
Upfront Cash Payment and Upfront Stock Issuance, TRIS shall
transfer the Tuzistra XR Product NDA to AYTU and shall (i) send to
the FDA (with a copy to AYTU) any required properly executed forms
(i.e., FDA Forms 356h and 1571, if applicable) and a letter
transferring the NDA for such Product to AYTU and (ii) provide the
TRIS Regulatory Documentation related to such Product, excluding
any DMFs or the contents thereof, to AYTU.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) TRIS
shall use Commercially Reasonable Efforts to (i) obtain Regulatory
Approval of an NDA for CCP-08; and (ii) interact with the FDA
regarding such Product. TRIS, at all times until Regulatory
Approval for such Product, shall remain the owner of the NDA for
the Product. On a Fiscal Quarter basis during the Term until
Regulatory Approval, and at such additional times as AYTU may
reasonably request in writing, TRIS shall advise AYTU of the status
of receipt of FDA approval of the NDA for such Product. Unless
otherwise agreed to by the Parties in writing, TRIS shall bear the
costs and expenses relating to the Development of the Product and
obtaining any Regulatory Approval. Without limiting the generality
of the foregoing, TRIS shall pay the human drug application and
supplement fees, assessed under Section 736(a)(1) of the FD&C
Act, related to the filing and prosecution of Regulatory Approval
of the CCP-08 Product until the FDA’s granting of approval to
Market the Product in the United States. TRIS will provide notice
to AYTU within three Business Days of receipt of Regulatory
Approval of CCP-08. Within ten (10) Business Days of TRIS’
delivery of such notice, AYTU shall pay to TRIS [**] in immediately
available funds (“NDA
Approval Milestone”). For the avoidance of doubt, TRIS
shall be responsible for payment of all fees payable with regard to
CCP-08 up to and including Regulatory Approval, including the NDA
submission PDUFA fee for CCP-08, but excluding any PDUFA Program
Fee assessed upon approval. Following receipt of the NDA Approval
Milestone, and as consideration for the NDA Approval Milestone TRIS
shall transfer the CCP-08 Product NDA to AYTU and shall (i) send to
the FDA (with a copy to AYTU) any required properly executed forms
(i.e., FDA Forms 356h and 1571, if applicable) and a letter
transferring the NDA for such Product to AYTU and (ii) transfer the
TRIS Regulatory Documentation related to such Product, excluding
any DMFs or the contents thereof to AYTU.
(c) The
CMC section of a Product NDA will reference TRIS’ DMF for
such Product. TRIS shall solely and exclusively own the DMFs for
the Products and the information contained therein, and AYTU shall
have no ownership interest in such DMFs or any right to access the
contents thereof. TRIS shall be responsible for assuring that
throughout the Term of each Product each such DMF shall be in the
form appropriate for (i) filing with the Regulatory Authorities in
the United States, complying with all requirements under Applicable
Law, including but not limited to those specified in 21 C.F.R.
314.420, regarding the referencing of DMFs in FDA submissions, and
(ii) obtaining and for maintaining the NDAs for the Products in the
United States. AYTU shall have the right of reference to all DMFs
for all Products, solely for the purpose of filing for, maintaining
and supplementing any Regulatory Approval in the Territory,
provided that AYTU shall bear any expenses (including reasonable
and documented out-of-pocket expenses of TRIS) in respect of
exercising any such right of reference.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(d) During
and after the Term, AYTU shall permit TRIS access to, and hereby
grants TRIS, at no cost or fee, the perpetual and irrevocable right
to reference and use (and for such purpose, copy), whether within
or without the Territory, all Regulatory Documentation Controlled
by AYTU for TRIS’ or its Affiliates use in the Development,
manufacture, Regulatory Approval and/or Marketing of any
pharmaceutical product of TRIS, its Affiliates or any licensee,
including, without limitation, any Product outside of the
Territory. In furtherance of the foregoing but for no other
purpose, AYTU shall, promptly upon the request of TRIS, deliver a
letter to the FDA (or the relevant Regulatory Authority)
authorizing TRIS to reference and use the applicable Regulatory
Documentation Controlled by AYTU related to Products (including,
without limitation, the Product NDAs) in the Territory, at no cost
or fee, for TRIS’ use in the Development and/or regulatory
approval of any such pharmaceutical products within or without the
Territory. Without limiting the foregoing, if requested, AYTU shall
provide to TRIS a copy, at TRIS’ expense, of the entire
“dossier”
relating to such Regulatory Approval (including, without
limitation, the clinical data package and all raw data supporting
same), provided that TRIS shall bear any expenses (including
reasonable and documented out-of-pocket expenses of AYTU) in
respect of exercising any such right of reference or obtaining such
information. AYTU shall, on written request by TRIS or its
Affiliate or sublicensee, provide to the requesting party and to
any specified Regulatory Authority a letter, in the form reasonably
required by the requesting party, acknowledging that the requesting
party has the right of reference to any such Regulatory Approval
for such purposes. Such right of reference attaches to the rights
to such pharmaceutical products, and AYTU shall ensure that any
transferee or assignee of rights in the applicable Product shall
also grant such rights of reference to TRIS and its Affiliates and
sublicensees. AYTU acknowledges and agrees that TRIS Regulatory
Documentation has application beyond the Products subject to this
Agreement, and subject to Article 10 constitutes TRIS’
Confidential Information; and TRIS acknowledges and agrees that
AYTU Regulatory Documentation, subject to Article 10, constitutes
AYTU’s Confidential Information.
(e) During
and after the Term, each Party shall reasonably cooperate with
other Party and provide information and documents in its possession
or Control as the other Party may reasonably request (specifically
excluding the provision by TRIS of CMC information as contemplated
in 2.1(c)) as necessary for such other Party’s compliance
with regulatory requirements and other Applicable Laws related to
the Products.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
2.2 Maintenance
of Regulatory Approval. AYTU shall be responsible for all
fees in connection with the transfer of a Product NDA (whether
arising prior to or upon such transfer and whether relating to
Tuzistra XR or CCP-08), including fees arising in connection with
additional documents required to be filed prior to, in anticipation
of or upon transfer of the NDA. AYTU shall be responsible for the
PDUFA Program Fee for the 2019 FDA Fiscal Year and for the PDUFA
Program Fees for all subsequent FDA Fiscal Years during the Term,
it being understood that such PDUFA Program Fee for the 2019 FDA
Fiscal Year has been paid by TRIS with respect to Tuzistra XR and
as a result AYTU shall pay the same to TRIS on the Effective Date.
Following such transfer of ownership of a Product NDA (whether
relating to Tuzistra XR or CCP-08), AYTU shall during the Term of a
Product, at its sole expense, be responsible for maintaining and
shall use Commercially Reasonable Efforts to maintain the NDA for
such Product (other than the DMFs with respect thereto), including
the filing of all annual and other reports or filings required by
the FDA or any other Governmental Authority, the performance and
submission of stability studies on batches of such Product as may
be required under FDA regulations (it being understood that such
studies will be conducted by TRIS) and the preparation and filing
of any notices, amendments or supplements as may be required to
change or add another source of supply of the APIs for such Product
and the payment of PDUFA Program Fees (in addition to the 2019
PDUFA Program Fee as aforesaid) and all other fees payable to the
FDA (other than the PDUFA submission/application fee for CCP-08).
To the extent not already held by TRIS, AYTU shall promptly provide
TRIS (other than with respect to pharmacovigilance which will be
governed by Section 2.4 and the Safety Data Exchange Agreement
contemplated therein) with complete copies of all applications,
submissions, filings and regulatory correspondence to or from the
FDA or other Regulatory Authority relating to a Product. AYTU will
file and maintain the Product drug listing under its labeler code
and will submit all marketing materials to OPDP (formerly DDMAC)
with a copy to TRIS. For the avoidance of doubt all post-marketing
clinical trials and commitments with respect to Products shall be
the sole responsibility, and at the sole cost and expense of AYTU.
Notwithstanding anything to the contrary contained in this
Agreement, changes to a Product NDA that relate in any respect to
the information in TRIS’ DMF, as the same may be amended,
shall be made solely as directed by TRIS and AYTU agrees to
promptly make such changes and associated FDA filings as directed
by TRIS. For the avoidance of doubt, if changes made or proposed to
be made by TRIS in its DMF relating to CMC for a Product, are also
required to be reflected in other parts of the NDA, or otherwise
reported to the FDA, then AYTU will make such filings in the form
and on the timetable requested by TRIS, at AYTU’s
expense.
2.3 Ownership
of Technical Information. As between the Parties, (a) all
Intellectual Property Rights and inventions related primarily to a
Product, whether developed pursuant to this Agreement or otherwise,
shall be owned solely by TRIS during and after the Term of such
Product, and (b) all Intellectual Property Rights used in the
formulation, manufacture, Labeling and/or Packaging of a Product
(excluding AYTU Marks), whether developed pursuant to this
Agreement or otherwise shall be solely owned by TRIS during and
after the Term of such Product.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
2.4 Adverse
Event Reporting.
(a) The
Parties will negotiate and enter into a Safety Data Exchange
Agreement for the Products in a form mutually agreed to before the
Launch of the first Product. AYTU shall prepare all adverse drug
experience reports to be filed with the FDA pursuant to 21 CFR
§§ 314.80(b) and (c) and provide copies to TRIS prior to
the date required to be filed pursuant to such regulations, and
where practicable at least five (5) days prior to such date. AYTU
as the Product NDA holder shall file such reports with the FDA.
AYTU will comply with Schedule 7.11 of the Asset Sale Agreement
(dealing with pharmacovigilance) as if it were TRIS and provide to
TRIS copies of all written communications provided to or by it by
Former Owner and TRIS will provide to AYTU all information provided
to it pursuant to such schedule by the Former Owner. Until May 31,
2019, AYTU will timely provide to TRIS, field alerts, warning
letters and adverse event reports, and other information reasonably
requested by TRIS to enable TRIS to comply with its monthly
reporting obligations under the last sentence of Section 7.12 of
the Asset Sale Agreement.
ARTICLE III
GENERAL COMMERCIAL
OBLIGATIONS
3.1 Exclusive
Distribution. TRIS hereby grants to AYTU the exclusive right
(except as expressly stated herein, even as to TRIS and its
Affiliates) to Market the Product solely as a branded product
(expressly excluding a non-branded generic or a Private Label
product) in the Territory during the Term. Such exclusive right (i)
is non-sub-licensable except as provided in this Section 3.1 and
(ii) may only be transferred in accordance with an assignment of
this Agreement pursuant to Section 14.8. AYTU may appoint
sublicensees with TRIS’s prior written consent (each, a
“Sublicensee”),
which consent shall not be unreasonably withheld, conditioned or
delayed. Each sublicense agreement shall provide for the following:
(i) AYTU guarantees (pursuant to a guaranty acceptable to TRIS) and
is responsible and liable to TRIS for the making of all payments
due, and the making of any reports under this Agreement, with
respect to sales of any Product by its Subsidiaries or Sublicensees
and their compliance with all applicable terms of this Agreement
(as if there was no Sublicensee); (ii) such sublicense agreement
permits AYTU to assign to TRIS such sublicense agreement; (iii)
such sublicense agreement requires such Sublicensee to observe all
other applicable terms of this Agreement; and (iv) each such
Affiliate or Sublicensee agrees in writing with TRIS to maintain
appropriate and accurate books and records and to permit TRIS to
inspect and copy such records and visit such Sublicensee’s
facilities and to observe all other applicable terms, of this
Agreement. No right or license other than those specifically
granted to AYTU under this Section 3.1 are granted, and rights not
specifically granted to AYTU herein are hereby explicitly retained
by TRIS, including, without limitation the right to manufacture
each Product and to exclusively supply each Product to AYTU (except
as otherwise expressly set forth in this Agreement).
3.2 Supply.
Subject to the terms and conditions of this Agreement, from and
after the Effective Date, during the Term of a Product: (1) TRIS
shall use Commercially Reasonable Efforts to manufacture, or have
manufactured, Label and Package, and supply to AYTU, all of
AYTU’s and its Subsidiaries’ and/or sublicensees’
requirements of such Product and (2) except as expressly provided
in Section 6.9, TRIS shall not manufacture such Product for, or
supply a Product to, any Third Party for sale in the Territory
without the prior written consent of AYTU. Subject to the terms and
conditions of this Agreement, and without limiting any other
restrictions contained in this Agreement, from and after the
Effective Date, during the Term of a Product AYTU shall purchase
all of AYTU’s and its Subsidiaries’ requirements of
such Product from TRIS (except as otherwise set forth in this
Agreement).
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
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COMMISSION.
3.3 Covenant
Not to Market Competing Products. Except as expressly
contemplated by the terms of this Agreement, the Parties and their
respective Subsidiaries shall not, and shall not negotiate to or
agree to, (1) develop, file for Regulatory Approval, acquire,
license, manufacture anywhere for use in the Territory, or (2)
Market or otherwise commercialize in or for the Territory, any
pharmaceutical product that is (A) a Generic Equivalent to a
Product, (B) an AG Product with respect to a Product, or (C) any
extended release or delayed release prescription cough/cold
medicine containing codeine, either alone or with a Third Party
(each, a “Competing
Product”) during the Term of a Product.
Notwithstanding the foregoing, clause (C) shall not prevent either
Party from developing, manufacturing and Marketing, a Generic
Equivalent (whose approval is or will be based on an ANDA) of a
Third Party extended release or delayed release prescription
cough/cold medicine containing codeine product which Third Party
product was approved pursuant an NDA and such product shall not be
deemed a Competing Product. If TRIS engages any Third Party to use
TRIS’ modified release technology for liquid suspension
products to manufacture Product, it shall enter into an agreement
with such Third Party whereby such Third Party agrees not to Market
a Generic Equivalent to such Product during the Term of such
Product.
3.4 Packaging
and Labeling. The Parties shall reasonably cooperate to
change the Label of Tuzistra XR so that such Product may be
Launched as soon as reasonably practicable after the Effective Date
(the “Tuzistra XR Initial
Label Changes”). Within three (3) months of the
Effective Date, AYTU shall supply to TRIS, in a timely fashion, its
logo and the layout required to Label the CCP-08 Product in
accordance with Applicable Laws and Section 4.10(a). TRIS shall be
responsible, at its sole cost and expense, for securing any
approvals required by Agencies in the Territory or other applicable
Regulatory Approvals for the initial Label for the CCP-08 Product,
and shall use Commercially Reasonable Efforts, at its own cost and
expense (including stability testing) to develop a bottle size
smaller than [**] and larger than [**], which the Parties currently
expect will be a [**] bottle size (the “Medium Bottle
Size”) with the exact size determined in TRIS’ sole
discretion after consultation with AYTU for the Products; provided
however, that costs and expenses of Labeling design (except for the
Tuzistra XR Initial Label Changes) and filings and interactions
with Regulatory Authorities shall be at the sole cost and expense
of AYTU for any post-NDA Approval Regulatory Approval. All changes
to Labels or Packaging prior to Regulatory Approval shall be at
AYTU’s sole cost and expense. Any changes or supplements to
the Labeling for any Product following the transfer of the NDA for
a Product to AYTU shall be at AYTU’s sole cost and expense;
provided, however, that the
costs and expenses of the Tuzistra XR Initial Label Changes, other
than incurred with respect to filings and interactions with
Regulatory Authorities, shall be at TRIS’ sole cost and
expense. In the event that AYTU wishes to modify or change the
Label for a Product, other than such changes to the Label as of the
Effective Date on Tuzistra XR to effectuate the Tuzistra XR Initial
Label Changes, AYTU shall provide at least sixty (60) days’
advance notice of such desired change to TRIS and forward such
modifications or changes to TRIS for incorporation into the
Packaging and Labeling of such Products. All reasonable costs
relating to changes in the Labels or Packaging, other than changes
with respect to the Label of Tuzistra XR existing as of the
Effective Date which are necessary to effectuate the Tuzistra XR
Initial Label Changes, including artwork, as well as destruction
and other costs (including TRIS’ reasonable and documented
out-of-pocket costs and expenses) relating to Labels or Packaging
that are no longer usable, shall be paid by AYTU to TRIS within
thirty (30) days of invoice to AYTU including, for example,
expenses of Labels or Packaging materials that are no longer
useable by TRIS in the Packaging or Labeling of the Products
because of (a) TRIS’ reliance on the Forecasts provided
pursuant to Section 5.1 hereof, or (b) changes requested by
AYTU.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
3.5 Patent
Marking. The Products shall be marked with the number of
each TRIS issued patent that applies to such Products in a manner
to provide sufficient notice under 35 U.S.C. § 287(a) and
other Applicable Law. In the event that the Product cannot be
marked itself, the patent notice shall be placed on associated
tags, labels, packaging, or accompanying documentation, either
electronic or paper, as appropriate to provide sufficient notice
under 35 U.S.C. § 287(a) and other Applicable
Law.
3.6 Signing
Payment, and Milestone Payments. Simultaneous with the
Parties’ execution of this Agreement, in addition to
reimbursing TRIS via wire transfer for the [**] 2019 PDUFA Program
Fee pursuant to Section 2.2, AYTU shall pay TRIS the Upfront Cash
Payment via wire transfer of immediately available funds as
directed by TRIS, and issue and deliver to TRIS stock certificates
(or electronic delivery as may be requested by TRIS) for the
Upfront Stock Consideration, which payments and issuance shall be
non-refundable and non- creditable. In addition, AYTU shall pay the
following non-refundable and non-creditable one- time milestone
payments (each of which shall be payable by wire transfer in
immediately available funds as directed by TRIS): (i) the NDA
Approval Milestone following NDA Approval of CCP-08, as set forth
in Section 2.1(b); (ii) [**] payable on the earlier of (A) the
third anniversary of the Effective Date and (B) the date when
cumulative combined aggregate Net Sales of all Products since the
Effective Date, by AYTU, its Subsidiaries and Sublicensees exceed
[**], and (iii) [**] if and when cumulative combined aggregate Net
Sales of all Products since the Effective Date by AYTU, its
Subsidiaries and Sublicensees exceed [**]. For the avoidance of
doubt, for purposes of each of the foregoing clauses (ii) and (iii)
cumulative combined aggregate Net Sales of the Products by AYTU and
its Subsidiaries shall, in each such case, be calculated from the
Effective Date through the applicable date of determination and no
payment made or payable pursuant to any such clause shall be
credited against or otherwise reduce any payment payable under
another clause (so that total payments made and required to be made
pursuant to this Section 3.6(a) when the milestones set forth in
Section 3.6(a)(i), (ii) and (iii) are achieved shall aggregate
[**].
ARTICLE IV
COMMERCIALIZATION
4.1 General
Diligence Obligation. Subject to the terms and conditions of
this Agreement, with respect to CCP-08, following approval of the
CCP-08 Product NDA, and with respect to Tuzistra XR, after the
Effective Date, AYTU will exercise Commercially Reasonable Efforts
to Market the Products to customers in the Territory during the
Term of each such Product in accordance with the terms of this
Agreement and with Applicable Law. Such efforts shall include,
without limitation, the Launch of each Product not later than the
required Launch Date for such Product, as set forth in Section 4.6,
the preparation of an annual Marketing Plan for such Product, sales
projections for such Product on an annual and Fiscal Quarter basis
and such other responsibilities as more specifically provided
herein. Without limiting the foregoing, AYTU shall:
(i) Perform
pre-commercialization analysis, planning, market preparation and
related Marketing activities for such Product in the
Territory;
(ii) Use
Commercially Reasonable Efforts to Market such Product in the
Territory (in the case of CCP-08 following TRIS’ receipt of
Regulatory Approval of such Product), regardless of whether such
Product has been listed on any formulary;
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
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COMMISSION.
(iii) Maintain
records, in sufficient detail, which shall be complete and accurate
in all material respects to reflect activities and results in
connection with the Marketing of such Product;
(iv) Use
Commercially Reasonable Efforts to retain sufficient personnel who
are qualified and experienced in the conduct of AYTU’s
responsibilities in the Marketing of such Products;
(v) Use
Commercially Reasonable Efforts to ensure that its sales force
personnel are trained and knowledgeable about the Product, with
AYTU to be responsible if such sales force personnel make any
unauthorized or inaccurate representations concerning such
Product;
(vi) Discuss
Marketing strategies for such Product with TRIS on at least twice
per Fiscal Year basis (including, without limitation, discussing
and reviewing Net Sales compared to AYTU’s forecasts and
evaluating progress of material activities under the Marketing
Plan);
(vii) Review
with TRIS AYTU’s efforts to Launch such Product in the
Territory (in the case of CCP-08, following Regulatory Approval),
which review shall occur as frequently as either Party shall
reasonably request; and
(viii) [**].
The
purchase order for the Initial Launch Quantities for Tuzistra XR
will be issued to TRIS no later than one Business Day after the
Effective Date.
4.2 Marketing
Plan. AYTU will be responsible for assessing the market
opportunities for the Product in the Territory and preparing and
providing to TRIS, for TRIS’ review and comment, within
thirty (30) days of the execution of this Agreement, a marketing
plan for the Tuzistra XR Product and sixty (60) days after NDA
Approval of CCP-08, a marketing plan for the CCP-08 Product (each
such marketing plan for Tuzistra XR and CCP-08, a
“Marketing
Plan”), which Marketing Plan, and each subsequent
Marketing Plan delivered in accordance with this Section 4.2, shall
set forth AYTU’s plan, strategy and proposed activities, to
Market such Product in the Territory. Each Marketing Plan will
include as appropriate, without limitation, the following
elements:
(i) A
description of AYTU’s general strategy with respect to
pre-Launch and post- Launch Marketing, reimbursement strategies,
advertising and promotion activities of the Product in the
Territory;
(ii) An
estimated time schedule for the performance of the Marketing
activities;
(iii) A
description of AYTU’s initial and long term pricing strategy
in the Territory; and
(iv) A
promotional budget.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Thereafter, on an
annual basis on or before each October 31 beginning October 31,
2019, AYTU will provide TRIS with a copy of AYTU’s Marketing
Plan for each Product that has received Regulatory Approval for the
following calendar year for review and adoption. TRIS may
communicate comments to AYTU in respect of all Marketing Plans and
AYTU agrees to consider such comments in good faith; provided that,
subject to AYTU’s Marketing obligations under this Agreement,
the final Marketing Plan shall be within AYTU’s discretion
and control.
4.3 Training.
AYTU shall (at its own cost and expense) be responsible for
training of all sales representatives with respect to the Marketing
of the Product, including, without limitation, developing sales
training materials (including scientific overview and positioning
and conducting sales training and testing of sales
representatives), all in compliance with Applicable
Law.
4.4 Advertising
and Promotion. AYTU shall develop, subject to Section 4.10
and the other provisions of this Agreement, the Trademarks with
respect to the Products (which in accordance with, and subject to,
Section 4.10, will contain the name “Tuzistra”),
website, and other Product positioning and supporting materials,
including without limitation, physician education materials. All
materials used by AYTU in Marketing the Products, including print
advertising, brochures, leaflet, and similar materials, shall
comply in all material respects with Applicable Laws and
requirements of any applicable Regulatory Authority and the terms
and provisions of Section 4.10. Prior to NDA Approval of the CCP-08
NDA, AYTU shall provide to TRIS copies of such materials used by or
on behalf of AYTU in Marketing of the Product for submission to the
FDA, at AYTU’s sole cost and expense. Copies of materials,
whether or not required to be submitted to the FDA shall be
provided to TRIS at least five (5) Business Days prior to their
first intended use. AYTU shall not make any therapeutic claims or
statements relating to the Product other than those authorized by
the applicable Regulatory Authorities, and AYTU shall remain solely
liable for all Marketing materials prepared by it or on its
behalf.
4.5 Pricing.
AYTU
shall have final decision-making authority for determining the
selling price for the Product in the Territory. If either (a)
during the period beginning on or after the Effective Date and
ending on December 31, 2019 the WAC price of Tuzistra XR increases
by a cumulative amount greater than [**] above the WAC price
immediately prior to the Effective Date, which was [**] for a [**]
bottle (whether through one or more price changes) or (b) during
the period beginning January 1, 2020 and ending May 31, 2020 AYTU
increases the WAC price of Tuzistra XR by a cumulative amount
greater than [**] above the WAC price as of December 31, 2019
(whether through one or more price changes), and such increase
results in an increase in rebates relating to or returns of Product
sold prior to the Effective Date, as demonstrated by TRIS or the
Former Owner providing evidence of such to AYTU (and having regard
to historic rebate and return levels), then AYTU shall be liable to
reimburse TRIS (or at TRIS’ election the Former Owner)
promptly (and in any event within 10 Business Days of TRIS or the
Former Owner providing evidence to AYTU) for these increased costs
(measured by the excess of the increase such costs over what such
increase would have been had the WAC price increase been limited to
[**] during the period specified in clause (a) or (b) of this
Section 4.5, as applicable) incurred by TRIS or the Former Owner as
a consequence of such increased rebates and returns. For example,
if the WAC price at the Effective Date or at May 31, 2019, as
applicable, is [**] per bottle and the WAC price increases [**] to
[**] (as opposed to [**]) during the period specified in clause (a)
or (b) of this Section 4.5, as applicable, then if ten bottles are
returned at [**], AYTU would owe [**].
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
4.6 Required
Launch Date. The Parties shall reasonably cooperate to
Launch the Tuzistra XR Product as soon as practicable following the
Effective Date. AYTU shall Launch the Tuzistra XR Product within
[**] after the Effective Date and shall Launch the CCP-08 Product
within [**] after NDA Approval, with the date for the CCP-08
Product reasonably adjusted to reflect the seasonality of market
demand for the Product where demand is lower between April and
August.
4.7 Bartering
and Bundling Prohibited.
(a) AYTU
and its Subsidiaries shall not accept or solicit any bartered goods
or services relating to the sale of the Product.
(b) The
Products shall not serve as a loss leader or be bundled with other
products to serve as a loss leader. The term “loss leader” shall refer to a
situation in which (1) the Product is sold on terms that are less
favorable than terms that could otherwise have been obtained in
order to benefit sales of one or more products other than a Product
and/or (2) a Product’s price is discounted to induce the sale
of other products.
(c) In
addition to and without limiting TRIS’ other remedies
hereunder, if AYTU or its Subsidiaries or Sublicensees distribute a
Product in violation of Section 4.7(b), the Net Sales shall be
adjusted to reverse any discounts in such bundling and loss leader
arrangement which were given to a customer that were in excess of
the then customary discounts for a Product (or, in the absence of
relevant data for a Product, other similar products under similar
market conditions).
(d) A
Product may be sold as part of any multiple product offering with
any other products by AYTU or its Subsidiaries or Sublicensees
(“bundling”), so
long as any discount granted as part of such sale is allocated on a
proportionate basis to such Product on the one hand and the other
products in the bundle on the other hand. For example, if a Product
and another product are sold under a volume discount arrangement
and have a combined volume discount of $200,000 on a total
undiscounted sales price of $1,000,000 and the units of such
Product included in such discount arrangement have an undiscounted
sales price of $600,000 and the units of such other product have an
undiscounted sales price of $400,000, such discount shall not be
considered a sale of such Product as a loss leader in violation of
Section 4.9(b) or as part of a bundle, basket or group sale so long
as no more than sixty percent (60%), or $120,000, of such discount
is allocated to such Product.
4.8 Selling
Data. Simultaneous with AYTU’s delivery to TRIS of the
Quarterly Payment Report, AYTU shall provide a report to
TRIS:
(i) setting
forth the total number of prescriptions filled for each Product in
the Territory; and
(ii) setting
forth AYTU’s and its Subsidiaries’ sales of Product by
units and revenue in the Territory.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
4.9 Reports.
(a) Each
Party shall promptly keep the other fully informed of all
governmental and regulatory requirements, activities and plans of
any Regulatory Authority including any changes thereto of which
such Party becomes aware which materially affect, or are reasonably
likely to materially affect, the manufacture or Marketing of the
Product in the Territory.
(b) Prior
to the Launch of a Product, AYTU shall report to TRIS regarding
AYTU’s pre-Launch Marketing activities with respect to the
Product as set forth in the Marketing Plan for such Product
prepared pursuant to Section 4.2.
(c) After
the Launch of the Product, AYTU shall throughout the Term provide
to TRIS a written report for each Fiscal Quarter showing quarterly
data for the following: the number of units of a Product sold, the
gross sales, and the Net Sales for such Product, including details
of all necessary calculations of the same, including (i) the
calculations which detail the differences between Net Sales and
gross sales; (ii) the calculation of a total number of
prescriptions for such Product, including by NDC number, and (iii)
a statement of the amount of inventory of the Products held by
AYTU, its Subsidiaries or Sublicensees as of the last day of such
Fiscal Quarter. AYTU shall also provide to TRIS each statement of
the amount of inventory of the Products received from any
wholesaler that provides such information to AYTU either (i) at
AYTU’s request in its sole discretion if there is an
additional charge for such report or (ii) at no additional charge
(in which case AYTU shall request such reports), which statements
AYTU shall request that each wholesaler provide as of the end of
each Fiscal Quarter, delineating the amount of Products held by
such wholesaler as of the last day of the Fiscal Quarter. AYTU
shall provide such statement on a Fiscal Quarterly basis on or
before the forty-fifth (45) day following such Fiscal
Quarter.
(d) After
the Launch of the Product, AYTU shall within forty-five (45) days
after the completion of each calendar year during the Term, provide
to TRIS, a report describing other selling resources deployment,
including without limitation, budget and spend on Marketing
compared to the Marketing Plan for the Product for such calendar
year.
(e) After
the Launch of a Product, AYTU shall provide, on a Fiscal Quarter
basis on or before the forty-fifth (45) day following each Fiscal
Quarter, a report summarizing the status of Reimbursement Approvals
and Pricing Approvals and filings in terms of formulary listings
and reimbursement pricing tier for such Product.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
4.10 Trademarks;
Logos
(a) AYTU,
either itself or through a Subsidiary of AYTU, may Market the
Product throughout the Territory under a Trademark or Trademarks
selected by AYTU (collectively, the “AYTU Marks”); provided, however, that notwithstanding
the foregoing or anything else to the contrary contained in this
Agreement, it is understood and agreed that, subject to Applicable
Law, the Products will be Marketed in the Territory utilizing the
TRIS Mark “Tuzistra” that is referred to below or such
variation thereof or other Trademark owned by TRIS that is
reflected as the name of a Product in the applicable Product NDA as
finally approved by the FDA, and that without TRIS’ prior
written consent (which may be withheld or conditioned in its sole
discretion) and compliance with Applicable Law, no other Trademark,
other than the TRIS Marks shall be utilized in Marketing the
Product other than AYTU Trademarks consisting of the corporate name
and logo of AYTU and its Subsidiaries which, subject to Applicable
Law, may be used in Packaging and promotional and advertising
materials for the Product which also contain the TRIS Mark,
“Tuzistra,” (or such other TRIS Mark reflected as the
name of a Product in the applicable Product NDA ultimately approved
by the FDA) and the other TRIS Marks requested to be included by
TRIS in accordance with the third sentence of this Section 4.10.
Except as otherwise expressly provided in this Agreement, AYTU
shall own all right, title and interest in and to such AYTU Marks.
Subject to Applicable Law and Section 7.4, all Labeling, Packaging,
and promotional and advertising materials for a Product shall, at
the request of TRIS, contain the TRIS trade name identifying TRIS
as manufacturer of the Products and TRIS’ LiquiXR logo
(collectively, together with the name “Tuzistra” and
any variation thereof or other Trademark owned by TRIS that is
reflected as the name of the Product in the NDA as finally approved
by the FDA, the “TRIS
Marks”). Except as otherwise expressly provided in
this Agreement, TRIS shall own all rights, title and interest in
and to all such TRIS Marks. For the avoidance of doubt, TRIS Marks
are not AYTU Marks. In connection with this Section 4.10: TRIS
hereby grants to AYTU a non-exclusive, royalty-free license to use
the TRIS Marks and the name “Tuzistra” as well as any
Trademarks utilizing “Tuzistra”, in the Territory, as
well as TRIS’ rights in the domain names www.tuzistraxr.com,
www.tuzistraer.com, www.tuzistra.com,
for the Term of this Agreement, in connection with the Marketing
and promotion of Products as contemplated in this Agreement. The
ownership and all goodwill from the use of the TRIS Marks
(including, without limitation, “Tuzistra”) shall vest
in and inure to the benefit of TRIS. TRIS reserves all rights not
expressly granted herein.
(b) Upon
termination of this Agreement, if and to the extent that AYTU owns
a Product-specific Trademark under or pursuant to which a Product,
and not any other product, is being Marketed at the time of such
termination (an “AYTU Product
Trademark”), AYTU shall promptly assign to TRIS
ownership of such AYTU Product Trademark. Upon termination of this
Agreement with respect to either Product, AYTU shall, and hereby
does, grant to TRIS, and shall cause its Subsidiaries to grant to
TRIS, a non-exclusive, royalty-free, non-transferable, non-
sublicensable license to use the applicable Trademarks of AYTU
(collectively, the “AYTU Non-
Product Specific Trademarks”) used with respect to
such Products that are not Product- specific, solely to the extent
included on the packaging for such Product in order that TRIS can
sell any inventory of such Product in TRIS’ possession at the
time of such termination, but in no event for a period longer than
six (6) months after the expiry of the stated shelf life of any
such remaining inventory of Product.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(c) As
between AYTU and TRIS, AYTU hereby acknowledges the exclusive
ownership of TRIS of the TRIS Marks furnished by TRIS (or its
Affiliates) for use in connection with the Products. AYTU shall
not, during the Term or thereafter, register, use, or attempt to
obtain any right in and to any TRIS Marks or in and to any name,
logo or trademark confusingly similar thereto, including, without
limitation, by adding to or supplementing the TRIS Marks with
additional words or phrases. As between AYTU and TRIS, TRIS hereby
acknowledges AYTU’s exclusive ownership rights in the AYTU
Marks, and accordingly agrees that, subject to Section 4.10(b) and
Section 9.3(a)(ix) solely with respect to an AYTU Product Trademark
upon termination of this Agreement, at no time during or after the
Term of this Agreement to challenge or assist others to challenge
the AYTU Marks or the registration thereof or attempt to register
any Trademarks, trade names or logo confusingly similar to such
AYTU Marks, including without limitation, by adding to or
supplementing the AYTU Marks with additional words or
phrases.
(d) For
the sake of clarity and with respect to this Section 4.10(d), TRIS
is the licensor as it pertains to TRIS Marks (including, without
limitation, the name “Tuzistra” and any Trademarks
utilizing “Tuzistra”) and licensee as it pertains to
the AYTU Non-Product Specific Trademarks during the Term of this
Agreement, the AYTU Product Trademarks. AYTU is the licensee as it
pertains to TRIS Marks (including, without limitation, the name
“Tuzistra” and any Trademarks utilizing
“Tuzistra”) and is the licensor as it pertains to the
Non-Product Specific Trademarks during the Term of this Agreement,
the AYTU Product Trademarks. Each of AYTU and TRIS are therefore
“Licensor” and “Licensee,” as applicable.
For the purposes of this Section 4.10(d), “Licensed
Trademarks” shall mean the TRIS Marks (including, without
limitation, the name “Tuzistra” and any Trademarks
utilizing “Tuzistra”) and AYTU Marks,
collectively.
(i) Licensor
shall have the right to exercise quality control over the
Licensee’s use of the Licensed Trademarks, as applicable, to
a degree reasonably necessary to maintain the validity of the
Licensed Trademarks, as applicable, and to protect the goodwill
associated therewith.
(ii) Licensee
shall, in its packaging, sale, marketing, advertising, disposition
and distribution of the Products and product packaging adhere to a
level of quality regarding the maintenance of the validity of the
Licensed Trademarks, as applicable, and the protection of the
goodwill associated therewith consistent with the high standards of
quality otherwise set by Licensee.
(iii) Licensee
shall comply with all Applicable Laws in the packaging, sale,
distribution, advertising, disposition and marketing of the
Products and product packaging, and Licensee shall use all legends,
notices, and markings as required by Applicable Law.
(iv) Licensee
shall, upon reasonable request by Licensor, submit to Licensor
samples of Products and product packaging and representative
samples of all publicly distributed materials bearing the Licensed
Trademarks or product packaging which are then currently sold or
distributed, or pending sale or distribution by
Licensee.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ARTICLE V
DELIVERY AND
ACCEPTANCE
5.1 Forecasts.
Not later than forty-five (45) days after the Effective Date (or if
later, one hundred eighty (180) days prior to the date estimated by
TRIS for receipt of Regulatory Approval of a Product NDA), AYTU
shall provide to TRIS a rolling forecast that estimates the
quantity of a Product to be purchased by AYTU for each month during
the [**] period following the Launch Date (the “Initial Forecast”). Thereafter, at
least 30 days prior to the beginning of each calendar month after
the Launch Date (each, a “Forecast Delivery Date”),
AYTU shall provide TRIS with a [**] rolling forecast that estimates
the quantity of the Product to be purchased by AYTU for each month
during such [**] period (each, a “Subsequent Forecast”, and together
with the Initial Forecast, a “Forecast”) setting forth its
estimated requirements for shipment by month for the Product. The
[**] of each Forecast shall represent firm orders for the Product
for which AYTU shall be obligated to issue Firm POs (as defined in
Section 5.2(a)). All Firm POs must be with the lead times specified
in Section 5.2. In the absence of receipt by TRIS within the
required lead time of Firm POs requesting delivery in a given
month, TRIS may treat the most recent Forecast for such month as a
Firm PO for such month. All Forecasts shall be made in good faith
based on AYTU’s commercially reasonable estimates of customer
requirements. Each Forecast provided to TRIS hereunder shall also
list the estimated number of units of inventory of Product held by
AYTU and its Subsidiaries and any Sublicensees as of the date prior
to the Forecast Delivery Date for which data are most recently
available, and such information shall be provided by AYTU after
termination and expiration of this Agreement on a monthly basis
until AYTU, its Subsidiaries and any Sublicensee hold no inventory
of the Product (collectively, “Inventory Reports”).
5.2 Purchase
Orders
(a) All
purchases and sales between AYTU and TRIS will be initiated by
AYTU’s issuance of written purchase orders sent via e-mail,
airmail or facsimile (each a “Firm PO”). Each Firm PO shall
state Product quantities, requested delivery dates, and shipping
instructions. Together with the delivery to TRIS of each Forecast,
AYTU shall deliver a Firm PO to TRIS with respect to the next month
for which a Firm PO is due in accordance with the following
delivery terms: prior to the estimated Launch Date, no Firm PO
shall request delivery less than one hundred twenty (120) days
after issuance of such Firm PO, provided that with respect to
Tuzistra XR, for the first [**] bottles and one batch of [**]
bottles (without waiving the required Lead Time), TRIS shall use
Commercially Reasonable Efforts to deliver and may deliver as soon
as practicable; and after the Launch Date, no Firm PO shall request
delivery less than one hundred twenty (120) days after issuance of
such Firm PO. In the event AYTU does not deliver timely Firm POs
corresponding to the applicable binding portions of a Forecast,
TRIS may rely on the applicable binding portion of the Forecast in
delivering Product to AYTU, and AYTU shall be required to take
delivery of, and pay for such Product as if a Firm PO had been
issued.
(b) TRIS
shall use Commercially Reasonable Efforts to supply the quantities
of the Product listed on each applicable Firm PO, provided such
amounts do not exceed 125% of the quantities of the Product listed
in the relevant and most recent Forecast for the applicable three
(3) month period. TRIS’ failure to supply Product to AYTU in
quantities in excess of 125% of the amounts listed in the relevant
and most recent Forecast for the applicable three (3) month period
shall not be a breach of TRIS’ supply obligations hereunder.
Notwithstanding the foregoing, only the lesser of the amount in (I)
a binding portion of a Forecast and (II) a Firm PO (as the same may
be modified pursuant to the last sentence of Section 5.3) shall be
taken into consideration in determining Service Level.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
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COMMISSION.
(c) If
TRIS is unable to meet Firm POs as the result of a shortage of
production capacity at TRIS’ manufacturing Facility, TRIS
shall promptly notify AYTU in writing and TRIS shall allocate its
production capacity for liquid products to assure AYTU a priority
supply of Products in such proportion (expressed as a function of
equipment utilized) as the production equipment capacity actually
utilized to meet orders for the Products over the previous twelve
(12) month period bears to total production equipment capacity in
TRIS’ manufacturing Facility for liquid products over the
same period.
(d) TRIS
shall promptly notify AYTU in writing if, at any time, TRIS has
reason to believe that it will not be able to fill an order for
Product in all material respects in accordance with the delivery
schedule specified in the applicable Firm PO and pursuant to the
terms and conditions of this Agreement. For the avoidance of doubt
if TRIS has reason to believe that it will be able to timely
deliver at least 90% of the quantities of Products specified in the
applicable Firm PO, then no such notification is
necessary.
(e) All
Products ordered by AYTU shall be in amounts consistent with the
then- current minimum batch sizes (or multiples thereof). By way of
example, as of the Effective Date, this equates to approximately
[**] bottles or [**] bottles. Notwithstanding the foregoing, TRIS
shall use Commercially Reasonable Efforts to accommodate one split
batch per year of [**] and [**] bottles.
5.3 Delivery
of Products. AYTU shall provide TRIS with appropriate
instructions for each shipment of the Products, designating the
carrier, destination, method of transport and insurance
requirements. TRIS shall make available all Products supplied under
this Agreement FCA (INCOTERMS 2010) TRIS’ designated U.S.
warehouse facility. AYTU shall pay all freight, insurance charges,
taxes, inspection fees and other reasonable and documented out-of-
pocket charges applicable to the shipping and transport of the
Products purchased by AYTU hereunder (“Freight Charges”). Within five (5)
Business Days following TRIS’ notification by email or fax to
AYTU of the availability of ordered Product, AYTU shall notify TRIS
by email or fax of the date and time for pickup, and the identity
of the Person (which may be AYTU) that will pick up such Product
order. The date and time of pickup shall be during normal business
hours and within five (5) Business Days of TRIS’
notification. Notwithstanding the foregoing or anything else to the
contrary contained in this paragraph, if AYTU (A) does not timely
send the required notification to TRIS; (B) does not pick up the
Product order as scheduled; or (C) requests that TRIS arrange for
delivery, then TRIS may arrange for delivery and/or deliver Product
(with its own trucks or otherwise); and the greater of $1,000 or
reasonable and documented out-of-pocket costs incurred by TRIS for
Freight Charges shall be added to the Transfer Price. If
TRIS’ notification is within plus/minus five Business Days of
the delivery date requested in the applicable Firm PO then the
associated delivery shall be deemed timely. Further, if TRIS
delivers between (A) 90% of Product ordered either (I) in a Firm PO
or (II) in the applicable binding portion of a Forecast and (B)
110% of Product ordered (I) in a Firm PO or (II) in the applicable
binding portion of a Forecast, then the Firm PO shall be deemed
modified to conform to the amount delivered and TRIS shall be
deemed to have fully satisfied its obligations with respect to
quantities thereunder.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Title
and risk of loss and damages to the Products purchased by AYTU
hereunder shall pass through to AYTU and Product shall be deemed
delivered upon AYTU’s designated carrier or the carrier
designated by TRIS pursuant to the last sentence of the preceding
paragraph taking control of such Product, provided however, if TRIS delivers
Product using its own employees then title and risk of loss shall
pass upon unloading at AYTU’s facility. TRIS shall provide
the Product and shall include an itemized packing list with each
shipment. Prior to Regulatory Approval of a Product, AYTU will
store Product made available by TRIS at secure warehouse facilities
and quarantine such Product until Regulatory Approval of such
Product.
5.4 Acceptance
and Rejection of the Product.
(a) AYTU
shall notify TRIS in writing of its rejection of any Product
supplied to it pursuant to this Agreement (“Rejection Notice”) as follows: (i)
in the case of defects that are readily discoverable upon a
physical inspection of a Product shipment, AYTU shall deliver a
Rejection Notice within thirty (30) calendar days after AYTU or its
designated facility has received such Product shipment, or (ii) in
the case of a latent defect or any defect that was not obvious and
could not be readily discovered from a physical inspection of the
Product supplied, AYTU shall deliver a Rejection Notice within ten
(10) calendar days of the date that AYTU discovers such defect, but
in any event prior to the expiration date of the shelf life of such
Product. Failure to provide a Rejection Notice to TRIS within the
applicable period shall constitute acceptance by AYTU of the
shipment for purposes of clause (i) or (ii) above, as applicable.
Rejection Notices that are provided by AYTU shall state in
reasonable detail (sufficient to enable TRIS to identify the nature
of the problem for tests or studies to be conducted by or on its
behalf or to dispute the same) the reason why AYTU believes the
Product does not conform to the Product Specifications and/or the
Product warranties contained in Section 8.1. AYTU shall, within
five (5) Business Days of the delivery by AYTU of any such
Rejection Notice, provide samples of the Product being rejected, if
appropriate, and copies of written reports relating to tests,
studies or investigations performed to date by or on behalf of AYTU
on the Product being rejected.
(b) AYTU’s
test results or basis for rejection shall be conclusive unless TRIS
notifies AYTU within ten (10) Business Days of receipt by TRIS of
the Rejection Notice that it disagrees with such test results or
basis for rejection. If AYTU and TRIS fail to agree within ten (10)
Business Days after TRIS’ notice to AYTU as to whether any
Product identified in the Rejection Notice deviates from the
Product Specifications or fails to materially comply with the
Product warranties contained in, representative samples of the
batch of the Product in question, together with mutually agreed
upon questions, shall be submitted to a mutually acceptable
independent laboratory or consultant (if not a laboratory analysis
issue) for analysis or review. The results of such applicable
independent evaluation shall be binding upon the parties. If TRIS
and AYTU determine by agreement, or if such evaluation certifies
that the Product was properly rejected by AYTU, AYTU may reject the
Product in the manner contemplated by Section 5.4(d). The Party
that is determined to have been incorrect in its determination of
whether the Product complies fully with the Product Specifications
and the Product warranties contained in shall pay all of the costs
of such independent evaluation, including, without limitation,
laboratory fees and additional shipping and transportation costs.
Should the fees associated with the work conducted by the
independent laboratory or consultant be due up front, AYTU and TRIS
shall each pay fifty percent (50%) of such upfront fees;
provided, that if it is
determined by the independent laboratory or consultant that either
Party shall have been incorrect in its determination as to whether
the Product complies fully with the Product Specifications and the
Product warranties contained in Section
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
8.1,
such incorrect Party shall reimburse the other Party for such fifty
percent (50%) of such fees within ten (10) Business Days of such
determination by the independent laboratory or consultant, as the
case may be.
(c) If
any order of a Product is rejected by AYTU, AYTU’s obligation
to pay TRIS in respect of the rejected Product shall be suspended
until such time as the rejection is determined or otherwise agreed
to be incorrect per Section 5.4(b). If only a portion of an order
is rejected, only the duty to pay the amount allocable to such
rejected portion shall be suspended.
(d) In
the event an order or partial order is rejected by AYTU pursuant to
the provisions of this Section 5.4, the non-conforming shipment of
a Product, or the non-conforming portion thereof, shall be held for
TRIS’ disposition, or shall be returned to TRIS, in each case
at TRIS’ expense, as directed by TRIS. TRIS shall use its
Commercially Reasonable Efforts to replace the non-conforming
shipment of such Product, or the non-conforming portion thereof,
with conforming Product as soon as reasonably practicable after
receipt of notice of rejection thereof, and in any event will do so
within the later of forty-five (45) calendar days after receipt of
notice of rejection thereof and thirty (30) calendar days of an
independent testing decision in favor of AYTU, at no cost to AYTU.
TRIS shall have no obligation to AYTU or to any Third Party with
respect to any defective Product manufactured by TRIS to the extent
that such defect is attributable to the failure by AYTU, its
Subsidiaries, or any Third Party to properly store, transport or
care for such Product after AYTU is notified of the availability
for pick-up of such Product at TRIS’ warehouse in accordance
with Section 5.3. TRIS shall make arrangements with AYTU for the
return or destruction, at TRIS’ option and cost, of any
rejected Product. All such return shipping charges or costs of
destruction shall be paid by TRIS. In the event that AYTU has paid
for rejected Product, and such Product has not been satisfactorily
replaced, TRIS shall promptly extend a credit to AYTU for the full
amount paid by AYTU for such Product, together with related costs,
or dispute such claim and, if necessary, initiate dispute
resolution in accordance with Section 5.4(b) of this Agreement. For
purposes of clarity, the Parties acknowledge and agree that
notwithstanding any other provision in this Section 5.4, AYTU will
be required to pay, without credit from TRIS, either (i) for the
initial non-conforming portion of the order or (ii) for its
replacement, provided that TRIS supplies such replacement for the
Product order, but not both (i) and (ii).
5.5 Product
Recall. In the event that either Party believes it may be
necessary to conduct a recall, field correction, market withdrawal,
stock recovery, or other similar action with respect to any Product
which was sold under this Agreement (a “Recall”), AYTU and TRIS shall
promptly consult with each other in good faith as to how best to
proceed, it being understood and agreed that the final decision as
to any Recall of any Product sold by AYTU or its Subsidiaries or
its Sublicensees shall be made by AYTU, as AYTU is responsible for
notifying regulatory agencies of any recall market withdrawals,
etc., provided, however,
that neither Party shall be prohibited hereunder from taking any
action that it is required to take by Applicable Law. Each of TRIS
and AYTU shall make a permanent, complete and accurate record of
all costs incurred by it in connection with any Product
recall.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(a) To
the extent any Recall or seizure of any Product sold by AYTU or its
Subsidiaries or Sublicensees is caused by or is the result of the
breach or default of any covenant, warranty or obligation in this
Agreement by TRIS (including a breach of the Product warranties
contained in Section 8.1), or the negligence, mistake or omission
of TRIS (or any Approved Manufacturer engaged by TRIS) (any of such
events being referred to as “TRIS’ Fault”), TRIS shall
(i) reimburse (or at AYTU’s option, credit) AYTU for all
reasonable and documented out- of-pocket costs and expenses
reasonably incurred by AYTU in connection with the Recall or
seizure, including, without limitation, replacing the Product
subject to the Recall or seizure in accordance with the provisions
of Section 5.4; and (ii) as provided in Section 13.1(b), indemnify
and hold AYTU and its Subsidiaries harmless from and against any
and all damages to or claims by Third Parties associated with or
resulting from any such Recall or seizure.
(b) To
the extent any Recall or seizure of any Product sold by AYTU or its
Subsidiaries or its Sublicensees is caused by or is the result of
the breach or default of any covenant, warranty or obligation in
this Agreement or any applicable sublicense agreement by AYTU or
its Subsidiaries or its Sublicensees or the negligence, mistake or
omission of AYTU (or any subcontractor or other Third Party engaged
by AYTU or its Subsidiaries or its Sublicensees) (any of such
events being referred to as “AYTU’s Fault”) AYTU shall:
(i) reimburse (or at TRIS’ option, credit) TRIS for all
reasonable and documented out-of-pocket costs and expenses incurred
by TRIS in connection with the Recall or seizure; and (ii) as
provided in Section 13.1(a), indemnify and hold TRIS and its
Subsidiaries harmless from and against any and all damages to or
claims by Third Parties associated with or resulting from any such
Recall or seizure.
(c) If
the cause or reason of any Recall or seizure of any Product sold by
AYTU or its Subsidiaries or its Sublicensees is the result of
TRIS’ Fault and AYTU’s Fault, then TRIS and AYTU shall
be responsible for the payment of reasonable and documented
out-of-pocket costs and expenses incurred by either Party in
connection with the Recall or seizure and all damages to or claims
by Third Parties associated with or resulting from such Recall or
seizure in proportion to the relative fault of each Party in
causing such Recall or seizure.
(d) If
there is any Recall or seizure of any Product sold by AYTU or its
Subsidiaries or its Sublicensees and the cause or reason of such
Recall or seizure is not the result of TRIS’ Fault or
AYTU’s Fault, the Parties shall be each be responsible for
and pay one-half (1/2) of any and all losses, costs, and expenses
reasonably incurred by either Party in connection with such Recall
or seizure and any damages to or claims by Third Parties associated
with or resulting from any such Recall or seizure.
(e) If
TRIS and AYTU cannot agree which party is at fault or the relative
degree of fault if both Parties are at fault, then such Dispute
shall be resolved in accordance with Section 14.3.
(f) Each
Party shall keep the other fully informed of any notification or
other information, whether received directly or indirectly, which
might affect the marketability, safety or effectiveness of a
Product, or which might result in liability issues or otherwise
necessitate action on the part of either party, or which might
result in Recall or seizure of Product.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(g) Prior
to any reimbursement pursuant to this Section 5.5 the Party
claiming reimbursement shall provide the other Party with all
available documentation of all reimbursable costs and
expenses.
5.6 Approved
Manufacturer.
TRIS
may, at any time during the Term direct that the Products be
manufactured and/or Packaged for TRIS on a subcontractor basis by a
Third Party manufacturer (an “Approved Manufacturer”). TRIS
shall be responsible under this Agreement for any Products
manufactured or Packaged by an Approved Manufacturer as if such
Product had been manufactured or Packaged by TRIS. If TRIS uses an
Approved Manufacturer, it shall bear the costs of transferring
technology to the Approved Manufacturer and the Parties’
out-of- pocket regulatory filing costs in conjunction therewith,
and the Transfer Price for Product shall continue to be the same
price that it would have been without TRIS’ use of an
Approved Manufacturer.
5.7 Problems
with Supply.
(a) As
soon as it becomes apparent to TRIS that circumstances resulting in
any failure or delay in delivery of the Product will continue for
more than thirty (30) days, it shall promptly notify AYTU in
writing and as soon as possible thereafter confer with AYTU to
discuss the alternatives, and cooperate with AYTU as AYTU may
reasonably request for AYTU to obtain a source of supply of the
Product during the continuance of such circumstances, provided
however, that in no event shall TRIS be required to transfer
manufacturing to another manufacturer or facility or cooperate with
respect thereto.
(b) In
addition, if at any time or times during the Term for any reason
(including a Force Majeure Event), (a) TRIS (i) fails to deliver
any Product meeting the requirements of this Agreement to AYTU for
[**] consecutive days following the date provided for delivery on
an outstanding Firm PO and (ii) does not deliver any Product
meeting the requirements of this Agreement against any other Firm
POs during such [**] day period, or (b) the Service Level is not at
least sixty-five percent (65%) over a period equal to the greater
of (x) six (6) consecutive months, and (y) the number of
consecutive whole months in which an aggregate of at least twenty
(20) batches of Product are scheduled for delivery to AYTU pursuant
to Firm POs issued in accordance with Section 5.2 (and the forecast
requirements of Section 5.1) (each a “Triggering Event”), then within
thirty (30) days of the occurrence of such Triggering Event, AYTU
may declare a supply interruption (“Supply Interruption”) by notice to
TRIS. Neither a Triggering Event nor a Supply Interruption shall
constitute a breach of this Agreement (provided TRIS is using
Commercially Reasonable Efforts to supply the Product). Upon
sending a timely notice to TRIS, AYTU may, notwithstanding Section
3.3 or any other provision of this Agreement, obtain all or any
part of its requirements of a Competing Product for sale in the
Territory from other sources and Market such Competing Product in
the Territory. Such sourcing of a Competing Product by AYTU from
other sources and Marketing such Competing Product as provided in
this Section 5.7 will not be deemed a breach or default of any
provision of this Agreement by AYTU.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(c) If
AYTU obtains a Competing Product from another source pursuant to
this Section 5.7 and thereafter during the Term TRIS is able to
resume supplying AYTU’s requirements of the Product in
accordance with the provisions of this Agreement, TRIS shall
promptly notify AYTU in writing that TRIS is able to resume
supplying AYTU’s requirements of the Product to AYTU under
the terms of this Agreement and at AYTU’s request, provide
AYTU with reasonable evidence to AYTU’s reasonable
satisfaction of TRIS’ ability to do so (a “Supply Resumption Notice”). After
AYTU’s receipt of a Supply Resumption Notice, AYTU will
resume purchasing the Product from TRIS and TRIS will resume
supplying the Product to AYTU, in accordance with the provisions of
this Agreement as quickly as commercially practicable. The Supply
Interruption will be deemed to have expired upon AYTU’s
receipt of TRIS’ Supply Resumption Notice. Notwithstanding
anything to the contrary contained in this Agreement, during the
pendency of a Supply Interruption and until AYTU re-commences the
purchase of Product exclusively from TRIS following a Supply
Resumption Notice, AYTU shall remit to TRIS Royalty Payments with
respect to the Net Sales from sales of the Competing Product as if
such Competing Product were the Product under this Agreement, in
accordance with Section 6.3.
(d) If
TRIS in not in compliance with Section 5.3, including the last
sentence of the first paragraph thereof with respect to a Firm PO,
then AYTU, at its option and in addition to the rights and remedies
specified in this Agreement, shall have the option, in AYTU’s
sole discretion, to (a) extend the required delivery date for such
Firm PO, or (b) cancel the applicable Firm PO.
(e) If,
after the commencement of a Supply Interruption for which TRIS has
not provided to AYTU a Supply Resumption Notice within six (6)
months of AYTU’s declaration of a Supply Interruption
(pursuant to Section 5.7(b)), AYTU is unable to engage an alternate
Third Party supplier to begin supplying a Competing Product to AYTU
within six (6) months after AYTU’s declaration of a Supply
Interruption (pursuant to Section 5.7(b)), AYTU may terminate this
Agreement by written notice to TRIS.
ARTICLE VI – PAYMENT OF TRANSFER PRICE; ROYALTY;
ACCOUNTING
6.1 Transfer
Price; Purchase of Product.
(a) TRIS
shall supply each Unit of Product for commercial sale in the
Territory to AYTU during the Term of such Product at the following
prices (the “Transfer
Price”):
(i) The
price for Tuzistra XR shall be [**] per [**] bottle and [**] per
[**] bottle; provided, further,
however, that, notwithstanding anything to the contrary
contained in this Agreement, there shall be no obligation for TRIS
to supply such [**] size samples after a Third Party Generic Launch
so long as AYTU’s Net Sales of Product (excluding AG Product)
do not exceed [**] in any consecutive 12 month period.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(ii) For
each 12 month period commencing July 1, 2019 and on July 1 of each
year thereafter, the Transfer Price in effect as of the immediately
preceding June 30 shall be automatically increased for existing and
new purchase orders (regardless of when placed) requesting delivery
on or after August 1 of such new 12 month period by the cumulative
percentage increase, if any, in the Pharmaceutical Producer Price
Index during the twelve months ended May 31 immediately preceding
such date. Once the Transfer Price for a twelve month period has
been set as aforesaid, it shall not be affected by revisions to the
Pharmaceutical Producer Price Index for the 12 month period ended
May 31, which was the basis of determination; provided, however, that in calculating
the adjustment to the Transfer Price for the next subsequent 12
month period commencing on July 1, the Pharmaceutical Producer
Price Index as of the beginning of the 12 month period ended May 31
preceding such date, shall be the same figure as was used as the
end of the 12 month period for the prior year’s calculation
regardless of any subsequent revisions made by the Bureau of Labor
Statistics thereto.
(iii)
At any time the Transfer Price for bottle sizes,
other than the [**] ounce and [**] ounce bottles, shall be
determined as follows: the sum of (i) the product of (A) the price
of the [**] bottle multiplied by (B) a fraction,
the numerator of which is 16 minus the number of ounces in the new
bottle size and the denominator of which is 15 (the
“[**] Bottle
Percentage”), plus (ii) the product of (A)
the price of the [**] bottle, multiplied by (B) 1 minus the
[**] Bottle Percentage. For example, to determine the price of a
[**] bottle, the [**] size price would be multiplied by 73.333% and
the [**] size price would be multiplied by 26.667%. Accordingly,
the resulting Transfer Price for the [**] size would be (73.333%)
([**]) + (26.667%) ([**]) or [**], which price would be increased
as provided in Section 6.3(a)(ii), at the same time as Transfer
Price of the [**] and [**] bottles are increased.
6.2 Invoicing.
Upon notifying AYTU of availability for pick-up of an order of a
Product, TRIS shall submit invoices therefor to AYTU. Subject to
Section 5.4, AYTU shall pay each invoice in full within thirty (30)
days after AYTU receives notice of the availability at TRIS’
warehouse of Products covered by the invoice (it being understood
that a certificate of analysis certifying that a Product meets its
Product Specification will be delivered along with the shipment of
such Product as set forth in Section 8.2). Notwithstanding the
foregoing, with respect to Product ordered prior to Launch of
CCP-08, TRIS will invoice AYTU after such Product is released from
TRIS’ quality control operations (which Product may be stored
at TRIS’ facilities, at AYTU’s request, and subject to
TRIS’ prior consent) and such invoice shall be paid by AYTU
within thirty (30) days. All invoices not paid within the time
period specified above, shall bear interest from the date due until
paid at the rate equal to the lesser of (1) 1.5% per month and (2)
the maximum interest rate permitted by Applicable Law. For the
avoidance of doubt, and notwithstanding anything else to the
contrary contained in this Agreement: the foregoing provisions
shall be applicable to all Units of Product ordered pursuant to
this Agreement, including, without limitation, the validation
batches of CCP-08, but only if the Product validation batches are
available for commercial sale with at least six months less than
the Products’ approved shelf life.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
6.3 Payment
of Royalties.
(a) For
each Fiscal Quarter during the Term of this Agreement commencing
with the first Fiscal Quarter which includes AYTU’s Launch of
the Product, AYTU shall calculate the Net Sales from the sale of
each Product in the Territory. Each such calculation shall be
conducted in a manner consistent with the definition of “Net
Sales” contained herein and shall be in accordance with
GAAP.
(b) Within
forty-five (45) calendar days (sixty (60) days in the case of
AYTU’s last Fiscal Quarter in a calendar year) after the last
day of each Fiscal Quarter of each calendar year during the Term
commencing with the Fiscal Quarter of AYTU’s Launch of a
Product, AYTU shall furnish to TRIS a written report (the
“Quarterly Payment
Report”) setting forth for such Fiscal Quarter, (i)
the Net Sales of each Product (including the number of units
shipped times the invoiced price per unit and the details of all
deductions from gross sales to arrive at Net Sales); (ii) the date
of AYTU’s Launch of such Product during such period (if
applicable), (iii) the amount of the Royalty Payment to be made to
TRIS, (iv) the applicable royalty rate payable under Section
6.3(e), together with reasonable supporting documentation with
respect thereto. AYTU shall also remit to TRIS, by the due date of
each Quarterly Payment Report for each Fiscal Quarter, a payment
equal to the Royalty Payment for each Product for such Fiscal
Quarter (subject to the next paragraph of this Section 6.3(b)).
Such Quarterly Payment Reports shall be subject to the audit
provisions of Section 6.5. Payment of Royalty Payments for the
Products shall not relieve AYTU of the obligation to pay the
Transfer Price for such Products.
(c) Within
twenty-five (25) calendar days after the last day of each Fiscal
Quarter, of each calendar year during the Term, commencing with the
Fiscal Quarter of AYTU’s Launch of a Product, AYTU shall
furnish to TRIS and the Former Owner (at such address as TRIS
furnishes to AYTU in writing) a written estimate of the Net Sales
for such Product for such Fiscal Quarter, which estimate shall be
solely for informational purposes and shall not be binding on
AYTU.
(d) AYTU
and its permitted licensees and assignees agree to be bound for the
benefit of the Former Owner, by the same obligations as TRIS under
the Asset Sale Agreement in respect of payment of royalties
pursuant to Section 3.2 of the Asset Sale Agreement with respect to
the Products. Accordingly, unless and to the extent TRIS instructs
otherwise in writing: (i) At the time of payment to TRIS, AYTU will
pay to the Former Owner a royalty of [**] of Net Sales of Tuzistra
XR on a quarterly basis for the period ending June 13, 2028 and
[**] of Net Sales of CCP-08 on a quarterly basis for the period
ending ten years from the first commercial sale thereof, and reduce
the Royalty Payment otherwise payable to TRIS by such amount
provided no portion of the Royalty Make Whole Payment shall be
payable to the Former Owner. Such payment will be accompanied by a
similar quarterly payment report to that provided to TRIS except
that the applicable royalty rate shall be [**] and shall be
accompanied by a request for an invoice supporting the payment
made; (ii) At least two Business Days prior to sending such report
to the Former Owner, AYTU shall provide to TRIS a copy of such
report by e-mail, and if TRIS objects shall not send such report or
payment to the Former Owner. If TRIS does not object, AYTU shall
send such report to the Former Owner along with payment, and a
request for invoice (which shall be provided to TRIS when received)
and evidence of same to TRIS. TRIS’ failure to object shall
not be evidence of TRIS’ agreement with the calculation of
Net Sales.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(e) For
each Fiscal Quarter or portion thereof during the Term of a
Product, AYTU shall pay TRIS the Royalty Payment (reduced by
payments to the Former Owner as provided in Section 6.3(b)). The
Applicable Royalty Percentage multiplied by the Net Sales of the
Product constitutes the “Royalty Payment.”
6.4 Royalty
Make Whole Payment.
(a) For
each Make Whole Payment Commercial Year during the Term of this
Agreement (in its entirety), commencing with the second Make Whole
Payment Commercial Year and ending with and including the tenth
Make Whole Payment Commercial Year, AYTU shall pay TRIS an amount
(the “Royalty Make Whole
Payment”) equal to the product of (x) Applicable Make
Whole Payment per Unit for such Make Whole Payment Commercial Year,
multiplied by (y) the Minimum Unit Sales Commitment Shortfall for
such Make Whole Payment Commercial Year. Notwithstanding the
foregoing or anything else to the contrary contained in this
Agreement, for purposes of calculating the Minimum Unit Sales
Commitment Shortfall for any Make Whole Payment Commercial Year,
the Minimum Unit Sales Commitment for such Commercial Year shall be
reduced by the number of Ineligible Months, if any, in such
Commercial Year, divided by twelve. The term “Ineligible
Month” means any calendar month in the applicable Make Whole
Payment Commercial Year during which either of the following is
true with respect to the Products: (i) sale and distribution of all
Products that had received NDA Approval in the Territory ceased
during the month due to an injunction or FDA mandate; or (ii) there
was a Supply Interruption during such month (i.e. a Supply
Interruption began during such month or a Supply Interruption began
prior to the commencement of such month and no Supply Resumption
Notice was sent prior to the commencement of such month) for all
Products that had received NDA Approval. AYTU will submit its
notice of the Royalty Make Whole Payment for the Products within
sixty (60) days after the end of each Make Whole Payment Commercial
Year. Each such notice shall be accompanied by a detailed line item
description of the calculation of such Royalty Make Whole Payment.
Simultaneous with such notice, AYTU shall remit to TRIS the Royalty
Make Whole Payment calculated in such notice.
(b) Notwithstanding
the foregoing if there is a Third Party Generic Launch of any
Product, then: (i) no Royalty Make Whole Payment shall be payable
for any Make Whole Payment Commercial Year after the Make Whole
Payment Commercial Year in which the Third Party Generic Launch
occurs; and (ii) the Minimum Unit Sales Commitment Shortfall for
the Make Whole Payment Commercial Year in which the Third Party
Generic Launch occurs, shall be calculated by prorating the Minimum
Unit Commitment for such Make Whole Payment Commercial Year based
upon the ratio that the total number of days during such Make Whole
Payment Commercial Year prior to the Third Party Generic Launch
bears to three hundred sixty- five (365).
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
6.5 TRIS’
Audit Rights. AYTU shall maintain and shall require its
Subsidiaries and Sublicensees to maintain, at their respective
offices, accurate and complete books and records of the Net Sales
of each of the Products in such form and in such reasonable detail
as to enable the TRIS, Former Owner and the Former Owner’s
Affiliates and licensees to verify the Net Sales of each of the
Products in the Territory and Royalty Payments (and any royalty
payments made directly to Former Owner by AYTU). Upon the written
request of TRIS, on behalf of the Former Owner as a result of an
audit request to TRIS provided by the Former Owner, not more than
once per calendar year, and additionally upon the written request
of TRIS without the need for a request by the Former Owner, not
more than once per calendar year, AYTU shall permit an independent
certified public accounting firm and/or suitably qualified
pharmaceutical industry expert jointly selected by AYTU and TRIS to
have access during normal business hours to such of the records of
AYTU as may be reasonably necessary to verify the accuracy of the
Net Sales and Royalty Payments (and any royalty payments made
directly to Former Owner by AYTU) for each Product for any calendar
year ending not more than four (4) full years prior to the date of
such request. If such accounting firm and/or pharmaceutical
industry expert concludes that there are discrepancies in the
reporting or calculation of the Net Sales or the Royalty Payments
for a Product, such accounting firm or pharmaceutical industry
expert shall recalculate such amounts and: (a) AYTU shall pay any
additional sums underpaid to TRIS within thirty (30) calendar days
of such re-determination; or (b) TRIS, at its option, shall repay
or, credit AYTU for any overpaid amounts. The fees and expenses
charged by such accounting firm and/or pharmaceutical industry
expert shall be paid by TRIS. However, if the audit discloses that
the aggregate Royalty Payments relating to all Products to TRIS was
underpaid during the audit period by more than five per cent (5%),
then AYTU shall pay the reasonable fees and expenses charged by the
accounting firm and/or pharmaceutical industry expert. Each Party
shall forthwith pay any amounts discovered to be due by it to the
other pursuant to an audit together with interest from the date
payment was originally due at a rate equal to the floating annual
rate of 2% above the commercial prime rate as published in the Wall
Street Journal on the next Business Day following receipt of the
auditor’s report. The results of such audit shall be final
and binding on the Parties. The Former Owner shall have access to
the results of such audit.
6.6 Taxes.
(a) AYTU
shall be solely responsible for the payment of all federal, state
or local taxes, use or value added taxes, excise or similar
charges, or other tax assessments (other than that assessed against
income), assessed or charged on the sale of the Products to or by
AYTU, its Subsidiaries or Sublicensees pursuant to this
Agreement.
(b) The
royalties payable by AYTU to TRIS or the Former Owner pursuant to
this Agreement (“Payments”) shall not be reduced on
account of any taxes unless required by Applicable Law. TRIS and
Former Owner shall be responsible for paying any and all taxes
(other than withholding taxes required by Applicable Law to be paid
by AYTU) levied on account of Payments it receives. AYTU shall
deduct or withhold from the Payments only taxes that it is required
by Applicable Law to deduct or withhold.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(c) Notwithstanding
the foregoing, if TRIS or the Former Owner is entitled under any
applicable tax treaty to a reduction of rate of, or the elimination
of, applicable withholding tax, it may deliver to AYTU or the
appropriate Governmental Authority (with the assistance of AYTU to
the extent that this is reasonably required and is expressly
requested in writing) the prescribed forms necessary to reduce the
applicable rate of withholding or to relieve AYTU of its obligation
to withhold tax, and AYTU shall apply the reduced rate of
withholding, or dispense with withholding, as the case may be,
provided that AYTU has received evidence, in a form reasonably
satisfactory to AYTU, of TRIS’ or the Former Owner’s
delivery of all applicable forms (and, if necessary, its receipt of
appropriate governmental authorization) at least fifteen (15) days
prior to the time that the Payments are due (and at TRIS or the
Former Owner’s request, AYTU will delay payment to allow such
reduction and the time for payment shall be extended accordingly).
AYTU shall provide TRIS and the Former Owner reasonable assistance,
which shall include the provision of such documentation as may be
required by the tax authority, in order to allow TRIS or the Former
Owner, as the case may be, to obtain the benefit of any present or
future treaty against double taxation which may apply to such
Payments or to claim an exemption from or obtain a repayment or a
reduction of such tax. If, in accordance with the foregoing, AYTU
withholds any amount, it shall pay to TRIS or the Former Owner, as
the case may be, the balance when due, make timely payment to the
proper taxing authority of the withheld amount, and send to such
Person proof of such payment within fifteen (15) Business Days
following that payment. For purposes of this Agreement, the stated
amount of the payments payable by AYTU shall not include any sales
tax that TRIS or the Former Owner, as the case may be, may be
required to collect from AYTU, and TRIS or the Former Owner, as the
case may be, shall be entitled to collect same from AYTU on receipt
of a valid tax invoice. Notwithstanding the foregoing, neither AYTU
nor TRIS will take any action (including licensing or assigning its
rights hereunder) that would create or cause an increase in
withholding liability above the withholding required under the
treaty applicable to payments between the United States and the
United Kingdom. Nothing in this Section 6.6 will require either
Party to take any action in the event of a change to Applicable Law
after the date of this Agreement.
6.7 Confidential
Financial Information. The Parties shall treat all financial
information subject to review under Section 6.5 and Section 6.9
hereof as Confidential Information.
6.8 Mode
of Payment. All payments payable pursuant to this Agreement
shall be made in United States dollars, and in the case of Royalty
Payments, and Royalty Make Whole Payments, by wire transfer to
TRIS’ designated account, unless TRIS requests otherwise in
writing. All payments of Transfer Price, Royalty Payments, AG
Product Royalty Payments and Royalty Make Whole Payments not paid
by their due date (including as ultimately determined pursuant to
Section 6.5 and 6.9(d)) shall bear interest commencing on such due
date until paid at the rate equal to the lesser of (a) rate equal
to the floating annual rate of 2% above the commercial prime rate
as published in the Wall Street Journal on the date payment should
have been made and (b) the maximum interest rate permitted by
Applicable Law.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
6.9 Authorized
Generic.
(a) At
any time on or after a Third Party Generic Launch with respect to a
Product, TRIS shall have the right to manufacture and Market an AG
Product of such Product. AYTU is not permitted to Market an AG
Product of a Product. If TRIS Markets AG Products during the Term
of such Product, it shall pay AYTU on a Fiscal Quarterly basis [**]
of TRIS’ Gross Margin for such AG Product for such Fiscal
Quarter (the “AG Product
Royalty Payment”), and if Gross Margin is negative
then AYTU shall pay TRIS [**] of such negative Gross Margin, as
more fully set forth in this Section 6.9; provided, however, that if Gross Margin
is negative for two consecutive Fiscal Quarters, AYTU may terminate
this Agreement by written notice to TRIS on thirty (30) days’
notice delivered within thirty (30) days following delivery of
TRIS’ second consecutive AG Quarterly Payment Report showing
that AYTU owes amounts to TRIS arising from negative Gross Margin,
provided however that if together with such second consecutive AG
Quarterly Payment Report, TRIS sends a notice stating that AYTU
will no longer be responsible for its share of negative Gross
Margin for future quarters, then AYTU may not terminate this
Agreement on account of negative Gross Margin.
(b) For
each Fiscal Quarter during the Term of this Agreement commencing
with the first Fiscal Quarter which includes TRIS’ launch of
an AG Product TRIS shall calculate the Gross Margin from the sale
of each AG Product in the Territory. Each such calculation shall be
conducted in a manner consistent with the definition of “Net
Sales” (as revised in the definition of Gross Margin)
contained herein and shall be in accordance with GAAP.
(c) Within
forty-five (45) calendar days (sixty (60) days in the case of the
last Fiscal Quarter in a calendar year) after the last day of each
Fiscal Quarter of each calendar year during the Term commencing
with the Fiscal Quarter of TRIS’ launch of an AG Product,
TRIS shall furnish to AYTU a written report (the
“AG Quarterly Payment
Report”) setting forth for such Fiscal Quarter, (i)
the Net Sales of each Product (including the number of units
shipped times the invoiced price per unit and the details of all
deductions from gross sales to arrive at Net Sales, with Net Sales
determined as in the definition of Gross Margin); (ii) the date of
TRIS’ launch of such Product during such period (if
applicable), (iii) the amount of the AG Product Royalty Payment to
be made to AYTU, together with reasonable supporting documentation
with respect thereto. TRIS shall also remit to AYTU, by the due
date of each AG Quarterly Payment Report for each Fiscal Quarter, a
payment equal to the AG Product Royalty Payment for the AG Product
for such Fiscal Quarter. Such AG Quarterly Payment Reports shall be
subject to the audit provisions of Section 6.9(d). Notwithstanding
the foregoing, if the AG Quarterly Payment Report shows that the
Gross Margin is negative then AYTU shall pay TRIS [**] of such
negative Gross Margin, within thirty (30) days of receipt of the AG
Quarterly Payment Report.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(d) TRIS
shall maintain and shall require its Subsidiaries and sublicensees
to maintain, at their respective offices, accurate and complete
books and records of the Net Sales of each of the AG Products in
such form and in such reasonable detail as to enable AYTU, to
verify the Net Sales of each of the AG Products in the Territory
and the AG Product Royalty Payments. Upon the written request of
AYTU not more than once per calendar year, TRIS shall permit an
independent certified public accounting firm and/or suitably
qualified pharmaceutical industry expert jointly selected by TRIS
and AYTU to have access during normal business hours to such of the
records of TRIS as may be reasonably necessary to verify the
accuracy of the Net Sales and AG Product Royalty Payments for each
AG Product for any calendar year ending not more than four (4) full
years prior to the date of such request. If such accounting firm
and/or pharmaceutical industry expert concludes that there are
discrepancies in the reporting or calculation of the Net Sales or
the AG Product Royalty Payments for an AG Product, such accounting
firm or pharmaceutical industry expert shall recalculate such
amounts and: (a) TRIS shall pay any additional sums overpaid by
AYTU or underpaid to AYTU, as the case may be, within thirty (30)
calendar days of such re-determination; or (b) AYTU shall repay
TRIS for any overpaid amounts by TRIS or underpaid amounts by AYTU.
The fees and expenses charged by such accounting firm and/or
pharmaceutical industry expert shall be paid by AYTU. However, if
the audit discloses that the aggregate AG Product Royalty Payments
relating to all AG Products to AYTU was underpaid during the
applicable audit period by more than five per cent (5%), then TRIS
shall pay the reasonable fees and expenses charged by the
accounting firm and/or pharmaceutical industry expert. Each Party
shall forthwith pay any amounts discovered to be due by it to the
other pursuant to an audit together with interest from the date
payment was originally due at a rate equal to the floating annual
rate of 2% above the commercial prime rate as published in the Wall
Street Journal on the next Business Day following receipt of the
auditor’s report.
ARTICLE VII –INFRINGEMENT
7.1 Infringement
Actions by Third Parties.
(a) If
TRIS, AYTU or their Affiliates, shall be sued or threatened with
suit during the Term or with respect to actions during the Term by
a Third Party for infringement of any patent of a Third Party or
for misappropriation of any Third Party know-how, trade secret,
proprietary, technical or confidential or the development,
manufacture and commercialization of a Product (which for purposes
of this Section 7 includes an AG Product) in the Territory (other
than infringement or misappropriation of any copyright or trademark
arising out of the marketing and/or sale of a Product in the
Territory during the Term) (each, an “Infringement Action”), such Party
shall promptly notify the other Party in writing (whether such
action was brought against AYTU or TRIS). During the Term and
thereafter with respect to events arising during the Term, TRIS
shall have the right, but not the obligation, to undertake control
of and manage and defend such Infringement Action, including,
without limitation, selection of counsel, and settling such
Infringement Action subject to AYTU’s consent as set forth
below. AYTU shall, promptly upon TRIS’s request, provide
reasonable assistance in conducting the litigation. TRIS shall have
the right to settle the Infringement Action only with the consent
of AYTU, not to be unreasonably withheld, conditioned or delayed.
For the avoidance of doubt, AYTU shall not have the right to settle
such action.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) The
Parties shall share equally the ongoing costs and expenses
(including attorney’s fees) of any Infringement Action. AYTU
shall reimburse TRIS for AYTU’s share of such costs and
expenses, within thirty (30) days after the date of TRIS’
invoice for same.
(c) Each
of TRIS and AYTU shall share equally and be responsible for any
settlement payment, damages award and/or judgment, including any
Losses, in connection with any Infringement Action (an
“Infringement Action
Award”). Each Party will indemnify and hold harmless
the other Party and its Affiliates from its payment obligations
pursuant to this Section 7.1(c). Any and all amounts recovered with
respect to such an action shall be applied first to reimburse the
Parties for their reasonable and documented out-of-pocket expenses
(including reasonable attorney’s fees) in prosecuting such
action and the remainder shall be shared equally.
(d) This
Article VII shall cover the procedure and remedy for
indemnification for Infringement Actions by Third Parties, to the
exclusion of Article XIII; provided, however, that the foregoing
shall not limit a Party’s right to recover for a breach of
any representation or warranty.
7.2 Infringement
Actions by TRIS or AYTU. In the event that any Party becomes
aware during the Term of any Person infringing or potentially
infringing the Product Technology, whether by direct or indirect
infringement, or by misappropriation of Product Technology, or that
a Person has filed a certification under 21 USC 355(b)(2)(A)(iv) or
Section 355(j)(2)(A)(vii)(IV) (or successor provisions) of the
Hatch-Waxman Act relating to a Product (a “Hatch-Waxman Certification”), it
shall promptly notify the other Party and in the case of a Hatch
Waxman Notification shall provide a copy to the other Party within
two Business Days of receipt thereof. TRIS in its sole discretion
shall determine whether an action should be commenced relating to
such infringement, potential infringement or certification, TRIS
shall control and manage any such action (including without
limitation, control over the settlement of such action, subject to
AYTU’s consent for such settlement as provided below), and
AYTU shall cooperate with TRIS and join the action as reasonably
requested. Each Party shall be responsible for fifty percent (50%)
of the ongoing costs and expenses (including attorney’s fees)
and any damages, settlements, or judgements related to any such
action. AYTU shall reimburse TRIS for AYTU’s share of such
costs and expenses within thirty (30) days after the date of
TRIS’ invoice for same. Any and all amounts recovered with
respect to such an action shall be applied first to reimburse the
Parties for their reasonable and documented out-of-pocket expenses
(including reasonable attorney’s fees) in prosecuting such
infringement or misappropriation and the remainder shall be shared
equally. TRIS shall have the right to settle such action only with
the consent of AYTU, not to be unreasonably withheld, conditioned
or delayed. For the avoidance of doubt, AYTU shall not have the
right to settle such action.
7.3 License
Fees to Third Parties. In the event that either AYTU or TRIS
during the Term learns of any Third Party patents which may cover
the manufacturing, marketing, testing or packaging of the Product
in the Territory, such Party will promptly notify the other Party.
The Parties agree to confer in good faith regarding such potential
infringement risk and to explore reasonable alternatives for
avoiding such risk and to provide such information to each other as
either Party may reasonably request. If the risk of such
infringement can be avoided or substantially reduced by the taking
of a Third Party license then the Parties shall use Commercially
Reasonable Efforts to obtain such Third Party license, provided
that the consent of both Parties, not to be unreasonably withheld,
conditioned or delayed shall be required to obtain such license and
shall share the costs and expenses, licensing fees and royalties
during the Term payable for and under such license in accordance
with the Parties’ Expense Allocation.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
7.4 Trademarks.
(a) General.
AYTU will Market the Products in the Territory, subject to Section
4.10 and Section 7.4(c)(i), under the AYTU Marks and the TRIS
Trademarks.
(b) Trademark
Filing and Expenses. AYTU shall be solely responsible for
the filing, prosecution and maintenance of the AYTU Marks in the
Territory and all costs and expenses related thereto, and TRIS
shall be solely responsible for the filing, prosecution and
maintenance of the TRIS Marks in the Territory and all costs and
expenses related thereto.
(c) Trademark
Infringement.
(i) With
respect to any and all claims instituted by Third Parties against
TRIS or AYTU or any of their respective Affiliates for Trademark
infringement involving the Marketing of the Product TRIS shall be
solely responsible for, and indemnify AYTU against, any and all
Losses arising out of or resulting from the use of the TRIS Marks
and AYTU shall be solely responsible for, and indemnify TRIS and
its Affiliates against, any and all Losses arising out of or
resulting from the use of any other Trademark. If any claim is made
against AYTU in connection with the use of the TRIS Marks, AYTU may
cease using the TRIS Marks until such claim is favorably
resolved.
(ii) In
the event that a Party becomes aware of actual or threatened
infringement of a Trademark used in connection with the Product,
that Party shall promptly notify the other Party in writing. AYTU
shall have the right but not the obligation to bring an action with
respect to such infringement against any Third Party for
infringement of an AYTU Mark. TRIS shall have the right, but not
the obligation to bring an action with respect to such infringement
against any Third Party for infringement of a TRIS Mark. AYTU, in
the case of AYTU Marks and TRIS in the case of TRIS Marks, shall
bear all reasonable and documented out-of-pocket costs and expenses
of the action (including court costs, reasonable fees of attorneys,
accountants and other experts and other expenses of litigation or
proceedings) and shall be entitled to any recovery in such
infringement action.
ARTICLE VIII
MANUFACTURING
STANDARDS AND QUALITY ASSURANCE
8.1 TRIS
Product Warranties. TRIS hereby represents, warrants,
covenants and agrees that:
(a) All
Products supplied to AYTU by TRIS under this Agreement will meet
the Product Specifications as of the date that title to such
Product is delivered to AYTU and TRIS shall continue to use
Commercially Reasonable Efforts to rectify any deficiencies
identified in the FDA Letter.
(b) All
Products supplied by TRIS hereunder will be transferred to AYTU
free and clear of any liens, claims, encumbrances and security
interests.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
8.2 Product
Testing. TRIS shall conduct, or cause to be conducted, all
physical parameters and in-process testing with respect to each
batch of a Product to be supplied pursuant hereto prior to delivery
thereof to AYTU. Prior to release to AYTU, TRIS shall perform
quality control testing at its own expense on representative
samples of each batch of Product to determine/verify it meets
Product Specifications. TRIS will provide AYTU with each shipment
of Product, a Certificate of Analysis certifying the Product has
met Product Specifications. TRIS shall retain a sample of each
batch tested for at least the shelf life of such batch, or such
longer period as may be required by cGMP.
8.3 Quality
Agreement. Prior to the Launch Date of the first Product to
be Launched, the Parties will negotiate in good faith and enter
into a separate quality agreement between the Parties with respect
to Products (such agreement, as amended by the Parties from time to
time, a “Quality
Agreement”). The Quality Agreement shall include terms
and conditions as are reasonably customary for agreements of that
type taking into account each Party’s obligations under this
Agreement and the requirements of Applicable Law. If there is any
conflict, inconsistency or ambiguity between the provisions of the
Quality Agreement and the provisions of this Agreement, then the
provisions of this Agreement will govern.
8.4 Disclaimer.
TRIS HEREBY DISCLAIMS ALL WARRANTIES NOT EXPRESSLY PROVIDED IN THIS
AGREEMENT, INCLUDING ANY IMPLIED WARRANTIES, INCLUDING WARRANTIES
OF FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES OF
MERCHANTABILITY.
ARTICLE IX
TERM AND
TERMINATION
9.1 Term.
This
Agreement shall come into effect on the Effective Date and, unless
it is earlier terminated pursuant to other provisions of this
Article 9, shall expire:
(i) as
to each Product upon the expiry of the Royalty Term of such
Product; and
(ii) in
its entirety upon the expiration of this Agreement with respect to
the last Product Royalty Term to expire.
“Term” with respect to a Product
shall mean the period from the Effective Date until the earlier of
(a) the expiration of the Royalty Term for such Product or (b)
termination of this Agreement with respect to such Product or in
its entirety.
9.2 Termination.
This Agreement may be terminated
(I) in
its entirety:
(a) immediately
upon the mutual written consent of AYTU and TRIS;
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) by
the other Party upon a Party’s material breach of its
obligations under this Agreement, which material breach, remains
uncured for ninety (90) calendar days, after the terminating Party
has provided written notice of same; provided that if a Party shall
have breached any payment obligation under this Agreement and such
breach shall have continued for thirty (30) days after written
notice thereof was provided to such Party by the other Party, then
this Agreement shall terminate at the expiration of such thirty
(30) day period; provided that if a Party disputes a payment
obligation during such thirty (30) day period (by written notice
delivered to the other Party within such period) then this
Agreement will not terminate until the matter is decided against it
in accordance with Section 14.3, at which time it shall immediately
terminate, and further provided that a Party may make a disputed
payment and reserve its rights with respect thereto;
(c) in
the event either Party becomes insolvent, makes a general
assignment for the benefit of creditors, suffers or permits the
appointment of a receiver for its business or assets, or avails
itself of, or becomes subject to, any case or proceeding under the
Bankruptcy Code or any other statute of any state or country
relating to insolvency or the protection of creditor rights, or
otherwise rejects this Agreement in any case or proceeding under
the Bankruptcy Code, the other Party shall have a right to
terminate this Agreement, provided that in the case of an
involuntary bankruptcy proceeding such right to terminate shall
only become effective if the other Party consents thereto or such
proceeding is not dismissed within sixty (60) calendar days after
the filing thereof. The Parties agree that each party may fully
exercise all of its rights and elections under the Bankruptcy
Code;
(d) by
TRIS upon written notice to AYTU if AYTU or its Subsidiaries
directly, or indirectly by controlling, providing assistance or
direction to a Third Party, (i) file an action seeking to
invalidate or challenge the validity or enforceability of, (ii)
oppose any extension of, or (iii) commence any interference or
opposition proceeding with respect to, any Patent included in TRIS
Intellectual Property Rights (“TRIS Patent Rights“) and listed in
the FDA Orange Book with respect to the Products (each such action,
a “AYTU Patent
Challenge”). AYTU will include provisions in any
agreement entered into with a Sublicensee providing that if the
Sublicensee or its Affiliates undertake or threaten an AYTU Patent
Challenge with respect to any TRIS Patent Rights under which the
Sublicensee is granted the right to Market a Product, AYTU will be
permitted to terminate such sub-licensed rights. If such a
Sublicensee of AYTU (or an Affiliate of such Sublicensee)
undertakes an AYTU Patent Challenge of any such TRIS Patent Right
relating to a Product, then AYTU upon receipt of notice from TRIS
of such AYTU Patent Challenge will terminate the applicable
sublicense agreement. In connection with such sublicense
termination, AYTU shall cooperate with TRIS’ reasonable
requests to cause such a terminated Sublicensee to discontinue
activities with respect to such Product;
(e) by
TRIS, upon thirty (30) calendar days prior written notice to AYTU,
at any time after twenty-four (24) months following a Third Party
Generic Launch, in the event that for any full calendar year
commencing after such twenty-four month period, the sum of (i)
TRIS’ Royalty Payments and (ii) TRIS’ share of Gross
Margin from the sale of AG Products is less than [**].
(II)
with respect to a Product:
(a)
by either Party
immediately upon written notice to the other Party if a permanent
injunction is issued preventing the sale of such Product in the
Territory; and
(b)
by AYTU, as
provided in Section 5.7(e).
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
9.3 Effect
of Termination or Expiration
Following the
expiration of the Term with respect to a Product in the Territory
pursuant to Section 9.1(i), each Party shall have a non-exclusive,
royalty-free, perpetual, irrevocable and sublicensable right and
license to Market, sell, have sold, distribute and otherwise
exploit such Product in the Territory. For the avoidance of doubt,
nothing in this Section 9.3 shall obligate either Party to transfer
any technology to enable the other Party to exercise any such right
or license.
(a) Upon
termination of this Agreement in its entirety or with respect to a
Product:
(i) TRIS’
obligations to manufacture and supply the terminated Products to
AYTU pursuant to this Agreement shall terminate;
(ii) Subject
to Section 9.3(e), AYTU shall no longer have the right to Market,
distribute or sell the terminated Products in the Territory and all
licenses and rights granted to AYTU by TRIS pursuant to under this
Agreement shall terminate; (iii) to the extent requested by TRIS,
AYTU shall promptly transfer and convey to TRIS, at AYTU’s
expense, ownership of all Regulatory Documentation Controlled by
AYTU or its Affiliates at the date of such termination for
terminated Products in the Territory, including the Product NDAs
and provide TRIS with reasonable assistance in connection with such
transfer and assumption of responsibility for any Regulatory
Documentation or Regulatory Approvals in AYTU’s name for
terminated Products;
(iv) TRIS
may repurchase all or a portion of the terminated Products in
AYTU’s inventory at the Transfer Price plus AYTU’s
reasonable documented out-of-pocket costs associated with shipping
and handling;
(v) Upon
TRIS’ written request, AYTU shall take delivery and pay for
terminated Product previously ordered or subject to the binding
portion of the Forecast (the “Take and Pay Event”);
(vi) AYTU
shall no longer have the right to market, distribute or sell the
terminated Product in the Territory; provided, that, if the Take
and Pay Event occurs, AYTU may sell Product in its possession or so
purchased pursuant to the Take and Pay Event, provided, further,
that AYTU makes Royalty Payments to TRIS on such sales in
accordance with Section 6.3;
(vii) subject
to Section 9.3(d), AYTU shall promptly transfer to TRIS, at
AYTU’s expense, all data, reports, records and materials that
relate to the terminated Product;
(viii)
subject to Section 9.3(d), each Party shall promptly return to the
other Party all records and materials in the Party’s
possession or control containing Confidential Information of the
other Party relating to the terminated Product;
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(ix) To
the extent AYTU owns or holds any right, title or interest in any
AYTU Product Trademarks or any internet domain registrations for
any AYTU Product Trademarks, under or pursuant to which the
terminated Product has been or is being Marketed and under which no
non-terminated Product is Marketed, AYTU shall promptly assign and
convey ownership of the same to TRIS, free of cost, expense or
other payment other than AYTU’s reasonable documented
out-of-pocket costs associated with the assignment and/or
conveyance, which shall be reimbursed by TRIS;
(x) AYTU
shall promptly provide to TRIS copies of all contracts entered into
by AYTU or its Subsidiaries that are related to the Product and are
not multi-product contracts and shall assist TRIS in understanding
the nature of any multi product contracts that cover the terminated
Product, and at TRIS’ request, to the extent requested by
TRIS, AYTU shall, and shall cause its Subsidiaries to, promptly
assign (without relieving AYTU of any pre-assignment liability
under such other agreement and without TRIS assuming any
pre-assignment liabilities of AYTU under such other agreement) to
TRIS to the extent it (or its Subsidiaries) may legally and
contractually do so, any other contracts that are solely related to
the terminated Product (collectively, such contracts that are
solely related to the terminated Product, the “Product
Contracts”) and AYTU shall and shall cause its Subsidiaries
to assist TRIS in the transition of such agreements and
arrangements upon TRIS’ reasonable request and at no charge
to TRIS (except for reimbursement of reasonable and documented
out-of-pocket expenses incurred in rendering such assistance);
and
(xi) all
of TRIS’ obligations to AYTU under this Agreement (including,
without limitation, under Section 3.3) shall
terminate.
(b) If
this Agreement is terminated by a Party as a result of the other
Party’s breach pursuant to Section 9.2(I)(b) or as a result
of an event described in Section 9.2(I)(c) occurring with respect
to the other Party or by TRIS pursuant to Section 9.2(I)(d), then,
in addition to the remedies provided herein, the terminating Party
shall have such other remedies available to it in law and in
equity.
(c) Termination
of this Agreement with respect to a Product or in its entirety by
either Party for any reason will not release the other from any
obligation to pay any royalties or make any payments described in
this Agreement which were accrued prior to the effective date of
termination.
(d) Within
thirty (30) days of the effective date of any termination of this
Agreement, each Party shall cooperate with the other Party in
transferring to such other Party or destroying (as the other Party
may elect), and causing its Subsidiaries to transfer or destroy (as
applicable), all Confidential Information to which a Party does not
retain rights hereunder, except that the Party with an obligation
to return or destroy such Confidential Information may retain one
copy of any data, reports, records, files and materials and other
Confidential Information for the purpose of performing any
obligations under this Agreement that may survive such termination
or for archival purposes, or for exercising its rights under
Section 9.3(e)
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(e) Notwithstanding
the termination of AYTU’s licenses and other rights under
this Agreement, except if this Agreement is terminated pursuant to
Section 9.2(II)(a), AYTU and its Subsidiaries shall have the right
for one (1) year after the effective date of such termination to
sell or otherwise dispose of all Product then in its inventory, as
though this Agreement had not terminated, including, without
limitation, paying the Royalty Payments to TRIS on such sales and
any amount that becomes payable pursuant to Section 3.6 as a result
of such sales.
(f) The
provisions of this Section 9.3 are not intended to be exclusive and
are without prejudice to the rights of the Parties to seek any
other rights and remedies that they may have under this Agreement,
at law or in equity or otherwise.
9.4 Survival.
(a) Upon
termination or expiration, this Agreement shall forthwith become
void and of no further force or effect, except for the following
provisions, which shall remain in full force and effect: Sections
2.1(d), 2.1(e), 2.3, 4.10(b), 5.5, Article VI (with respect to
sales and purchases of Product during the Term (or, if applicable,
pursuant to Section 9.3(e) or 9.3(a)(v) or (vi))), Article VII,
Article VIII, Section 9.3; this Section 9.4; Article X, Article
XIII, Article XIV and any other provision of this Agreement that by
its terms, or the context thereof, is intended to survive such
expiration or termination. The rights and remedies provided in this
Article IX shall be cumulative and not exclusive of any rights or
remedies provided by Applicable Law.
(b) Any
termination or expiration of this Agreement shall not affect any
right or claim hereunder that arises prior to such termination or
expiration, which claims and rights shall survive any such
termination, including, without limitation, any claim for
indemnification under Article XIII or any claims for payments of
Transfer Price, Royalty Payments or milestone
payments.
ARTICLE X – CONFIDENTIALITY
10.1 Confidentiality
and Non-Use Obligations.
(a) In
carrying out its obligations under this Agreement, each Party will
be sharing confidential and proprietary data and information
(“Confidential Information”) with the other Party.
Except as expressly permitted by this Agreement, each Party shall,
and shall cause its Subsidiaries to, treat Confidential Information
received or deemed to be received from the other Party (the
“Disclosing Party”) or its Subsidiaries as it treats
its own proprietary information of like nature and importance.
During the Term and for a period of five (5) years thereafter
(indefinitely with respect to trade secrets), the Party in receipt
of the Disclosing Party’s Confidential Information (the
“Receiving Party”) shall not disclose, divulge or
otherwise communicate such Confidential Information to any Person,
or use it for any purpose except pursuant to and in order to carry
out its obligations and exercise its rights under this Agreement.
Notwithstanding the foregoing, the Receiving Party may disclose
Confidential Information of the Disclosing Party to the Receiving
Party’s directors, officers, employees, Subsidiaries,
consultants, subcontractors, sublicensees or agents and in
TRIS’ case to its Affiliates to the extent reasonably
necessary to carry out its obligations and exercise its right under
this Agreement, provided that such directors, officers, employees,
Subsidiaries, consultants, subcontractors, sublicensees or agents
or in TRIS’ case its Affiliates have been advised of the
confidential nature of such information and have agreed to maintain
such information as confidential to the same extent required by
this Article 10.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) Confidential
Information shall not include information that the Receiving Party
can demonstrate:
(i) was
known by the Receiving Party or its Subsidiaries prior to the date
it was disclosed to the Receiving Party or its Subsidiaries by the
Disclosing Party or its Subsidiaries, as evidenced by the prior
written records of the Receiving Party or its
Subsidiaries;
(ii) is
lawfully disclosed to the Receiving Party or its Subsidiaries by a
Third Party rightfully in possession of such information and not
subject to obligations of confidentiality with respect thereto,
either before or after the date of the disclosure to the Receiving
Party or its Subsidiaries;
(iii) becomes
generally known to the public through no act or omission on the
part of the Receiving Party or its Subsidiaries or sublicensees,
either before or after the date of the disclosure to the Receiving
Party or its Subsidiaries; or
(iv) is
independently developed by the Receiving Party or its Subsidiaries
without reference to or reliance upon any Confidential Information
of the Disclosing Party or its Subsidiaries as established by
probative documentary evidence.
(c) The
restrictions set forth in this Article X shall not prevent either
Party from disclosing Confidential Information (i) in connection
with preparing, filing, prosecuting or maintaining the TRIS Patent
Rights, (ii) to Governmental Authorities to the extent required or
desirable to obtain a Regulatory Approval, (iii) to the Former
Owner, as contemplated to comply with the obligations expressly
referred to in this Agreement (and in the case of TRIS, as
otherwise required by the Asset Sale Agreement), (iv) to potential
private investors and lenders and potential lenders (in each case,
under a customary confidentiality agreement) in connection with
fundraising activities or compliance with existing obligations, (v)
to underwriters and financial advisors (under an obligation of
confidentiality) in connection with the public offering of
securities, (vi) to actual or prospective licensees, sublicensees,
distributors and subcontractors (under a confidentiality agreement
at least as restrictive as the provisions of this Article 10,
provided that the term of confidentiality shall be no less than
five (5) years from the date of disclosure), or (vii) that is
reasonably determined is required to be disclosed by the Receiving
Party (to comply with applicable securities or other laws) to
public investors or governmental agencies in connection with the
public offering of securities, or (viii) in response to a valid
order of a court of competent jurisdiction or other supra-national,
federal, national, regional, state, provincial and local
governmental or regulatory body of competent jurisdiction or, if in
the reasonable opinion of the Receiving Party’s legal
counsel, such disclosure is otherwise required by law; provided
that in all of the above cases (i) to (viii), the Party disclosing
Confidential Information of the Disclosing Party shall use all
reasonable efforts to provide prior written notice of such
disclosure to the Disclosing Party and to take reasonable and
lawful actions to avoid or limit such disclosure or to assist the
Disclosing Party in avoiding or limiting such
disclosure.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(d) Further,
either Party may also disclose the existence and terms of this
Agreement to its attorneys and advisors, to potential acquirors in
connection with a potential sale of such Party’s business
operations and to existing and potential investors or lenders of
such Party, as a part of their due diligence investigations, or to
potential permitted assignees or sublicensees, in each case under
an agreement to keep the terms of this Agreement confidential under
terms of confidentiality and non-use substantially similar to the
terms contained in this Agreement.
(e) Specific
aspects or details of Confidential Information shall not be deemed
to be within the public domain or in the possession of the
Receiving Party merely because the Confidential Information is
embraced by more general information in the public domain or in the
possession of the Receiving Party. Further, any combination of
Confidential Information shall not be considered in the public
domain or in the possession of the Receiving Party merely because
individual elements of such Confidential Information are in the
public domain or in the possession of the Receiving Party unless
the combination and its principles are in the public domain or in
the possession of the Receiving Party.
(f) Notwithstanding
anything contained herein to the contrary, that certain
Confidentiality Agreement, dated as of October 8, 2018, by and
between the Parties shall remain in full force and effect for any
breaches of same prior to the date hereof and information disclosed
thereunder shall also be deemed disclosed hereunder and following
the Effective Date this Agreement shall control with respect to
such information.
10.2 Press
Releases and Public Announcements. Neither Party shall issue
any other news release or make any other public announcement,
written or oral, relating to this Agreement, including its terms,
or any Products without the prior approval of the other Party,
except solely to the extent a Party is advised by its legal counsel
that the same is required by law (in which case the disclosing
party shall provide the other Party with such reasonable advance
notice and opportunity to comment thereon as it reasonably can) or
as otherwise permitted pursuant to Section 10.1(c); provided, however, the contents of any
such announcement or similar publicity that has been previously
reviewed and approved by the reviewing Party can be re-released by
either Party without a requirement for re-approval. Each Party
shall limit public disclosure of the financial terms set forth in
this Agreement to the minimum extent required by law (by, for
example, requesting confidential treatment of such terms in
documents required to be filed with the U.S. Securities and
Exchange Commission); provided,
however, the Parties may, after any required public
disclosure for compliance with any Applicable Law, including
securities laws, reference such financial terms in news releases or
oral statements without seeking approval from the other
Party.
The
Parties acknowledge that either or both Parties may be obligated to
file under Applicable Laws a copy of this Agreement with the U.S.
Securities and Exchange Commission or other Governmental
Authorities. Each Party shall be entitled to make such a required
filing, provided that it requests confidential treatment of the
commercial terms and sensitive technical terms hereof to the extent
such confidential treatment is reasonably available to such Party.
In the event of any such filing, each Party will provide the other
Party with a copy of this Agreement marked to show provisions for
which such Party intends to seek confidential treatment and shall
reasonably consider and incorporate the other Party’s
reasonable comments thereon to the extent consistent with the legal
requirements, with respect to the filing Party, governing
disclosure of material agreements and material information that
must be publicly filed.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ARTICLE XI – REPRESENTATIONS, WARRANTIES AND
COVENANTS
11.1 Legal
and Governmental Compliance. Each Party shall comply with
all Applicable Laws, relating to the activities undertaken by such
Party hereunder.
11.2 TRIS
Representations, Warranties and Covenants. TRIS represents,
warrants and covenants to AYTU that the following are true and
correct as of the date stated therein, or if none is specified then
as of the date hereof:
(a) TRIS
is a corporation duly organized, validly existing, and in good
standing under the applicable laws of incorporation and has full
corporate power to own its properties and conduct the business
presently being conducted by it, and is duly qualified to do
business in, and is in good standing under, the laws of all states
and nations in which its activities or assets require such status,
except in any case where the failure to be so qualified and in good
standing would not be material.
(b) TRIS
has full corporate right, power and authority to perform its
obligations pursuant to this Agreement, and this Agreement and the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of TRIS.
This Agreement has been duly and validly executed by TRIS and is
the valid and binding obligation of TRIS, enforceable in accordance
with its terms, subject to equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditor’s right and remedies
generally.
(c) The
execution, delivery and performance of this Agreement does not, and
the consummation of the transactions herein contemplated will not
violate any order, judgment or decree binding on TRIS, or result in
a breach of any term of the certificate of incorporation or by-laws
of TRIS or any contract, agreement or other instrument to which
TRIS is a party or, to TRIS’ knowledge, violate any law, rule
or regulation applicable to TRIS, except in each case to an extent
not material to TRIS’ compliance with its obligations under
this Agreement.
(d) There
are no judicial, arbitrable, regulatory or administrative
proceedings or investigations, claims, actions or suits settled or
pending against or, to TRIS’ Knowledge, threatened against
TRIS or its Affiliates in any court or by or before any
Governmental Authority (including in the form of any offer to
obtain a license as a result of the offering Person believing such
license was required by TRIS not to infringe the intellectual
property rights of such offering Person), which would adversely
affect TRIS’ compliance with its obligations under this
Agreement.
(e) TRIS
follows, and will continue to follow during the Term (and after the
Term to the extent necessary to implement the provisions of Article
X), reasonable commercial practices common in the pharmaceutical
industry to protect its proprietary and confidential information,
including requiring its employees, consultants and agents to be
bound in writing by obligations of confidentiality and
non-disclosure, and requiring its employees, consultants and agents
to assign to it any and all inventions and discoveries discovered
by such employees, consultants and/or agents made within the scope
of and during their employment, and only disclosing proprietary and
confidential information to Persons who are not Subsidiaries
pursuant to written confidentiality and non-disclosure
agreements.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(f) TRIS
is not listed by a United States Governmental Authority as
debarred, suspended, proposed for debarment or otherwise ineligible
for federal programs in the United States. To TRIS’
Knowledge, it has not and will not use the services of any persons
debarred under 21 U.S.C. § 335(a) or (b) in any capacity
associated with or related to the manufacture of the Products. TRIS
also warrants that neither TRIS nor, to its Knowledge, any of its
officers or employees has been convicted of a felony under the U.S.
federal law for conduct relating to the development or approval,
including the process for development or approval, of any drug
product, new drug application or abbreviated new drug application
and neither TRIS nor to its Knowledge, any of its officers or
employees has been convicted of a felony under the U.S. federal law
for conduct relating to the regulation of any product under the
FD&C Act.
(g) Except
as otherwise provided in this Agreement, TRIS shall use
Commercially Reasonable Efforts to obtain and maintain all
necessary licenses, permits and approvals required by the FDA and
other Governmental Authorities in the United States in connection
the manufacture of the Products. TRIS shall promptly notify AYTU of
any adverse regulatory action related to the Product of which it
becomes aware. TRIS has provided AYTU with a complete and correct
copy of the FDA Letter through the following link:
https://www.fda.gov/iceci/enforcementactions/warningletters/ucm603613.htm
(h) To
TRIS’ Knowledge: (i) TRIS’ Product Technology does not
infringe any valid U.S. patent granted as of the Effective Date;
(ii) neither TRIS nor any of its employees has violated or
misappropriated any trade secret of a Third Party relating to or in
respect of the Product; and (iii) TRIS has not committed
inequitable conduct before the United States Patent and Trademark
Office, which would adversely affect the validity, enforceability,
term or scope of any TRIS Patent Rights Covering the Products
listed in the Orange Book.
(i) TRIS
is the sole and exclusive legal and beneficial owner of the NDA for
Tuzistra XR and has the right to transfer all right, title and
interest thereto to AYTU free and clear of any liens imposed by
TRIS; TRIS has the unconditional and irrevocable right, power and
authority to grant to AYTU the rights granted hereunder; neither
TRIS’ grant of the license and other rights to AYTU, nor its
performance of any of its obligations, conflicts with or violates
any Applicable Law, or requires the consent, approval or
authorization of any governmental or regulatory authority or other
Third Party; and TRIS has not brought or threatened any claim
(still outstanding) against any Third Party alleging infringement
of any TRIS Patent Rights listed in the Orange Book for Tuzistra
XR, nor, to its Knowledge, is any Third Party infringing or, to its
Knowledge, preparing or threatening to infringe, or practicing any
claim of any Patent application, included in the TRIS Patent Rights
listed in the Orange Book for Tuzistra XR.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(j) TRIS
is acquiring the Shares for its own account, not as a nominee or
agent, and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act, in any manner that would be
in violation of the Securities Act and with no present intention of
distributing or reselling, or granting any participation in, any
part thereof. TRIS has not, directly or indirectly, offered the
Shares to anyone or solicited any offer to buy any Shares from
anyone, so as to bring the offer and sale of any Shares within the
registration requirements of the Securities Act and does not have
any contract, undertaking, agreement or arrangement with any Person
to sell, transfer or grant participations to such Person or to any
third Person, with respect to the Shares (except it must pledge
such Shares to its lender). TRIS will not sell, convey, transfer or
offer for sale any of the Shares it acquires except in compliance
with the Securities Act and any applicable state securities or
“blue sky” laws or pursuant to any exemption therefrom.
TRIS understands that the Shares will not be registered under the
Securities Act or any state securities laws by reason of their
issuance by AYTU in a transaction exempt from the registration
requirements thereof and as such are “restricted
securities” and (b) the Shares may not be sold or otherwise
disposed of unless such sale or disposition is registered under the
Securities Act and applicable state securities laws or such sale or
other disposition is exempt from registration thereunder. TRIS
further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of
sale, the holding period for the Shares, and on requirements
relating to AYTU as specified under Rule 144 promulgated under the
Securities Act which are outside of TRIS’
control.
(k) TRIS
is an “accredited investor” as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act. TRIS has
sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of
its investment in the Shares and is capable of bearing the economic
risks of such investment for an indefinite period of
time.
(l) Attached
hereto as Schedule 11.2(l) is an extract of a royalty report
delivered to TRIS by the Former Owner to TRIS showing the
deductions from gross sales in calculating net sales under a
“Net Sales” definition which contains the same
deductions for Net Sales as used in this Agreement.
(m) TRIS
has provided AYTU a true and correct copy of the Asset Sale
Agreement, which has not been amended since the date of
delivery.
Except
as set forth in Section 8.1 and this Section 11.2, but without
limiting its obligations under this Agreement, TRIS expressly
disclaims all representations and warranties relating to the
Products.
11.3 Representations,
Warranties and Covenants of AYTU.
AYTU
represents, warrants and covenants to TRIS that the following are
true and correct as of the date stated therein, or if none is
specified then as of the date hereof:
(a) AYTU
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full
corporate power to own its properties and conduct the business
presently being conducted by it, and is duly qualified to do
business in, and is in good standing under, the laws of all states
in which its activities or assets require such status, except in
any case where the failure to be so qualified and in good standing
would not be material.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) AYTU
has full corporate right, power and authority to perform its
obligations pursuant to this Agreement, and this Agreement and the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of AYTU.
This Agreement has been duly and validly executed by AYTU and is
the valid and binding obligation of AYTU enforceable in accordance
with its terms, subject to equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditor’s rights and remedies
generally.
(c) The
execution, delivery and performance of this Agreement does not, and
the consummation of the transactions therein contemplated will not
violate any law, rule, regulation, order, judgment or decree
binding on AYTU or result in a breach of any term of the
certificate of incorporation or by-laws of AYTU or any contract,
agreement or other instrument to which AYTU is a party, or, to
AYTU’s knowledge, violate any law, rule or regulations
applicable to AYTU, except in each case to an extent not
material.
(d) AYTU
follows and will continue to follow during the Term (and after the
Term to the extent necessary to implement the provisions of Article
X), reasonable commercial practices common in the industry to
protect its proprietary and confidential information, including
requiring its employees, consultants and agents to be bound in
writing by obligations of confidentiality and nondisclosure, and
requiring its employees, consultants and agents to assign to it any
and all inventions and discoveries discovered by such employees,
consultants and/or agents made within the scope of and during their
employment, and only disclosing proprietary and confidential
information to Persons who are not Subsidiaries pursuant to written
confidentiality and nondisclosure agreements.
(e) Without
limiting anything herein, AYTU shall materially comply with all
Applicable Laws in performing this Agreement, including all
Marketing, promotional or advertising activities conducted by it or
its Subsidiaries.
(f) AYTU
is not listed by a United States Governmental Authority as
debarred, suspended, proposed for debarment or otherwise ineligible
for federal programs in the United States. To AYTU’s
Knowledge, it has not and will not use the services of any persons
debarred under 21 U.S.C. § 335(a) or (b) in any capacity
associated with or related to the manufacture of the Products. AYTU
also warrants that neither AYTU nor, to its Knowledge, any of its
officers or employees has been convicted of a felony under the U.S.
federal law for conduct relating to the development or approval,
including the process for development or approval, of any drug
product, new drug application or abbreviated new drug application
and neither AYTU nor to its Knowledge, any of its officers or
employees has been convicted of a felony under the U.S. federal law
for conduct relating to the regulation of any product under the
FD&C Act.
(g) There
are no judicial, arbitral, regulatory or administrative proceedings
or investigations, claims, actions or suits pending against or, to
AYTU’s knowledge, threatened against AYTU or its Subsidiaries
in any court or by or before any Governmental Authority, which
would adversely affect AYTU’s compliance with its obligations
under this Agreement.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(h) AYTU
shall be responsible for storing Products under appropriate
conditions as specified in Labeling and for distribution in full
compliance with the applicable cGMP standards, the Regulatory
Approvals, the FD&C Act and Applicable Law. AYTU shall have
received and shall be in current compliance with all approvals of
any Governmental Authority as may be required to Market a Product
pursuant to this Agreement.
(i) AYTU
shall register and sell the Products only using National Drug Codes
that reflect AYTU as the distributor.
(j) AYTU
shall be responsible for all price reporting for the Products to
any and all governmental agencies, as well as any Third Party
pricing publications.
(k) AYTU
shall be responsible for all rebates, whether required by contract
or state or federal law, for the Products.
(l) AYTU
shall take all reasonable actions to ensure that all discounts and
price reductions offered to its customers and included in the
definition of Net Sales fall within the discount safe-harbor to the
federal anti-kickback statute, as described in 42 U.S.C. 1320a-
7b(b)(3)(A) and 42 C.F.R. 1001.952(h).
(m) As
of the Effective Date AYTU will have, and will have during the
Term, sufficient capital reserves and financial resources to make
the payments to be made to TRIS, at the time and in the amount
provided in this Agreement, and to satisfy its obligations to
Market the Products in the Territory as provided
herein.
(n) The
Shares are duly authorized and, when issued pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens imposed by AYTU. The
shares of Common Stock issuable upon conversion of the Shares when
issued will be validly issued, fully paid and nonassessable, free
and clear of all liens imposed by AYTU. AYTU will at all times have
reserved from its duly authorized capital stock the number of
shares of Common Stock into which the Shares are then convertible.
The Shares have not been registered under the Securities Act and
are being issued in reliance on an exemption under the Securities
Act.
(o) A
true and correct copy of the Certificate of Designations for the
Series D Preferred Stock has been delivered to TRIS and has not
been amended since the date of delivery and such Certificate of
Designations has been duly filed with, and accepted for filing by,
the Secretary of State of Delaware.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(p) AYTU
has filed all reports, schedules, forms, statements and other
documents required to be filed by AYTU under the Securities Act and
the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to
herein as the “SEC
Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of the later of
their respective dates or the most recent amendment to a respective
SEC Report, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of
AYTU included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial
position of AYTU and its consolidated Subsidiaries as of and for
the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit
adjustments.
(q) All
of the written disclosure furnished by or on behalf of AYTU to TRIS
regarding the transactions contemplated hereby, is true and correct
in all material respects and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not
misleading.
(r) Assuming
the accuracy of TRIS’ representations and warranties set
forth in Section 11.2(i) and 11.2(j), no registration under the
Securities Act is required for the offer and sale of the Shares, by
AYTU to TRIS as contemplated hereby.
(s) The
Shares will be issued with restrictive legends preventing the
resale of the Shares unless the requirements of Rule 144 under the
Securities Act have been met, including without limitation the
holding periods imposed by Rule 144. To the knowledge of AYTU, no
legend on the Shares, or any restrictions imposed by AYTU with
respect thereto, will prevent TRIS from pledging such Securities;
provided that such pledged securities will continue to bear the
restrictive legends under Rule 144. Once the holding periods and
other conditions under Rule 144 have been satisfied, AYTU will
reasonably cooperate during and after the Term in enabling TRIS to
remove the restrictive legends on the Shares and any shares of
common stock into which they may be converted.
(t) AYTU
has determined that no filing is necessary under the HSR Act
because the size of transaction embodied in this Agreement is less
than $84.4 million.
(u) AYTU
shall comply with the provisions of Section 6.7 of the Asset Sale
Agreement with respect to any payments of accounts receivable of
the Former Owner received by AYTU or any of its Affiliates and
provide TRIS written notice thereof.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(v) AYTU
will comply with the last sentence of Section 7.8 of the Asset Sale
Agreement, regarding withdrawal of the Former Owners NDC numbers
for the Products, as if it were TRIS.
11.4 Limitation
on Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO
THE OTHER, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND BOTH PARTIES
SPECIFICALLY DISCLAIM ANY AND ALL IMPLIED OR STATUTORY WARRANTIES,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR USE, OR A WARRANTY
AS TO THE VALIDITY OF ANY PATENT RIGHTS OR THE NON-INFRINGEMENT OF
ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. IN ADDITION,
EACH PARTY UNDERSTANDS AND AGREES THAT NEITHER PARTY WARRANTS NOR
COMMITS THAT THE CCP-08 PRODUCT WILL RECEIVE APPLICABLE REGULATORY
APPROVAL.
ARTICLE XII – RESERVED
ARTICLE XIII - INDEMNIFICATION; INSURANCE
13.1 Indemnification.
(a) AYTU
Indemnification. AYTU agrees to indemnify and hold forever
harmless TRIS and its Affiliates and each of their agents,
directors, officers and employees (each such person, a
“TRIS Indemnified
Party”) from and against any and all losses, damages,
liabilities, costs and expenses (including reasonable
attorneys’ fees) (“Losses”) in connection with any
and all suits, investigations, claims or demands of Third Parties
(“Claims”) to
the extent arising from or in connection with (i) the Marketing,
use, the offer for sale, sale or distribution of the Product or any
Competing Product by AYTU or its Subsidiaries or Sublicensees in
the Territory; (ii) infringement or misappropriation of any
copyright or Trademark (other than TRIS Marks) arising out of the
Marketing of a Product or any Competing Product in the Territory;
(iii) the breach or inaccuracy of any representations, warranties
or covenants made by AYTU in this Agreement; (iv) a Recall
described in Section 5.5(b); and (v) the gross negligence or
willful misconduct of AYTU or its Subsidiaries or Sublicensees or
any of their agents, directors, officers or employees; provided, however, that AYTU shall not
be obligated to indemnify any TRIS Indemnified Party pursuant to
this Section 13.1(a) for any Losses to the extent TRIS is obligated
to indemnify an AYTU Indemnified Party for such Losses pursuant to
Section 13.1(b).
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(b) TRIS
Indemnification. TRIS agrees to indemnify and hold forever
harmless AYTU and its Affiliates and each of their agents,
directors, officers and employees (each such Person, a “AYTU
Indemnified Party”) from and against any Losses in connection
with any and all Third Party Claims to the extent arising from or
in connection with: (i) the Marketing, use, the offer for sale,
sale or distribution of any Competing Product by TRIS or its
Subsidiaries or their subdistributors in the Territory; (ii)) the
breach or inaccuracy of any representations, warranties or
covenants made by TRIS in this Agreement; (iii) TRIS’, its
Subsidiaries’ or an Approved Manufacturer’s manufacture
and supply of a Product that does not meet Product Specifications
or such Product Warranties provided in Section 8.1 at the time of
delivery or during the shelf life of such Product; (iv) the gross
negligence or willful misconduct of TRIS or its Affiliates or any
of their agents, directors, officers or employees; (v) a Recall
described in Section 5.5(a); and (vi) the Marketing, use, the offer
for sale or distribution of an AG Product by TRIS or its Affiliates
or their subdistributors; provided, however, that TRIS shall not
be obligated to indemnify any AYTU Indemnified Party pursuant to
this Section 13.1(b) for any Losses to the extent AYTU is obligated
to indemnify a TRIS Indemnified Party for such Losses pursuant to
Section 13.1(a).
13.2 Procedure.
The indemnities set forth in this Article XIII are subject to the
condition that the Party seeking indemnity shall forthwith notify
the other Party on being notified or otherwise made aware of a
suit, action or claim and that the indemnifying Party defend and
control any proceedings, with the other Party being permitted to
participate at its own expense (unless there shall be a conflict of
interest which would prevent representation by joint counsel, in
which event the indemnifying Party shall pay for the other
Party’s counsel); provided that the indemnifying Party
may not settle the suit or otherwise consent to any judgment in
such suit without the written consent of the indemnified Party
(such consent not to be unreasonably withheld, conditioned or
delayed). The Parties shall cooperate in the defense of any Third
Party claim. The Parties acknowledge and agree that the indemnity
provisions of Section 13.1 shall comprise the Parties’ sole
remedy relating solely to the items for which indemnity is
described and provided in Sections 13.1(a) and (b)
above.
13.3 Other
Product Liability Claims. To the extent either Party incurs
any Losses arising from or in connection with any claim based on
product liability with respect to the Products to the extent
arising from the actions not subject to the indemnity obligation
set forth in Sections 13.1(a) and 13.1(b), above (“Product
Claim”) such Losses shall be shared by the Parties during the
Term in accordance with such Party’s Expense Allocation,
determined at the effective date of such recovery. Neither Party
shall enter into any settlement of a Product Claim, without the
prior written consent of the other, such consent not to be
unreasonably withheld, delayed or conditioned.
13.4 DISCLAIMER.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER FOR ANY COVER, SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OR EXPENSES,
INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS, LOSS OF
OPPORTUNITY OR USE OF ANY KIND, SUFFERED BY THE OTHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT PROVIDED HOWEVER, (A) THE LIMITATION
OF LIABILITY IN THIS SECTION 13.4 SHALL NOT APPLY IN THE CASE OF A
PARTY’S OR ITS SUBSIDIARIES’ BREACH OF ITS OBLIGATIONS
UNDER SECTION 3.3 OR ARTICLE X AND (B) A PARTY WILL BE LIABLE FOR
SUCH DAMAGES TO THE EXTENT IT IS OBLIGATED TO INDEMNIFY THE OTHER
PARTY (OR ANY OF SUCH OTHER PARTY’S AFFILIATES) UNDER THIS
AGREEMENT IN RESPECT OF A THIRD PARTY CLAIM AGAINST SUCH OTHER
PARTY (OR ANY OF SUCH OTHER PARTY’S AFFILIATES) THAT INCLUDES
SUCH DAMAGES.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
13.5 Insurance.
During the term of this Agreement and for a period of five (5)
years after its expiration or earlier termination, each Party shall
obtain, at its sole cost and expense, liability insurance
applicable to its performance under this Agreement, which meets the
following requirements:
(a) the
insurance shall insure such Party against all liability related to
its activities relating to the development, manufacture or sale of
a Product (whether such Party’s liability arises from its own
conduct or by virtue of its participation in this Agreement),
including liability for bodily injury, property damage, wrongful
death, and any contractual indemnity obligations imposed by this
Agreement; and
(b) the
insurance shall be in amounts that are reasonable and customary in
the United States in the pharmaceutical industry, but in no event
shall liability insurance relating to manufacture, sale or
distribution of a marketed product maintained by such Party cover
less than [**] per occurrence (or claim) and an annual aggregate of
[**]. All such policies shall include a contractual endorsement
naming the other Party to this Agreement as an additional insured
and require the insurance carriers to provide such other Party with
no less than thirty (30) days’ written notice of any change
in the terms or coverage of the policies or their
cancellation.
ARTICLE XIV – MISCELLANEOUS
14.1 Force
Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or Losses on account of
failure of performance by the defaulting Party if the failure is
occasioned by any cause (a “Force Majeure Event”)
beyond the reasonable control of the defaulting Party, including,
without limitation, such Force Majeure Events as government action
(including, without limitation, the issuance of a temporary
injunction, preventing the manufacture or sale of a Product in the
Territory), war, fire, explosion, flood, embargo, unavailability
of, or shortage of raw materials or other materials, unavailability
or shortage of testing solvents or materials, failure of equipment
despite regular maintenance, or act of God, provided that the Party
claiming force majeure event has exerted all reasonable efforts to
avoid or remedy such force majeure event and given prompt notice to
the other Party. The affected Party shall exert Commercially
Reasonable Efforts to remedy the Force Majeure Event promptly,
perform its obligations under this Agreement to the extent feasible
given the Force Majeure Event, and give the other Party prompt
written notice when it is again fully able to perform such
obligations.
14.2 Notices.
All notices or other communications given pursuant hereto by one
Party hereto to the other Party shall be in writing and shall be
deemed given (a) when delivered by messenger, (b) when received by
the addressee, if sent by express mail, Federal Express or other
express delivery service (receipt requested) or (c) three (3) days
after being mailed in the U.S., first-class postage prepaid,
registered or certified, in each case to the appropriate addresses
and telecopy number set forth below (or to such other addresses and
telecopy numbers as a Party may designate as to itself by prior
advance written notice to the other Party):
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Notices
for TRIS shall be sent to:
TRIS
Pharma, Inc.
2033
Route 130, Suite D
Monmouth Junction,
NJ 08852
Attn:
President
Email:
kmehta@trispharma.com
Notices
for AYTU shall be sent to:
Aytu
Bioscience, Inc.
373
Inverness Parkway, Suite 206
Englewood, Colorado
80112
Attn:
Chief Executive Officer
Email:
josh.disbrow@aytubio.com
14.3 Governing
Law; Dispute Resolution.
(a) This
Agreement shall be governed by the laws of the State of New York,
as such laws are applied to contracts entered into and to be
performed within such state, as though made and to be fully
performed therein without regard to conflicts of law principles
thereof. The United Nations Convention on Contracts for the
International Sale of Goods will not apply to this Agreement or to
any sales of goods effected under this Agreement.
(b) The
Parties shall initially attempt in good faith to resolve any
significant controversy, claim, allegation of a material breach or
dispute arising out of or relating to this Agreement (collectively,
a “Dispute”)
through negotiations between senior executives of AYTU and TRIS.
The senior executives shall meet promptly to discuss the matter
submitted and to attempt to determine a resolution. If the Dispute
is not resolved within thirty (30) days (or such other period of
time mutually agreed upon by the Parties) of notice of the Dispute
(the “Executive Resolution
Period”), then the Parties agree to submit the Dispute
to arbitration as provided herein. Unless otherwise mutually agreed
by the Parties, only if the Dispute is not resolved through
negotiations as set forth herein, may a party resort to
arbitration.
(c) All
Disputes relating in any way to this Agreement, and not resolved in
accordance with the immediately preceding paragraph, shall be
resolved exclusively through arbitration conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association (the “AAA”) as then in effect. In the
event either Party demands arbitration, it shall do so within
thirty (30) days after the expiration of the Executive Resolution
Period (or any mutually agreed extension) and shall include a
request that such arbitration be held within ninety (90) days of
such demand. The arbitration hearing shall be held as soon as
practicable. The arbitration hearing shall be conducted in English
and held in New York, New York and shall be before a single
arbitrator selected by the Parties in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association regarding the selection of arbitrators. The arbitrator
shall render a formal, binding non-appealable resolution and award
on each issue as expeditiously as possible, but not more than
thirty (30) days after the hearing.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(d) Notwithstanding
the foregoing, prior to or following the appointment of an
arbitrator, either Party may seek from any court having
jurisdiction hereof any interim, provisional, or injunctive relief
that may be necessary to protect the rights or property of any
Party or maintain the status quo. The institution or maintenance of
any judicial action or proceeding for any such interim,
provisional, or injunctive relief shall not constitute a waiver of
the right or obligation of either Party to submit the Dispute to
arbitration.
(e) Notwithstanding
anything to the contrary in this Agreement, any disputes regarding
TRIS’ rights with respect to the Shares may be brought by
TRIS in a court of competent jurisdiction.
(f) Notwithstanding
the foregoing, if a dispute involves Sections 11.3(u), 11.3(v), the
last two sentences of Section 2.4, or royalties payable to the
Former Owner or taxes thereon, either Party may bring an action in
the courts of the State of New York sitting in New York County, New
York or in the U.S. District Court for the Southern District of New
York, and waives any claim and will not assert that venue should
properly lie in any other location within the selected
jurisdiction. The consents to jurisdiction in this paragraph will
not constitute general consents to service of process in the State
of New York for any purpose except as provided in this
paragraph.
14.4 Non-waiver
of Rights. Except as specifically provided for herein, the
waiver from time to time by any of the Parties of any of their
rights or their failure to exercise any remedy shall not operate or
be construed as a continuing waiver of same or of any other of such
Party’s rights or remedies provided in this
Agreement.
14.5 No
Agency. Neither Party shall by virtue of this Agreement have
any power to bind the other to any obligation nor shall this
Agreement create any relationship of agency, partnership or joint
venture.
14.6 Severability.
If any term, covenant, or condition of this Agreement or the
application thereof to any Party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (i) the
remainder of this Agreement, or the application of any term,
covenant or condition other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each
such term, covenant, or condition of this Agreement shall be valid
and be enforced to the fullest extent permitted by law and (ii) the
Parties hereto covenant and agree to renegotiate any such term,
covenant, or application thereof in good faith in order to provide
a reasonably acceptable alternative to the term, covenant, or
condition of this Agreement or the application thereof that is held
to be invalid or unenforceable.
14.7 Entire
Agreement. This Agreement together with the Exhibits and
Schedules hereto, and the Confidentiality Agreement described in
Section 10.1(f), sets forth all the covenants, promises,
agreements, warranties, representations, conditions, and
understandings between the Parties hereto in the scope of the
collaboration, and supersedes and terminates all prior agreements
and understandings between the Parties with respect to matters
covered by this Agreement. No subsequent alteration, amendment,
change, or addition to this Agreement shall be binding upon the
Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
14.8 Assignment.
No Party shall, without the prior written consent (not to be
unreasonably withheld, conditioned or delayed) of the other Party
having been obtained, assign or transfer this Agreement to any
Person, provided, however,
that any Party may assign or transfer this Agreement to (i) (A) any
Subsidiary of such Party, or (B) any direct or indirect parent of
such Party which is an operating company in the business of
manufacturing or distributing prescription pharmaceuticals and
which owns (on a fully diluted basis) the majority of the total
voting power (unrestricted in the exercise of such power by a
voting or similar agreement) of shares of stock entitled to vote
(without regard to the occurrence of any contingency) in the
election of directors of such Party, in each case, on thirty (30)
days’ written notice to the other Party, provided that the
assigning Party shall remain primarily liable for all obligations
of assignee and assignee shall be liable for all obligations of
assignor before or after such assignment, and assignor shall
execute a guarantee in form and substance acceptable to the other
Party, or (ii) to any Third Party successor by merger of such
Party, or to a Third Party purchaser of all or substantially all of
such assets of, or stock of the line of business to which this
agreement relates, without the prior written consent of the other
Party hereto. This Agreement shall be binding upon and shall inure
to the benefit of the Parties and their successors and permitted
assigns. For the avoidance of doubt, and notwithstanding anything
else to the contrary contained in this Agreement, the reference to
the term “Affiliates” or “Affiliate” of a
Party, in the provisions of this Agreement, shall not imply that
any rights or obligations under this Agreement may be assigned to
any such Affiliate, except in accordance with the foregoing
provisions of this Section 14.8 or as expressly provided herein;
provided, that, TRIS or any of its Affiliates shall have the right
to Market an AG Product in the Territory in accordance with the
terms and conditions set forth in Section 6.9, and TRIS shall have
the right to assign any such rights to any of its
Affiliates.
14.9 Facsimile
Execution. This Agreement may be executed in pdf or
facsimile counterparts each of which is hereby agreed to have the
legal binding effect of an original signature. The Parties hereto
agree to forward the original signatures by overnight mail to the
other Party upon execution.
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed by their duly authorized
representatives as of the day and year first indicated
above.
TRIS
PHARMA, INC.
Title:
CFO & SVP Corporate
Dev.
AYTU
BIOSCIENCE, INC.
Title: Chief Executive
Officer
Attachments:
Schedule
I - TRIS Knowledge Representatives
Schedule
II - AYTU Knowledge Representatives
Schedule 11.2(1) - Historical Deductions from Gross Sales in
Determining Net Sales
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE I
TRIS Knowledge Representatives
Ketan
Mehta, President and Chief Executive Officer
Peter
Ciano, Senior Vice President, Corporate Development/Acting
CFO
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE II
AYTU Knowledge Representatives
Josh
Disbrow, CEO
Jarrett
Disbrow, COO
David
Green, CFO
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE
DESIGNATED BY [**]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
SCHEDULE 11.2(l)
Historical Deductions from Gross Sales for Calculation of Net
Sales*
Managed
Care rebates
Launch
and Promo discounts
Pharmacy Stocking
incentive
Prompt
payment discount
Returns
and adjustments
Government
Channel
Chargebacks
Wholesaler DSA fee
for service
Coupon
Program (co-pay card)
Coupon
Program (e Voucher)
*
Although not included in the above extract of a royalty report
delivered to Tris by the Former Owner, the above is not intended to
limit other deductions contemplated within definition of Net Sales.
Without limiting the generality of the foregoing, it is expected
that payor rebates and associated administrative fees may be
deducted from gross sales in calculating Net Sales.
AYTU BIOSCIENCE, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES E CONVERTIBLE PREFERRED STOCK
PURSUANT
TO SECTION 151 OF THE
DELAWARE
GENERAL CORPORATION LAW
The
undersigned, Joshua R. Disbrow and David A. Green, do hereby
certify that:
1. They
are the President and Secretary, respectively, of Aytu BioScience,
Inc., a Delaware corporation (the “Corporation”).
2. The
Corporation is authorized to issue 50,000,000 shares of preferred
stock, [●] of which have been issued.
3. The
following resolutions were duly adopted by the board of directors
of the Corporation (the “Board of
Directors”):
WHEREAS, the
certificate of incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, consisting
of 50,000,000 shares, $0.0001 par value per share, issuable from
time to time in one or more series;
WHEREAS, the Board
of Directors is authorized to fix the dividend rights, dividend
rate, voting rights, conversion rights, rights and terms of
redemption and liquidation preferences of any wholly unissued
series of preferred stock and the number of shares constituting any
series and the designation thereof, of any of them;
and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as
aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of the preferred stock, which shall
consist of up to [●] shares of the preferred stock which the
Corporation has the authority to issue, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby
fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as
follows:
TERMS OF PREFERRED STOCK
Section 1. Definitions. For the purposes
hereof, the following terms shall have the following
meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Alternate Consideration”
shall have the meaning set forth in Section 7(d).
“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 6(d).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Buy-In” shall have the
meaning set forth in Section 6(c)(iv).
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
Corporation’s common stock, par value $0.0001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Corporation or the Subsidiaries which
would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Conversion Amount” means
the sum of the Stated Value at issue.
“Conversion Date” shall
have the meaning set forth in Section 6(a).
“Conversion Price” shall
have the meaning set forth in Section 6(b).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Fundamental Transaction”
shall have the meaning set forth in Section 7(d).
“GAAP” means United States
generally accepted accounting principles.
“Holder” shall have the
meaning given such term in Section 2.
“Liquidation” shall have
the meaning set forth in Section 5.
“New York Courts” shall
have the meaning set forth in Section 8(d).
“Notice of Conversion”
shall have the meaning set forth in Section 6(a).
“Original Issue Date”
means the date of the first issuance of any shares of the Preferred
Stock regardless of the number of transfers of any particular
shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred
Stock.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Preferred Stock” shall
have the meaning set forth in Section 2.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Share Delivery Date”
shall have the meaning set forth in Section 6(c).
“Stated Value” shall have
the meaning set forth in Section 2, as the same may be increased
pursuant to Section 3.
“Successor Entity” shall
have the meaning set forth in Section 7(d).
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market or the New York Stock Exchange (or any
successors to any of the foregoing).
“Transfer Agent” means
Issuer Direct Corporation, the current transfer agent of the
Corporation with a mailing address of [●] and a facsimile
number of [●], and any successor transfer agent of the
Corporation.
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a
majority in interest of the Preferred Stock then outstanding and
reasonably acceptable to the Corporation, the fees and expenses of
which shall be paid by the Corporation.
Section 2. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
Series E Convertible Preferred Stock (the “Preferred Stock”) and the
number of shares so designated shall be up to [●] (which
shall not be subject to increase without the written consent of all
of the holders of the Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of
Preferred Stock shall have a par value of $0.0001 per share and a
stated value equal to $0.88, subject to increase set forth in
Section 3 below (the “Stated Value”). The
Preferred Stock will initially be issued in book-entry form. As
between the Corporation and a beneficial owner of Preferred Stock,
such beneficial owner of Preferred Stock shall have all of the
rights and remedies of a Holder hereunder.
Section 3. Dividends. Except for stock
dividends or distributions for which adjustments are to be made
pursuant to Section 7, Holders shall be entitled to receive, and
the Corporation shall pay, dividends on shares of Preferred Stock
equal (on an as-if-converted-to-Common-Stock basis, disregarding
for such purpose any conversion limitations hereunder) to and in
the same form as dividends actually paid on shares of the Common
Stock when, as and if such dividends are paid on shares of the
Common Stock. No other dividends shall be paid on shares of
Preferred Stock. The Corporation shall not pay any dividends on the
Common Stock unless the Corporation simultaneously complies with
this provision.
Section 4. Voting Rights. Except as
otherwise provided herein or as otherwise required by law, the
Preferred Stock shall have no voting rights. However, as long as
any shares of Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Preferred Stock, (a)
alter or change adversely the powers, preferences or rights given
to the Preferred Stock or alter or amend this Certificate of
Designation, (b) amend its certificate of incorporation or other
charter documents in any manner that adversely affects any rights
of the Holders, (c) increase the number of authorized shares of
Preferred Stock, or (d) enter into any agreement with respect to
any of the foregoing.
Section 5. Liquidation. Upon any
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary (a “Liquidation”), the
Holders shall be entitled to receive out of the assets, whether
capital or surplus, of the Corporation the same amount that a
holder of Common Stock would receive if the Preferred Stock were
fully converted (disregarding for such purposes any conversion
limitations hereunder) to Common Stock which amounts shall be paid
pari passu with all holders of Common Stock. The Corporation shall
mail written notice of any such Liquidation, not less than 45 days
prior to the payment date stated therein, to each
Holder.
Section 6. Conversion.
a) Conversions
at Option of Holder. Each share of Preferred Stock shall be
convertible, at any time and from time to time from and after the
Original Issue Date at the option of the Holder thereof, into that
number of shares of Common Stock (subject to the limitations set
forth in Section 6(d)) determined by dividing the Stated Value of
such share of Preferred Stock by the Conversion Price. Holders
shall effect conversions by providing the Corporation with the form
of conversion notice attached hereto as Annex A (a “Notice of Conversion”).
Each Notice of Conversion shall specify the number of shares of
Preferred Stock to be converted, the number of shares of Preferred
Stock owned prior to the conversion at issue, the number of shares
of Preferred Stock owned subsequent to the conversion at issue and
the date on which such conversion is to be effected, which date may
not be prior to the date the applicable Holder delivers by
facsimile or e-mail such Notice of Conversion to the Corporation
(such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion to
the Corporation is deemed delivered hereunder. No ink-original
Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required. The calculations and entries
set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. To effect conversions of shares
of Preferred Stock, a Holder shall not be required to surrender the
certificate(s) representing the shares of Preferred Stock to the
Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver
the certificate representing such shares of Preferred Stock
promptly following the Conversion Date at issue. Shares of
Preferred Stock converted into Common Stock or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued.
b)
Conversion Price.
The conversion price for the Preferred Stock shall equal $0.88,
subject to adjustment herein (the “Conversion
Price”).
c)
Mechanics of
Conversion
i.
Delivery of Conversion
Shares Upon Conversion. Not later than the earlier of (i)
two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined below) after each
Conversion Date (the “Share Delivery Date”),
the Corporation shall deliver, or cause to be delivered, to the
converting Holder (A) the number of Conversion Shares being
acquired upon the conversion of the Preferred Stock, which
Conversion Shares, if registered with the Commission, shall be free
of restrictive legends and trading restrictions, and (B) a bank
check in the amount of accrued and unpaid dividends, if any. The
Corporation shall use its best efforts to deliver the Conversion
Shares required to be delivered by the Corporation under this
Section 6 electronically through the Depository Trust Company or
another established clearing corporation performing similar
functions. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Corporation’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of Conversion.
Notwithstanding the foregoing, with respect to any Notice(s) of
Conversion delivered by 12:00 p.m. (New York City time) on the
Original Issue Date, the Corporation agrees to deliver the
Conversion Shares subject to such notice(s) by 4:00 p.m. (New York
City time) on the Original Issue Date, and the Original Issue Date
being deemed the “Share Delivery Date” with respect to
any such Notice(s) of Conversion.
ii.
Failure to Deliver
Conversion Shares. If, in the case of any Notice of
Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the
Holder shall be entitled to elect by written notice to the
Corporation at any time on or before its receipt of such Conversion
Shares, to rescind such Conversion, in which event the Corporation
shall promptly return to the Holder any original Preferred Stock
certificate delivered to the Corporation and the Holder shall
promptly return to the Corporation the Conversion Shares issued to
such Holder pursuant to the rescinded Notice of
Conversion.
iii.
Obligation Absolute;
Partial Liquidated Damages. The Corporation’s
obligation to issue and deliver the Conversion Shares upon
conversion of Preferred Stock in accordance with the terms hereof
is absolute and unconditional, irrespective of any action or
inaction by a Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any
obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Corporation to such Holder in connection with the issuance of
such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Corporation of any such action
that the Corporation may have against such Holder. In the event a
Holder shall elect to convert any or all of the Stated Value of its
Preferred Stock, the Corporation may not refuse conversion based on
any claim that such Holder or anyone associated or affiliated with
such Holder has been engaged in any violation of law, agreement or
for any other reason, unless an injunction from a court, on notice
to Holder, restraining and/or enjoining conversion of all or part
of the Preferred Stock of such Holder shall have been sought and
obtained, and the Corporation posts a surety bond for the benefit
of such Holder in the amount of 150% of the Stated Value of
Preferred Stock which is subject to the injunction, which bond
shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of such injunction, the Corporation shall
issue Conversion Shares and, if applicable, cash, upon a properly
noticed conversion. If the Corporation fails to deliver to a Holder
such Conversion Shares pursuant to Section 6(c)(i) by the Share
Delivery Date applicable to such conversion, the Corporation shall
pay to such Holder, in cash, as liquidated damages and not as a
penalty, for each $5,000 of Stated Value of Preferred Stock being
converted, $50 per Trading Day (increasing to $100 per Trading Day
on the third Trading Day and increasing to $200 per Trading Day on
the sixth Trading Day after such damages begin to accrue) for each
Trading Day after the Share Delivery Date until such Conversion
Shares are delivered or Holder rescinds such conversion. Nothing
herein shall limit a Holder’s right to pursue actual damages
for the Corporation’s failure to deliver Conversion Shares
within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such
rights shall not prohibit a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable
law.
iv.
Compensation for Buy-In on
Failure to Timely Deliver Conversion Shares Upon Conversion.
In addition to any other rights available to the Holder, if the
Corporation fails for any reason to deliver to a Holder the
applicable Conversion Shares by the Share Delivery Date pursuant to
Section 6(c)(i), and if after such Share Delivery Date such Holder
is required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the
Corporation shall (A) pay in cash to such Holder (in addition to
any other remedies available to or elected by such Holder) the
amount, if any, by which (x) such Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and
(B) at the option of such Holder, either reissue (if surrendered)
the shares of Preferred Stock equal to the number of shares of
Preferred Stock submitted for conversion (in which case, such
conversion shall be deemed rescinded) or deliver to such Holder the
number of shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements
under Section 6(c)(i). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the actual sale price of the
Conversion Shares (including any brokerage commissions) giving rise
to such purchase obligation was a total of $10,000 under clause (A)
of the immediately preceding sentence, the Corporation shall be
required to pay such Holder $1,000. The Holder shall provide the
Corporation written notice indicating the amounts payable to such
Holder in respect of the Buy-In and, upon request of the
Corporation, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Corporation’s failure to timely
deliver the Conversion Shares upon conversion of the shares of
Preferred Stock as required pursuant to the terms
hereof.
v.
Reservation of Shares
Issuable Upon Conversion. The Corporation covenants that it
will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of
issuance upon conversion of the Preferred Stock as herein provided,
free from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of
the Preferred Stock), not less than such aggregate number of shares
of the Common Stock as shall be issuable (taking into account the
adjustments and restrictions of Section 7) upon the conversion of
the then outstanding shares of Preferred Stock. The Corporation
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
vi.
Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of the Preferred Stock. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such conversion, the Corporation shall round up to
the next whole share. Notwithstanding anything to the contrary
contained herein, but consistent with the provisions of this
subsection with respect to fractional Conversion Shares, nothing
shall prevent any Holder from converting fractional shares of
Preferred Stock.
vii.
Transfer Taxes and
Expenses. The issuance of Conversion Shares on conversion of
this Preferred Stock shall be made without charge to any Holder for
any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such Conversion Shares,
provided that the Corporation shall not be required to pay any tax
that may be payable in respect of any transfer involved in the
issuance and delivery of any such Conversion Shares upon conversion
in a name other than that of the Holders of such shares of
Preferred Stock and the Corporation shall not be required to issue
or deliver such Conversion Shares unless or until the Person or
Persons requesting the issuance thereof shall have paid to the
Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid. The
Corporation shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion and all fees to the
Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.
d) Beneficial
Ownership Limitation. The Corporation shall not effect any
conversion of the Preferred Stock, and a Holder shall not have the
right to convert any portion of the Preferred Stock, to the extent
that, after giving effect to the conversion set forth on the
applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any Persons acting as a group
together with such Holder or any of such Holder’s Affiliates
(such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon
conversion of the Preferred Stock with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the
remaining, unconverted Stated Value of Preferred Stock beneficially
owned by such Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Corporation
subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, the
Preferred Stock) beneficially owned by such Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 6(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 6(d) applies, the determination of whether the Preferred
Stock is convertible (in relation to other securities owned by such
Holder together with any Affiliates and Attribution Parties) and of
how many shares of Preferred Stock are convertible shall be in the
sole discretion of such Holder, and the submission of a Notice of
Conversion shall be deemed to be such Holder’s determination
of whether the shares of Preferred Stock may be converted (in
relation to other securities owned by such Holder together with any
Affiliates and Attribution Parties) and how many shares of the
Preferred Stock are convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this
restriction, each Holder will be deemed to represent to the
Corporation each time it delivers a Notice of Conversion that such
Notice of Conversion has not violated the restrictions set forth in
this paragraph and the Corporation shall have no obligation to
verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes
of this Section 6(d), in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of
the following: (i) the Corporation’s most recent periodic or
annual report filed with the Commission, as the case may be, (ii) a
more recent public announcement by the Corporation or (iii) a more
recent written notice by the Corporation or the Transfer Agent
setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request (which may be
via email) of a Holder, the Corporation shall within one Trading
Day confirm orally and in writing to such Holder the number of
shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of
the Corporation, including the Preferred Stock, by such Holder or
its Affiliates or Attribution Parties since the date as of which
such number of outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 40% of the number of
shares of Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon conversion
of Preferred Stock held by the applicable Holder. A Holder, upon
notice to the Corporation, may decrease the Beneficial Ownership
Limitation provisions of this Section 6(d) applicable to its
Preferred Stock. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 6(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of Preferred Stock.
Section 7. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Corporation, at any time
while this Preferred Stock is outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions payable
in shares of Common Stock on shares of Common Stock or any other
Common Stock Equivalents (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, this Preferred Stock),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Corporation, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of
the Corporation) outstanding immediately before such event, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 7(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete conversion of such Holder’s Preferred Stock (without
regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before
the date on which a record is taken for the grant, issuance or sale
of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a
result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata
Distributions. During such time as this Preferred Stock is
outstanding, if the Corporation declares or makes any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Preferred Stock, then, in each such
case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Preferred
Stock (without regard to any limitations on conversion hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that the
Holder’s right to participate in any such Distribution would
result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
d)
Fundamental
Transaction. If, at any time while this Preferred Stock is
outstanding, (i) the Corporation, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Corporation with or into another Person, (ii) the Corporation,
directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Corporation or another
Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) the
Corporation, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Corporation, directly or indirectly, in one or more
related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Preferred Stock, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock), the number of shares of
Common Stock of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Preferred
Stock is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of this Preferred Stock). For purposes of any such
conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Corporation shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Preferred Stock following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any
successor to the Corporation or surviving entity in such
Fundamental Transaction shall file a new Certificate of Designation
with the same terms and conditions and issue to the Holders new
preferred stock consistent with the foregoing provisions and
evidencing the Holders’ right to convert such preferred stock
into Alternate Consideration. The Corporation shall cause any
successor entity in a Fundamental Transaction in which the
Corporation is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Corporation under
this Certificate of Designation in accordance with the provisions
of this Section 7(d) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Preferred Stock a security of the
Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Preferred Stock which is
convertible for a corresponding number of shares of capital stock
of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon conversion of
this Preferred Stock (without regard to any limitations on the
conversion of this Preferred Stock) prior to such Fundamental
Transaction, and with a conversion price which applies the
conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock and, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Preferred Stock immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Certificate of Designation referring to the
“Corporation” shall refer instead to the Successor
Entity), and may exercise every right and power of the Corporation
and shall assume all of the obligations of the Corporation under
this Certificate of Designation with the same effect as if such
Successor Entity had been named as the Corporation
herein.
e)
Calculations. All
calculations under this Section 7 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 7, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding any treasury shares
of the Corporation) issued and outstanding.
f)
Notice to the
Holders.
i.
Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 7, the Corporation shall promptly
deliver to each Holder by facsimile or email a notice setting forth
the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such
adjustment.
ii.
Notice to Allow Conversion
by Holder. If (A) the Corporation shall declare a dividend
(or any other distribution in whatever form) on the Common Stock,
(B) the Corporation shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the
Corporation shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the
Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E)
the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of
conversion of this Preferred Stock, and shall cause to be delivered
by facsimile or email to each Holder at its last facsimile number
or email address as it shall appear upon the stock books of the
Corporation, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Corporation or any of the Subsidiaries, the
Corporation shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of this
Preferred Stock (or any part hereof) during the 20-day period
commencing on the date of such notice through the effective date of
the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 8. Miscellaneous.
a)
Notices. Any and
all notices or other communications or deliveries to be provided by
the Holders hereunder including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by
facsimile or e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at the address set
forth above Attention: Controller, facsimile number (720) 437-6527,
e-mail address ecreason@aytubio.com, or such other facsimile
number, e-mail address or address as the Corporation may specify
for such purposes by notice to the Holders delivered in accordance
with this Section 8. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in
writing and delivered personally, by facsimile, e-mail, or sent by
a nationally recognized overnight courier service addressed to each
Holder at the facsimile number, e-mail address or address of such
Holder appearing on the books of the Corporation. Any notice or
other communication or deliveries hereunder shall be deemed given
and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number or e-mail at the e-mail address set forth in this
Section 8 prior to 5:30 p.m. (New York City time) on any date, (ii)
the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number
or e-mail at the e-mail address set forth in this Section on a day
that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
b)
Absolute
Obligation. Except as expressly provided herein, no
provision of this Certificate of Designation shall alter or impair
the obligation of the Corporation, which is absolute and
unconditional, to pay liquidated damages, and accrued dividends, as
applicable, on the shares of Preferred Stock at the time, place,
and rate, and in the coin or currency, herein
prescribed.
c)
Lost or Mutilated
Preferred Stock Certificate. If a Holder’s Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed,
the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed
certificate, a new certificate for the shares of Preferred Stock so
mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such certificate,
and of the ownership hereof reasonably satisfactory to the
Corporation.
d)
Governing Law. All
questions concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware without regard to the principles of
conflict of laws thereof. All legal proceedings concerning the
interpretation, enforcement and defense of the transactions
contemplated by this Certificate of Designation (whether brought
against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). The
Corporation and each Holder hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. The Corporation
and each Holder hereby irrevocably waives personal service of
process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
applicable law. The Corporation and each Holder hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Certificate of Designation or
the transactions contemplated hereby. If the Corporation or any
Holder shall commence an action or proceeding to enforce any
provisions of this Certificate of Designation, then the prevailing
party in such action or proceeding shall be reimbursed by the other
party for its attorneys’ fees and other costs and expenses
incurred in the investigation, preparation and prosecution of such
action or proceeding.
e)
Waiver. Any waiver
by the Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.
f) Severability.
If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law.
g)
Next Business Day.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h)
Headings. The
headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions
hereof.
i)
Status of Converted or
Redeemed Preferred Stock. If any shares of Preferred Stock
shall be converted, redeemed or reacquired by the Corporation, such
shares shall resume the status of authorized but unissued shares of
preferred stock and shall no longer be designated as Series E
Convertible Preferred Stock.
*********************
RESOLVED,
FURTHER, that the Chairman, the president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be
and they hereby are authorized and directed to prepare and file
this Certificate of Designation of Preferences, Rights and
Limitations in accordance with the foregoing resolution and the
provisions of Delaware law.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this [●] day of [●], 2019.
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Name:
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Name:
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Title:
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Title:
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ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
E Convertible Preferred Stock indicated below into shares of common
stock, par value $0.0001 per share (the “Common Stock”), of Aytu
BioScience, Inc., a Delaware corporation (the “Corporation”), according
to the conditions hereof, as of the date written below. If shares
of Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. No fee will be charged to the Holders
for any conversion, except for any such transfer
taxes.
Conversion
calculations:
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Date to
Effect Conversion:
_____________________________________________
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Number
of shares of Preferred Stock owned prior to Conversion:
_______________
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Number
of shares of Preferred Stock to be Converted:
________________________
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Stated
Value of shares of Preferred Stock to be Converted:
____________________
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Number
of shares of Common Stock to be Issued:
___________________________
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Applicable
Conversion
Price:____________________________________________
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Number
of shares of Preferred Stock subsequent to Conversion:
________________
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Address
for Delivery: ______________________
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or
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DWAC
Instructions:
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Broker
no: _________
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Account
no: ___________
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[HOLDER]
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By:
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Name:
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Title:
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NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
AYTU BIOSCIENCE, INC.
Warrant Shares:
[●]
Initial Exercise Date:
[●], 2019
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, Armistice Capital Master Fund Ltd or its
assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after
[●], 2019 (the “Initial Exercise Date”)
and on or prior to the close of business on the five (5) year
anniversary of the Initial Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Aytu BioScience,
Inc., a Delaware corporation (the “Company”), up to
[●]1 shares (as subject to adjustment
hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).
Section 1. Definitions. In addition to the
terms defined elsewhere in this Warrant, the following terms have
the meanings indicated in this Section 1:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB
or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on OTC Pink Open Market (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a
majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
________________
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
common stock of the Company, par value $0.0001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day
on which the Common Stock is traded on a Trading
Market.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means
Issuer Direct Corporation, with a mailing address of [●] and
a facsimile number of [●], and any successor transfer agent
of the Company.
“Warrants” means this
Warrant and other Common Stock Purchase Warrants issued by the
Company pursuant to an Exchange Agreement between the Company and
the Holder dated as of [●], 2019.
Section 2. Exercise.
a)
Subject to the limitations set forth in this Section, exercise of
the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before close of business on the Termination
Date by delivery to the Company of a duly executed facsimile copy
(or e-mail attachment) of the Notice of Exercise in the form
annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as
defined in Section 2(d)(i) following the date of exercise as
aforesaid, the Holder shall deliver the aggregate Exercise Price
for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier's check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
b)
Exercise Price. The
exercise price per share of the Common Stock under this Warrant
shall be $1.00, subject to adjustment hereunder (the
“Exercise
Price”).
c)
Cashless Exercise.
If after six months from the Initial Exercise Date there is no
effective registration statement registering, or the prospectus
contained therein is not available for the resale of the Warrant
Shares to the Holder, then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a
number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;
(B) = the Exercise Price of
this Warrant, as adjusted hereunder; and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a
cashless exercise, the parties acknowledge and agree that in
accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the registered characteristics of the Warrants
being exercised. The Company agrees not to take any position
contrary to this Section 2(c). Notwithstanding anything
herein to the contrary but without limiting the rights of the
Holder to receive Warrant Shares on a “cashless
exercise” and without limiting the liquidated damages
provision in section 2(d)(i) and the Buy-In provision in Section
2(d)(iv), in the event there is
no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant
Shares to the Holder, under no circumstance will the Company be
required to net cash settle the
warrants.
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX
and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the holders of a
majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d)
Mechanics of
Exercise.
i.
Delivery of Warrant Shares
Upon Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder or (B)
this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise, (ii) one (1) Trading Day after delivery of
the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. If
the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the VWAP of the Common
Stock on the date of the applicable Notice of Exercise), $10 per
Trading Day (increasing to $20 per Trading Day on the fifth Trading
Day after such liquidated damages begin to accrue) for each Trading
Day after such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a transfer agent that is a participant in the
FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Exercise.
ii.
Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
iii.
Rescission Rights.
If the Company fails to cause the Transfer Agent to transmit to the
Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise.
iv.
Compensation for Buy-In on
Failure to Timely Deliver Warrant Shares Upon Exercise. In
addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder
the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or
otherwise) or the Holder's brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price
at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver shares of Common
Stock upon exercise of the Warrant as required pursuant to the
terms hereof.
v.
No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in
an amount equal to such fraction multiplied by the Exercise Price
or round up to the next whole share.
vi.
Charges, Taxes and
Expenses. Issuance of Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided,
however, that in
the event Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of
Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant
Shares.
vii.
Closing of Books.
The Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant, pursuant
to the terms hereof.
e)
Holder's Exercise
Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder's Affiliates, and any other Persons
acting as a group together with the Holder or any of the Holder's
Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, non-exercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or non-converted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company's most recent periodic or annual report filed with the
Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 40% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company,
may decrease the Beneficial Ownership Limitation provisions of this
Section 2(e). The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this
Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and
Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any
other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.
b)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder's right to
participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a
result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata
Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
d)
Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation in
Section 2(e) on the exercise of this Warrant). For purposes of any
such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume
in writing all of the obligations of the Company under this Warrant
and the other Transaction Documents in accordance with the
provisions of this Section 3(d) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and
approved by the Holder (which approval shall not be unreasonably
withheld or delayed) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
e)
Calculations. All
calculations under this Section 3 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
f)
Notice to
Holder.
i.
Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall promptly deliver
to the Holder by facsimile or email a notice setting forth the
Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement
of the facts requiring such adjustment.
ii.
Notice to Allow Exercise
by Holder. If (A) the Company shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on
or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders
of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger
to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize
the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Company, then, in each case, the Company
shall cause to be delivered by facsimile or email to the Holder at
its last facsimile number or email address as it shall appear upon
the Warrant Register of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided in this Warrant
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.
Section 4. Transfer of
Warrant.
a)
Transferability.
This Warrant and all rights hereunder are transferable, in whole or
in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees, as applicable,
and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and
this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date the Holder delivers an assignment form to the Company
assigning this Warrant full. The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant
issued.
b)
New Warrants. This
Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section
4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. All Warrants issued on
transfers or exchanges shall be dated the original Initial Exercise
Date of this Warrant and shall be identical with this Warrant
except as to the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant Register.
The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
Section 5. Miscellaneous.
a)
No Rights as Stockholder
Until Exercise. This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of
the Company prior to the exercise hereof as set forth in Section
2(d)(i), except as expressly set forth in Section 3.
b)
Loss, Theft, Destruction
or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any
stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken
or such right may be exercised on the next succeeding Business
Day.
d)
Authorized
Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
e)
Governing Law. All
questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflict of laws
thereof. Each party agrees that all legal Proceedings concerning
the interpretation, enforcement and defense of this Warrant shall
be commenced in the state and federal courts sitting in the City of
New York, Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any provision hereunder), and hereby irrevocably
waives, and agrees not to assert in any suit, action or Proceeding,
any claim that it is not personally subject to the jurisdiction of
such New York Courts, or such New York Courts are improper or
inconvenient venue for such Proceeding. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal Proceeding
arising out of or relating to this Warrant. If any party shall
commence an action or Proceeding to enforce any provisions of this
Warrant, then the prevailing party in such action or Proceeding
shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred in the investigation, preparation
and prosecution of such action or Proceeding.
f)
Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
g)
Nonwaiver and
Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder's rights,
powers or remedies. Without limiting any other provision of this
Warrant, if the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees,
including those of appellate Proceedings, incurred by the Holder in
collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies
hereunder.
h)
Notices. Any and
all notices or other communications or deliveries to be provided by
the Holders hereunder including, without limitation, any Notice of
Exercise, shall be in writing and delivered personally, by
facsimile or by e-mail, or sent by a nationally recognized
overnight courier service, addressed to the Company, at 373
Inverness Parkway, Suite 206, Englewood, Colorado 80112, Attention:
Chief Executive Officer, facsimile number: (720) 437-6527, email
address: Josh.Disbrow@aytubio.com or such other facsimile number,
email address or address as the Company may specify for such
purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address
of such Holder appearing on the books of the Company. Any notice or
other communication or deliveries hereunder shall be deemed given
and effective on the earliest of (i) the time of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number or e-mail at the e-mail address set forth in this
Section prior to 5:30 p.m. (New York City time) on any date, (ii)
the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number
or e-mail at the e-mail address set forth in this Section on a day
that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
i)
Reserved.
j)
Limitation of
Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
k)
Remedies. The
Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.
l)
Successors and
Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit
of any Holder from time to time of this Warrant and shall be
enforceable by the Holder or holder of Warrant Shares.
m)
Amendment. This
Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company, on the one hand, and the
Holder or the beneficial owner of this Warrant, on the other
hand.
n)
Severability.
Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
o)
Headings. The
headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of [●],
2019.
AYTU
BIOSCIENCE, INC.
By:
__________________________
Name:
Title:
NOTICE OF EXERCISE
TO:
AYTU BIOSCIENCE, INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful money of
the United States; or
[ ] if permitted the
cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant
Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 2(c).
(3) Tax
ID Number: _______________________
(4)
Please issue said Warrant Shares in the name of the undersigned or
in such other name as is specified below:
___________________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
___________________________________
____________________________________
____________________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________
Signature of Authorized Signatory of Investing
Entity:__________________________________
Name of
Authorized
Signatory:____________________________________________________
Title
of Authorized Signatory:
______________________________________________________
Date:__________________________________________________________________________
ASSIGNMENT
FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
Name:
(Please
Print)
Address:
(Please
Print)
Phone
Number:
Email
Address:
Dated:
_____________________ __, ______
Holder's
Signature:
Holder's
Address: