Amended and Restated License Agreement by and between BioProtection Systems Corporation and Her Majesty the Queen in Right of Canada, as represented by the Minister of Health, acting through the Public Health Agency of Canada, dated December 5, 2017

i)    Canada surrenders its commercial self-interest to the Company; and

G.     WHEREAS the salient elements of this License Agreement are:

prophylaxis against and treatment of Ebola (Zaire), a VHF virus, in humans, whether before or after exposure; and (b) a non-exclusive, worldwide, revocable and royalty-bearing license to make, use, improve, Develop and Commercialize the technology in the field of prevention and prophylaxis against and treatment of Ebola (Sudan), a VHF virus, in humans, whether before or after exposure;

 

 

NOW THEREFORE in consideration of the premises, the terms and conditions hereinafter contained and other good and valuable consideration, the receipt of which is hereby acknowledged by each Party, the Parties hereto covenant and agree as follows:

1.0    DEFINITIONS

means any corporation, subsidiary, partnership or other entity which the Company, directly or indirectly, controls (or has common control of) or which, directly or indirectly, controls the Company:

Identified in appendix D (“Affiliates”) are the Affiliates of the Company in existence on the Execution Date.

means:

1.2.1     the commercial making, using, Sale or offering to sell;

1.2.3     by the Company, its Affiliates or its sub-licensees;

1.2.5     within the Field of Use; and

means, with respect to a Party, all proprietary information of any type, or any part or portion thereof, that is disclosed by that Party to the other Party pursuant to this License Agreement, whether or not such information is specifically marked or identified as confidential at the time of disclosure, which may include without limitation,

 

which may have actual or potential economic value in part from not being known and may be positive (what works) or negative (what does not) information;

means with respect to a given Licensed Product in a given country, that the composition of matter (but excluding formulation) or method of use of such Licensed Product is claimed by a Valid Claim in such country and such Valid Claim would be infringed by the sale of such Licensed Product in such country for use in the Field of Use but for the licenses granted to Company hereunder; provided, that with respect to method of use, such method of use is (i) for an indication for which regulatory approval has been received (as set forth on the approved labeling for such Licensed Product) for such Licensed Product in such country, and (ii) for the indication for which such Licensed Product is actually being marketed.

means:

1.5.1     the pre-clinical or clinical research, development, making or using;

1.5.2    of the products resulting from the exercise of the Licensed Rights;

1.5.3    by the Company, its Affiliates or its sub-licensees;

1.5.4    in the Territory; and

1.5.5    within the Field of Use.

for purposes of Article 16 (Alternate Dispute Resolution (ADR)), and paragraph 17.17 (Forum Conveniens)

but Dispute does not encompass:

means the date on which the last signature is affixed to this amended and restated License Agreement.

means:

(i) the application and use of the Licensed Rights only with products to be sold or used by the Company, or its Affiliates or sub-licensees or marketed through specified trade channels in the field of prevention and prophylaxis against and treatment of Ebola (Zaire), a VHF virus, in humans (the “Ebola (Zaire) Field of Use”), and

(ii) the application and use of the Licensed Rights only with products to be sold or used by the Company, or its Affiliates or sub-licensees or marketed through specified trade channels in the field of prevention and prophylaxis against and treatment of Ebola (Sudan), a VHF virus, in humans (the “Ebola (Sudan) Field of Use”);

and for no other purposes whatsoever.

means, at any time, accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants at the relevant time, applied on a consistent basis (except for necessary or advisable changes in accordance with the promulgations of the Canadian Institute of Chartered Accountants). If and when Canadian GAAP does not address an accounting issue, then generally accepted accounting principles in the United States will apply.

means any modification, improvement, enhancement, variation, refinement, derivative or development

relating to the Licensed Rights which

1.10.1    infringes any one or more claims of any of the Patents; or

means all Patents, trade-marks, copyrights, industrial designs, trade-names, trade secrets, Confidential Information and other intellectual property rights whether registered or not, whether proprietary or not

i) owned by or licensed to Canada, relating to the Licensed Rights; or

ii) owned by or licensed to the Company, relating to the Improvements made by the Company, its Affiliates or sub-licensees,

as the case may be.

1.12    “Know-How Royalty Term”

means

(a) if the first Sale of such Licensed Product in such country of Sale occurs when there is a Valid Claim Covering such Licensed Product in such country: the period beginning on the date of expiry of the last to expire Valid Claim Covering such Licensed Product in such country and ending five (5) years thereafter; or

(b) if the first Sale of such Licensed Product in such country of Sale occurs when there is no Valid Claim Covering the Licensed Product in such country: the period beginning on the date of first Sale of such Licensed Product in such country and ending five (5) years after the first Sale in such country.

(a) if the first Sale of such Licensed Product in such country of Sale occurs when there is a Valid Claim Covering such Licensed Product in such country: the period beginning on the date of the last to expire Valid Claim Covering such Licensed Product in such country and ending five (5) years thereafter in such country; and

(b) if the first Sale of such Licensed Product in such country of Sale occurs when there is no Valid Claim Covering the Licensed Product in such country: the period beginning on the date of first Sale of such Licensed Product in such country and ending ten (10) years after the first Sale in such country.

means this agreement and including all attached appendices and future amendments, and refers to the whole of this agreement, not to any particular section or portion thereof.

1.14     “Licensed Product(s)”

means any product resulting from Commercialization under this License Agreement.

means the exercise, as of, on or after the Execution Date, in whole or in part, of

1.15.1    the Patents and related Intellectual Property and Confidential Information and any subsequent changes thereto that are expressly incorporated into the License Agreement;

1.15.2. any Improvements owned by or licensed to Canada and related Intellectual Property and Confidential Information; and any subsequent changes thereto that are expressly incorporated into the License Agreement; and

within the Field of Use.

1.16    “Merck”

means Merck, Sharp & Dohme Corp., a corporation organized and existing under the laws of New Jersey.

1.17    “MTA”

means the Material Transfer and License Agreement between Canada and the Company dated November 21, 2014 and attached hereto as Appendix E.

means any one of the signatories to the License Agreement and “Parties” means both of them.

1.19    “Patent Royalty Term”

means, with respect to a given Licensed Product in a given country of Sale, the period, during the Term, prior to the date of expiry of the last to expire Valid Claim Covering such Licensed Product in such country of Sale.

means:

for such patents, continuations, continuations-in-part, extensions, re-issues thereof for those patents listed in "Appendix A";

means without limitation the act of transferring (conditionally or unconditionally, permanently or temporarily) the results of the exercise of the Licensed Rights for consideration including but not limited to sale, lease, gift, barter, exchange or other disposition for value in the Field of Use. (For greater clarity (a) any transfer by the Company to an Affiliate or sub-licensee shall not be deemed a Sale at the Sales Price at the time of the transfer to such Affiliate or sub-licensee but shall be deemed a Sale at the time of transfer to an end user by such Affiliate or sub-licensee and (b) any internal corporate use / consumption whatsoever of the Licensed Rights by the Company or an Affiliate or sub-licensee shall be deemed a Sale at the Sales Price at the time of the use / consumption or allocation for internal use / consumption, whichever is the earlier).

means the aggregate gross price paid by an arm’s length purchaser or lessee for any of the results of the exercise of the Licensed Rights sold or leased by the Company (or, to the extent the results of the exercise of the Licensed Rights sold or leased by the Company are subject to pricing set by the applicable regulatory authority in a given country in the Territory, then the price set by such regulatory authority for sales or leases in such country) for use in the Field of Use, less a fixed amount equal to [*] of the amount invoiced.

1.23    "Taxes"

means taxes (including, without limitation, sales taxes, goods & services taxes, value added taxes, however described), levies, imposts, deductions, charges, license and registration fees, assessments, withholdings / withholding taxes and duties imposed by any jurisdiction or authority (including stamp and transaction taxes and duties) together with any related interest, penalties, fines and expenses in connection with them.

1.24    “Term”

means the term as set out in section 3.1 of the License Agreement.

means the entire world, always subject to:

1.24.1    the United Nations Act, R.S.C. 1985, Chap. U-2;

1.24.2    the Export & Import Permits Act, R.S.C. 1985;

1.24.3    Chap. E-19, Special Economic Measures Act, S.C. 1992, Chap. 17;

1.24.4    Foreign Extra-Territorial Measures Act, R.S.C. 1985 c. F-29; and

1.24.5    any other pertinent Canadian statutory or regulatory strictures.

For greater clarity Territory means all countries and jurisdictions of the world.

1.26    “Valid Claim”

means a claim of an issued and unexpired patent (as may be extended through supplementary protection certificate or patent term extension) within the Patents, which claim has not been abandoned or revoked, held invalid or unenforceable by a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal was taken within the

allowable time period), and has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise.

1.27    “VHF”

means viral hemorrhagic fever.

2.0    GRANT & RESERVATIONS

Subject to:

2.1.1    the definitions, terms and conditions of the License Agreement,

2.1.3    any third party peremptory rights,

Canada hereby grants to the Company: (a) a personal, non-transferable, sole, revocable, royalty-bearing license for Development and Commercialization in the Ebola (Zaire) Field of Use, and (b) a personal, non-transferable, non-exclusive, revocable, royalty-bearing license for Development and Commercialization in the Ebola (Sudan) Field of Use. Nothing herein shall constitute in any manner whatsoever:

Notwithstanding anything to the contrary in the License Agreement, Canada retains from the License Agreement, any and all absolute and unfettered rights necessary to do the following:

2.2.1    improve the Licensed Rights or Patents;

 

2.2.7 to grant licenses to any third party, for commercial and non-commercial purposes, concerning the Patents and related Intellectual Property and the Confidential Information of Canada:

a) outside the Ebola (Zaire) Field of Use; and

b) subject to subsection (a) above, within and outside the Ebola (Sudan) Field of Use,

in each case of (a) and (b), in the Territory.

Subject to clause 2.2, Canada shall not commercially compete with the Company, or grant a license to any third party for commercial purposes, within the Ebola (Zaire) Field of Use concerning the Licensed Rights in the Territory. Without limiting the generality of the foregoing, Canada hereby verifies that, with the exception of biological reagents used for non-compendial release testing, it has provided access to and use of Materials (as defined in the MTA) to third parties only for use outside the scope of the license under the Licensed Rights in the Field of Use.

As regards sub-licensing:

2.4.2 The Company is permitted to grant to its sub-licensee Merck a right to sub-sublicense or subcontract to: (i) Merck’s affiliates; and (ii) Merck’s non-affiliated or non-controlled parties pursuant to or in connection with contracts with, or services by, such non-affiliated or non-controlled parties for Development, manufacture or Commercialization; ((i) and (ii), collectively referred to hereafter as “Merck Ordinary Course Sub-licenses”), and, subject to clause (ii) of Section 2.4.3, no consent for a Merck Ordinary Couse Sub-license shall be required. The Company shall require that any Merck Ordinary Course Sub-licenses be consistent with the terms of the License Agreement and not exceed the scope and rights granted to the Company under this License Agreement; provided that Merck Ordinary Course Sub-licenses are not required to carry a royalty payable to Canada and will not be subject to the obligations set forth in Section 2.5 (save and except for the obligation set forth in 2.5.4), 2.6 or 5.4 of the License Agreement; however, any Sale by a Merck Ordinary Course Sub-licensee shall be deemed a Sale by Merck for the purpose of section 5.2 of the License Agreement and any royalty paid by Merck relating to a Sale by a Merck Ordinary Course Sub-licensee to the Company shall be counted as a royalty for the purpose of section 5.4 of the License Agreement; and

2.4.3 To the extent that the Company’s sub-licensee Merck desires to enter into a sub-sub-license (i) other than the Merck Ordinary Course Sub-licenses or (ii) a Merck Ordinary Couse Sub-license which would include a sub-sub-license of the majority of Merck’s Commercialization rights to a third party in the Territory, the Company shall, on behalf of Merck, seek the prior written consent of Canada. Canada shall have thirty (30) calendar days, from the date it receives from the Company a notice in compliance with section 20.1 of the License Agreement, to respond to the request. Canada’s consent to the request shall not be unreasonably withheld.

2.4.4 For greater certainty, the Company acknowledges and agrees that it remains primarily liable to Canada for all of the Company’s duties and obligations contained in the License Agreement, including duties and obligations relating to sub-licenses and sub-sub-licenses mentioned in 2.4.1, 2.4.2 and 2.4.3.

Except as otherwise set forth in the License Agreement (including with respect to any Merck Ordinary Course Sub-licenses, save and except for the obligation set forth in 2.5.4), any sub-license or any amendment to any sub-license granted by the Company to Affiliates and non-affiliated or non-controlled parties, shall:

2.5.3    be only within the Territory or any portion thereof

2.5.4    be only within the Field of Use or a subset thereof;

2.5.6    be copied to Canada immediately following execution; and

2.5.7    not be a de facto assignment.

For greater clarity, Canada shall receive from the Affiliates and sub-licensees not less than the same amount of consideration Canada would have received from the Company, had the Company conducted the Commercialization rather than the Affiliates or sub-licensees. The Company shall ensure that any monies owing to Canada from the Affiliates or sub-licensees are paid to Canada when due, and shall be liable for any such monies irrespective of whether or not the Affiliate or sub-licensee paid the Company.

In addition to the royalties payable by the Affiliates and sub-licensees to Canada as contemplated in paragraph 2.5 (Sub-licensing Conditions), the Company shall also pay to Canada [*] paid by the Affiliates and sub-licensees to the Company in accordance with paragraph 5.4.

Except as otherwise set forth in the License Agreement, termination of the License Agreement shall also terminate any subsisting sub-licenses, but any consideration due or owing to Canada shall be paid promptly thereafter, and any and all unsatisfied obligations and rights shall subsist until satisfied.

3.0    TERM AND RENEWAL

This License Agreement shall commence on the Execution Date and shall continue in force until the earlier of (i) July 28, 2033; or (ii) such time the Company, its Affiliates and sub-licensees cease all Development and Commercialization, subject to:

3.1.1    early termination as prescribed under Article 15.0 (Termination); and

3.1.2    condition subsequent in paragraph 4.1 (Business Plan).

The term of this License Agreement as set forth in section 3.1 (Term) shall be referred to herein as the “Term”.

4.0    EXPLOITATION OF LICENSED RIGHTS

The Company shall submit a business plan to Canada by no later than December 31, 2017, containing Company’s then-current development plans for the Licensed Products and commercial plans. Company shall provide Canada with an update to the business plan at least once every twelve (12) months to reflect Company’s then-current plans. Canada shall have the right to request amendments to the business plan in order to ensure maximum commercial return to the Company and Canada in accordance with this Article 4 (Exploitation of Licensed Rights). The Company shall use commercially reasonable efforts to ensure that the business plan submitted to Canada pursuant to this section 4.1 includes Merck’s (and its affiliates’ and sub-licensees’) then-current development plans for the Licensed Products and, if available, commercial plans.

The business plan shall provide sufficient detail to show how the Company plans to diligently research, Develop and promote and make commercially reasonable efforts to Commercialize. This business plan shall also disclose any

4.2.2     market studies pertinent to the Licensed Rights;

During the term of the License Agreement, the Company shall promptly provide to Canada any amendments or updates to the business plan.

The Company acknowledges that the business plan as orally presented to Canada in a pre-contractual setting, and subsequently manifested in the written format under paragraph 4.1, as accepted by Canada is the major inducement for Canada to enter into the License Agreement on the terms and conditions prescribed herein.

If the Company

then such failure is a material breach of the License Agreement which provides Canada with the discretionary election either to:

4.5.3    rescind the License Agreement and seek damages; or

4.5.4    maintain the License Agreement and seek damages alone.

As an inducement to Canada to enter into the License Agreement, during the Term (or the renewal) of the License Agreement, the Company shall:

4.6.1    use commercially reasonable efforts to Commercialize;

Payment of fees and royalties under Article 5 (Fees & Royalties) does not relieve the Company of its obligation under paragraph 4.6 (Commercially Reasonable Efforts to Commercialize).

Any “parking”, “shelving” or other activity or inactivity concerning the Licensed Rights whereby the Company is not using its commercially reasonable efforts to diligently and aggressively Commercialize the Licensed Rights in the Territory, is a fundamental breach of the License Agreement.

In carrying out basic research and Development activities concerning the Licensed Rights and VHF vaccine in the Field of Use during the term of this License Agreement, and any renewal thereof, the Company, its Affiliates and sub-licensees shall make good faith efforts to collaborate with Canada on such activities, under collaborative research agreements containing commercially reasonable terms and conditions as agreed to by the Parties at that time. Any payments made by the Company pursuant to such collaborations shall not diminish or affect the Company’s obligation to pay fees and royalties under Article 5 (Fee and Royalties).

The Company shall ensure that the Government of Canada receives full and fair acknowledgment for its role and contribution in the development of the VSV-EBOV ebola vaccine on all of the Company’s news releases, media communications activities or public announcements (hereinafter "Communications Materials") relating to the VSV-EBOV ebola vaccine. In order to satisfy such obligations, the Communications Materials shall refer specifically to "Canada’s VSV-EBOV ebola vaccine", or “the vaccine originally licensed from the Public Health Agency of Canada” or “the vaccine originally developed by the Public Health Agency of Canada” or “the vaccine originally discovered by the Public Health Agency of Canada” or other similar description recognizing Canada’s involvement with the VSV-EBOV ebola vaccine. The Company shall also ensure that its Affiliates and sub-licensees comply with these obligations in their Communications Materials.

[*].

[*]. 

5.0    FEES AND ROYALTIES

The Company shall pay to Canada the following non-refundable lump sums but solely to the extent that such amounts were not previously paid to, or otherwise received by, Canada prior to the Execution Date of this amended and restated License Agreement: The Parties acknowledge and agree that all payments due pursuant to the version of the license agreement that immediately preceded this amended and restated License Agreement have been paid by the Company to Canada and that only payments due pursuant to this amended and restated License Agreement shall be due to Canada.

[*] lump sum payable on the earlier of [*] or [*], whichever comes first; and

[*] lump sum payable on [*].

During the Patent Royalty Term, the Company shall pay to Canada a royalty rate of [*] of the Sales Price of Licensed Products sold by the Company, its Affiliate(s) or sub-licensees.

5.2.1 The royalty rate shall be lowered to [*] if: a) an additional technology is required to Commercialize; and b) the additional technology is actually licensed by the Company (or its Affiliates or sub-licensees) from a third party and the latter actually charges royalties to the Company (or its Affiliates or sub-licensees) for such a license (as shown by documentation sufficient to establish the requirement and the actual license).

5.2.2 The rate shall be lowered to [*] if: a) two (2) or more additional technologies are required to Commercialize; and b) the additional technologies are actually licensed by the Company (or its Affiliates or sub-licensees) from one or more third parties and the latter actually charge royalties to the Company (or its Affiliates or sub-licensees) for such a license (as shown by documentation sufficient to establish the requirement and the actual license).

5.2.3 No amounts shall be owed to Canada under this paragraph 5.2 with respect to Sales of Licensed Products sold by the Company, its Affiliate(s) or sublicensees in (i) those countries (and their territories and possessions) in Africa and (ii) GAVI Eligible Countries (and their territories and possessions). As used

herein, “GAVI Eligible Countries” means all countries which are deemed GAVI-eligible countries by the GAVI Alliance, as such GAVI-eligible countries may be added or deleted by the GAVI Alliance from time to time; provided that in no event shall China be included as a GAVI Eligible Country (it being understood countries that have ‘graduated’ from GAVI eligibility shall, following such ‘graduation’, no longer be included as GAVI Eligible Countries) and “GAVI Alliance” means the Global Alliance for Vaccines and Immunization (GAVI), an independent non-profit organization established under the laws of Switzerland, with the purpose of providing support for improvements of vaccinations and immunization in the poorest countries of the world.

Notwithstanding any other provision of the License Agreement, the Company shall pay to Canada a minimum annual royalty of [*] payable on or before January 1^st during each year of the License Agreement. Such amounts paid shall be creditable against royalties owed under clause 5.2 (Royalty Percentage Rate) and sub-license payments owed under clause 5.4 (Sub-Licensing Consideration) in the same year.

The Company shall pay to Canada [*] paid by the sub-licensees to the Company as follows:

Such payments shall be over and above the royalty rate paragraph 5.2 (Royalty Percentage Rate) (whether or not such consideration was directly, indirectly or derivatively paid or provided) including without limitation any equity. Notwithstanding the foregoing, any amounts payable to Canada under paragraph 5.2 with respect to Sales of Licensed Products by Merck, its affiliates or sublicensees may be deducted from the amount Company is obligated to pay Canada as sub-licensing consideration under this paragraph 5.4 (but for clarity, Company shall pay Canada [*] it receives from Merck in excess of the amount payable to Canada under paragraph 5.2).

The Company shall ensure that royalties payable to Canada from Affiliates and sub-licensees shall be remitted directly to the Receiver General for Canada, at the address provided in Article 20.1 (Notice). The Company shall take any necessary actions (at the Company’s own cost) to collect, enforce and remit royalties or other consideration owing to Canada by the Affiliates and sub-licensees. Notwithstanding the foregoing, the Company’s sub-licensee Merck (and its affiliates and sub-licensees) shall not be required to make any direct payment to Canada. Any amounts payable under this License Agreement as a result of activities of the Company’s sub-licensee Merck (and Merck’s affiliates, sub-licensees and Ordinary Course Sub-Licensees) shall be paid by the Company to Canada.

If an Affiliate or sub-licensee has royalties or other consideration owing to Canada under a sub-license for a period in excess of thirty (30) days, then the Company shall pay to Canada that amount owing within the next fourteen (14) days immediately following the aforementioned thirty (30) days.

The Company shall pay Taxes at the applicable prevailing rates exigible on the Company’s activities under the License Agreement, including without limitation Commercialization or on the payment of royalties, including any withholding taxes that in the first instance are levied against Canada.

Unless the License Agreement expressly provides otherwise, the Company shall pay any and all monies and consideration owing to Canada as follows:

quarterly, by cheque, money order or wire transfer, commencing on December 31, 2010 and thereafter on March 31, June 30, September 30 and December 31 of each year of this License Agreement;

except for royalties generated from Commercialization within Canada, payment of royalties shall be in U.S. funds (at the conversion rate stated in the Wall Street Journal on the day prior to the date payment is due) and made payable to the "Receiver General for Canada". The payment(s) shall be sent to:

Director, Intellectual Property Management & Business Development

Public Health Agency of Canada

1015 Arlington Street, Suite 2420

Winnipeg, Manitoba, Canada

R3E 3R2;

each cheque, money order or wire transfer shall be accompanied by a statement bearing the name / identification of this License Agreement and the Licensed Rights, and showing the period covered, the total sales, per country sales, the per country royalty applicable and the total royalty paid or consideration paid, as applicable.

The Company shall pay to Canada any consideration due and payable under the License Agreement, whether such consideration is due and payable before or after termination, in accordance with Article 15 (Termination).

The Company shall continue paying the amounts as prescribed in this Article, notwithstanding any impeachment proceedings, or the expiry, expungement or other nullification of the Patents.

Notwithstanding any other provision of the License Agreement, any consideration payable to Canada by the Company under the License Agreement is unconditional and non-cancelable. Further, the Company shall not have the right of set-off, deduct or counter-claim against any such consideration.

The Company shall use GAAP in the calculation of consideration owing to Canada. The Company may allow its sub-licensee Merck (and its affiliates and sub-licensees) to use United States GAAP in the calculation of consideration owing to Canada.

Royalties accrue on receipt of payment by the Company (or Affiliates or the sub-licensees) for the Licensed Rights.

In the event the Company fails to make any payment under the License Agreement when due and payable, then interest on any unpaid amount shall accrue at a rate of four (4)% above the base rate of the Bank of Montreal, Toronto, from time to time in force during the period of non-payment.

If the Company receives any lump sum or other payments, royalties (including royalty payments received from third parties), or any other income or consideration for, or in respect of the Commercialization of the Licensed Rights, then the Company shall include such additional income in calculating the Sales Price.

5.12    Know-How Royalty

During the Know-How Royalty Term, the Company shall pay to Canada royalties at [*] of the rates set out in sections 5.2 and 5.4 of the License Agreement.

6.0    RECORDS AND AUDIT

The Company shall keep true and accurate records and maintain such records relating to Commercialization and all other obligations of the Company under the License Agreement during the term of the License Agreement and for ten (10) years following the termination or expiration of the License Agreement.

For greater clarity and without limiting the generality of the foregoing, records cited in paragraph 6.1 (Records) shall comprehensively address:

6.2.2    quality standards and monitoring reports and records.

The Company irrevocably authorizes its independent accountants, KPMG LLP, to provide to Canada’s independent accountants any information it may have with respect to the Commercialization.

Upon the written request of Canada and with at least fifteen (15) calendar days prior notice, the Company shall permit an independent accountant, retained by Canada, to inspect all relevant records (whether held internally by the Company or at the offices of professional advisors or elsewhere) in order to ascertain the accuracy of such royalties, reports and Commercialization efforts. Such inspections shall be during business hours and in a manner that does not unduly disrupt the Company’s business. The Company shall allow the accountant to make any necessary copies of the records that the independent accountant deems fit.

In addition to the rights in paragraph 6.4, upon the written request of Canada, the Company shall allow the

independent accountant to interview key personnel of the Company. The independent accountant, in its unfettered discretion, shall determine who the key personnel are for the purposes of the interview. The Company acknowledges that the independent accountant may have more than one interview with key personnel.

The independent accountants retained by Canada shall inform Canada whether the Company has complied with its obligations under the License Agreement, including without limitation whether all royalties and consideration due and payable were paid as prescribed to Canada and marketing efforts and any inaccuracies in such payments. Subject to the information contained in the foregoing audit reports, the independent accountants shall neither reveal to Canada any of the Company’s internal documentation or records, nor disclose any notes or copies of the Company’s records made by the independent accountants, excluding anything necessary for the report.

The auditing and verification provisions herein shall continue for 10 years following the expiry or termination of this License Agreement.

Any royalty payment or report accepted by Canada shall not constitute a waiver by or estoppel against Canada concerning the contractual right to audit the Company, and Canada shall continue to have the right to audit as prescribed in the License Agreement. Furthermore, an audit shall not preclude Canada from conducting subsequent audit or audits.

With respect to the earned royalties (paragraph 5.2, Royalty Rate; paragraph 5.4, Sub-License Fees) in the event of any discrepancy uncovered by the audit, in excess of five percent (5.0%) of the amounts paid during the audited period, the Company shall pay forthwith to Canada both the discrepancy and the cost of the audit. Overpayments shall be credited against the next payment due by the Company to Canada.

The record and audit requirements are a material term of the License Agreement.

7.0    REPORTS & QUALITY CONTROL

The Company shall, on or before the 45th day following each calendar quarter, during the term hereof and any renewal, submit to Canada written reports as to the Company’s activities with respect to the exercise of Licensed Rights during the preceding twelve (12) months. Such reports shall contain:

The report from the Company shall also contain a certificate from either the CEO or CFO of the Company attesting to the fact that the Company has been using commercially reasonable efforts to Develop and

Commercialize the products or processes created by the exercise of the Licensed Rights and that Commercialization is a material and active element of the Company’s business.

In addition to the requirements of paragraphs 7.1 (Report Contents - General) and paragraph 7.2 (Report - Officer’s Certificate), the report from the Company to Canada shall also contain an audited statement, which includes, without limitation:

In addition to the foregoing, the report shall also contain internal audit results, conducted quarterly, showing the quality standards of the products or processes created by the exercise of the Licensed Rights at all production sites and at the major sale or distribution sites.

The Company shall comply with all quality requirements for the products or processes created by the exercise of the Licensed Rights that are prescribed by:

7.5.1     Canada from time to time in writing; and

7.5.2     any regulatory or statutory authority.

The Company shall allow Canada to conduct spot audits of the Company production and sales sites during operating hours anywhere in the Territory to ensure compliance with the prescribed quality standards.

Canada may ask the Company to conduct spot audits of the Company production and sales sites anywhere in the Territory and to disclose those results to Canada within 15 days of each audit.

The Company shall, on or before the 31st day of May of each calendar year, during the term hereof and any renewal, submit to Canada a copy of:

7.8.2    the Company’s annual reports to shareholders; and

7.8.3    material revisions to the Company’s business plan.

The Company shall, on the 121st day of each calendar year, during the term of the License Agreement and any renewal, meet with Canada to provide a progress report on the activities carried out by the Company under the License Agreement.

The reporting and quality requirements and audit rights are a material term of the License Agreement.

 

7.11    Non-Application of Article 7 to Merck

The Company may exempt its sub-licensee Merck (and its affiliates and sub-licensees) from the application of Article 7. If the Company provides such an exemption, it shall provide to Canada copies of reports provided by Merck (or its affiliates or sub-licensees) to the Company. Canada shall keep all such reports confidential in accordance with Article 11.

8.0    OWNERSHIP OF TECHNOLOGY / IMPROVEMENTS

The Company agrees and is estopped from alleging otherwise that:

8.1.2.2     the right to issue a license;

are vested in and are the sole property of Canada; and

The Company shall neither impeach, contest or otherwise attack, directly or indirectly, the validity, enforceability or ownership of the Patents or any Intellectual Property rights held by Canada, or Canada’s right, title and interest in and to the Licensed Rights nor assist, counsel or procure any third party to do the same.    

The Company shall not use any Confidential Information obtained from Canada in the negotiation of the License Agreement, under due diligence searches or otherwise related to this License Agreement, in any manner that either violates the Company’s rights and obligations under the License Agreement or is

inimical to the interests of Canada.

Unless expressly agreed to otherwise in writing by the Parties, the ownership of any Improvement (and Intellectual Property related thereto) made by or on behalf of a Party shall immediately, after creation, vest exclusively in that Party.

The Company shall:

Such disclosures shall be made no later than sixty (60) calendar days from the date the Improvements, innovations and discoveries have been disclosed within Merck by the inventors by written memorandum pursuant to Merck’s internal procedures for the disclosure of inventions and discoveries. Canada shall keep all such disclosures confidential in accordance with Article 11.

The Company hereby grants to Canada a personal, non-transferable, non-exclusive, worldwide, perpetual, irrevocable, royalty-free and fully paid-up license for the Improvements (including data and reports related thereto), made by or on behalf of the Company under paragraph 8.4 (Improvements - Ownership) and disclosed to Canada under paragraph 8.5 (Improvements - Disclosure) for the purposes set out in paragraph 2.2 (Carve Out), save and except for the purposes set out in paragraph 2.2.7. Further, Canada may sub-license such Improvements for the purposes of carrying out the purposes set out in paragraph 2.2 (Carve Out).

Termination of the License Agreement shall not terminate the foregoing license to Canada or any subsisting sub-licenses.

For greater certainty, the Company shall ensure that its sub-licensee Merck (and its affiliates and sub-licensees) complies with this section.

9.0    DISCLAIMERS

The Company acknowledges that there is some question as to the integrity of ownership of the Licensed Rights and Patents and the Company accepts those risks.

The Licensed Rights and Patents are provided to the Company on an “as is” basis. Canada makes no warranties, representations or conditions, express or implied, of any nature, and Canada disclaims all warranties, representations or conditions, for the Licensed Rights, the Patents, the Intellectual Property or the Confidential Information including, without limitation:

9.1.1    merchantability;

9.1.2    quality (either as discussed or with respect to a sample / model);

9.1.3    fitness for any or a particular purpose;

9.1.4    commercial utility or practical purpose;

9.1.6    latent or other defects;

9.1.7    infringement or non-infringement of Patents or other third party rights;

9.1.8    conformity with the laws of any jurisdictions; or

For greater certainty, no information or advice given by Canada shall create a warranty or representation or condition other than as expressly stated in the License Agreement. The Company hereby accepts the Licensed Rights and the Patents “as is”, with all faults, and the entire risk as to satisfactory quality, performance, accuracy and effort is with the Company. In no event shall Canada be liable for any direct, indirect, incidental, special, exemplary, or consequential damages (including, but not limited to, procurement of substitute goods or services, loss of use, data or profits, or business interruption) however caused and on any theory of liability, whether in contract, strict liability, or tort (including negligence or otherwise) arising in any way out of the exercise of the Licensed Rights by the Company, its Affiliates or sub-licensees, even if advised of the possibility of such damage.

No legal or equitable warranties or conditions implied by law or convention under any domestic, foreign or international legal regime, or from a course of dealing or usage of trade, shall apply to the License Agreement. The Company acknowledges this disclaimer and is estopped from relying on any such representations, warranties or conditions against Canada.

The Company shall not rely in any way on the quality, accuracy or completeness of any Confidential Information provided by Canada under the License Agreement. Any use of such Confidential Information shall be at the Company’s sole risk and expense. Any Confidential Information provided to the Company by Canada is without any warranty or guarantee or representation or warranty of any kind whatsoever other than as expressly provided herein.

The Company undertakes to use the Licensed Rights and apply Confidential Information of Canada entirely at its own risk and under its own responsibility, and that the Company will have no recourse against Canada with respect to any consequences of such application.

The Company shall not represent to any Affiliate or sub-licensee the existence of any warranty or condition concerning the Licensed Rights.

The Company acknowledges that:

unfavorable have been identified; and

 

10.0    PATENT PROTECTION & REGULATORY REQUIREMENTS

The Company shall pay all costs related to and maintaining Patents (and shall reimburse Canada for any of these costs that Canada may pay during any term of the License Agreement), as they are incurred, and within thirty (30) days of being invoiced for such costs. Canada shall have the first right to prosecute and maintain any of the Patents. However, if Canada decides not to do so, Canada shall provide a notice to the Company under Article 20 in a timely manner. The Company or its sub-licensee Merck (or its affiliates or sub-licensees) may then prosecute and maintain such Patents in the name of Canada and Canada shall provide reasonable assistance and cooperation to the Company in connection therewith (including, without limitation, providing the necessary authorizations to the Company or other relevant documents). If the Company, or its sub-licensee Merck (or its affiliates or sub-licensees) prosecute or maintain such Patents, then the Company shall provide a notice to Canada under Article 20 in a timely manner.

Nothing in the License Agreement shall limit or restrict Canada from seeking to patent Improvements made by Canada or the Company from seeking to patent Improvements made by the Company.

In addition, the Company or its sub-licensee Merck (or its affiliates or sub-licensees) shall have the right to file for patent term extensions and supplementary protections certificates (or equivalents thereof) (hereinafter “PTR(s)”) for any Licensed Products in its discretion. Canada shall provide reasonable assistance and cooperation to the Company or its sub-licensee Merck (or its affiliates or sub-licensees) in connection with any PTR and shall provide all necessary authorizations for a PTR application. Any such application shall request that any PTR certificate granted shall reflect Canada as the patent owner. Canada shall assume the costs associated with its reasonable assistance and cooperation but all other costs for a PTR application shall be borne by the Company or its sub-licensee Merck (or its affiliates or sub-licensees). If the Company, or its sub-licensee Merck (or its affiliates or sub-licensees) file PTRs, then the Company shall provide a notice to Canada under Article 20 in a timely manner.

The Company shall use commercially reasonable efforts to obtain any authorizations, permits, certificates or other regulatory permissions which may be required in order for the Company to legally carry out all of its activities under the License Agreement, including but not limited to Commercialization, at the Company’s sole cost and expense without right of set-off.

Nothing in the License Agreement shall obligate any emanation of Her Majesty the Queen in Right of Canada to grant any required authorizations, permits, certificates or other regulatory permissions. Conversely, there is no implication by the execution of the License Agreement that the Company will be granted any required authorization, permits, certificates or other regulatory permissions necessary for the effective Commercialization of the Licensed Rights.

11.0    CONFIDENTIALITY / FIDUCIARY OBLIGATIONS & EQUITABLE REMEDIES

Commencing on the Execution Date of this License Agreement, Confidential Information disclosed by

one Party to the other Party under this License Agreement shall be:

11.1.1    held in confidence and in trust by the receiving Party;

The Company may disclose to its sub-licensee Merck (and Merck may thereafter disclose to its affiliates, subcontractors and sub-licensees) Confidential Information of Canada on terms and conditions that are at least as protective as those set out herein.

The confidentiality and non-use obligations under this Article 11 shall survive until July 28, 2033.

11.2    No Waiver of Privilege

Each Party acknowledges that the Confidential Information of the disclosing Party is the property of the disclosing Party or a third party and that none of the latter intend to or do waive any rights, title or privilege they may have in respect of any of the Confidential Information.

11.3    Common Law Duty of Confidentiality

Nothing in this License Agreement derogates, displaces or otherwise diminishes the common law or equitable duty of confidentiality vested in the receiving Party concerning the Confidential Information.

11.4    Confidentiality Exclusions

Article 11.1 (Confidentiality Obligations) does not apply to information which, even if it may be marked “confidential”, is not really confidential, in that:

11.5    Secure Location

Each Party shall keep the Confidential Information of the other Party in a secure location accessible only to its employees specifically authorized to have access pursuant to this License Agreement. Each Party shall ensure that its employees complies with the terms and conditions of this License Agreement and shall enter into agreements with such employees if necessary to give effect to this obligation.

If this License Agreement expires or is terminated, the Parties shall return to each other the Confidential Information disclosed to them under this License Agreement and any notes, reports and other materials prepared by the receiving Party from the disclosing Party’s Confidential Information except that Canada shall be entitled to retain one copy of such records for the purposes of meeting Canada’s obligations under the federal laws of Canada and for the purposes of paragraph 8.6 (Company Improvements - License to Canada).

The Confidential Information of each Party is and shall remain the exclusive property of that Party or third parties and the receiving Party shall not claim any rights, title, interest or ownership in the Confidential Information. The receiving Party shall not contest any such rights, title, interest or ownership.

11.8    Legal and Equitable Remedies

Should a Party commit or threaten to commit a serious or material breach of its confidentiality or fiduciary obligations under this Article 11, then the other Party may pursue any and all legal and equitable remedies, including without limitation, injunctive relief, accounting for profits, redistribution, damages, constructive trust and disgorgement. Disgorgement means, for the purposes of the License Agreement, the ejection of all benefits gained by the receiving Party, traceable to the material breach, notwithstanding that such disgorgement may exceed the damages directly suffered by the disclosing Party or deprivation suffered by the disclosing Party for such breach.

11.9    No Hiring of Canada’s Employees

The Company shall not:

11.9.1         solicit, hire, retain or secure;

11.9.3         any of the agents, servants or employees of Canada;

to accept employment with the Company of any of its Affiliates, unless

The prohibition in paragraph 11.9 (No Hiring of Canada’s Employees) does not apply to general solicitations of employment issued by the Company and any hiring resulting from such solicitations that are:

11.10.1     not directed towards the employees of Canada; and

The Parties shall have no discussions, correspondence or other contact with the other Party, its licensees, confidants or any person concerning the License Agreement, except through the designated representative of the other Party or any delegates identified in writing by the designated representative from time to time.

The Parties agree that terms of this License Agreement are confidential but not its existence. The terms of this License Agreement shall not be disclosed by a Party unless disclosure is required by law or if the other Party agrees to the disclosure in writing prior to disclosure.

 

12.0    CORPORATE REPRESENTATIONS & WARRANTIES

The Company represents and warrants to Canada that as of the Execution Date of this amended and restated License Agreement:

it can Commercialize, and the Company has or will have the necessary access to funds, resources, knowledge, facilities and personnel to perform its obligations under the License Agreement, including to use commercially reasonable efforts to Commercialize;

it is authorized and has the corporate power and authority to negotiate, execute, comply with and satisfy its obligations, without qualification, under the License Agreement;

it has been duly incorporated and organized under the laws of the state of Delaware and is validly existing under the laws of Iowa;

it is duly qualified, licensed or registered to carry on business in the Province or State of Delaware.

it is bound by the License Agreement, upon execution, and the License Agreement constitutes a legal, valid and binding obligation on the Company, enforceable against the Company in accordance with the terms of the License Agreement, except as those terms may be limited by applicable bankruptcy laws and general principles of equity;

it has no knowledge of any legal proceeding or order pending against or, to the knowledge of the Company, threatened against or affecting, the Company or any of its properties or otherwise that could adversely affect or restrict the ability of the Company to consummate fully the transactions

contemplated by this License Agreement (including without limitation the Commercialization) or that in any manner draws into question the validity of this License Agreement;

no representation or warranty by the Company contained in this License Agreement and no statement contained in any certificate, schedule or other instrument furnished to Canada pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact;

it has not given any understanding, express or implied, to any third party which would;

it is not subject any "march in" or third party rights, (contractual or statutory, contingent or vested) which would give that third party any rights to the Licensed Rights not otherwise explicitly described in the License Agreement; and

its execution of the License Agreement does not contravene its constituent documents or any law, regulation or official directive or any of its obligations or undertakings by which it or any of its assets are bound or cause a limitation on its powers or the powers of its directors to be exceeded.

Canada represents and warrants to the Company as of the Execution Date:

Canada has the power and authority to negotiate, execute and comply with the License Agreement, subject to all applicable laws and the royal prerogative; and

13.0    INDEMNITY, INSURANCE AND LIABILITY ALLOCATION & CAPS

The Company shall:

13.1.1     indemnify; and

13.1.2     save harmless;

Canada (and her employees, servants and agents),

against Canada or her employees, servants and agents;

Further, the Company shall not add Canada as a third party in respect of any such claims, actions, suits or other proceedings taken solely against the Company and the Company hereby expressly waives any rights it has against Canada for claims of infringement.

The foregoing indemnity is a continuing obligation, separate and independent from the other obligations of the Company and survives termination of, expiration of, or the acceptance of repudiation of the License Agreement. It is not necessary for Canada to incur expense or make payment before enforcing a right of indemnity conferred hereunder.

The Company shall ensure that both the Company and each of its Affiliates and sub-licensees shall obtain and maintain, throughout the term of the License Agreement (and any renewal thereof) or duration of the sub-licenses (as the case may be), comprehensive general liability insurance for any and all claims, actions, liabilities and expenses resulting from the Commercialization of the License Rights.

The insurance policy shall be obtained from a qualified insurance company licensed to do business in the applicable jurisdictions.

The insurance policy shall name Her Majesty the Queen in Right of Canada and Her employees, servants and agents as “additional insureds”.

As of the Execution Date, the insurance policy shall include commercial general liability insurance, and shall have monetary limits in the amount not less than one million dollars ($1,000,000) for each single occurrence or claim. Following the submission of an Investigational New Drug covering a Licensed Product and prior to the beginning of a Phase 1 Clinical Study, the insurance policy shall include commercial general liability insurance, that includes products liability insurance, and shall have monetary limits in an amount not less than five million dollars ($5,000,000) for each single occurrence or claim. The minimum amount of insurance coverage required under this License Agreement shall not be construed as a limit of liability.

The insurance policy shall provide for thirty (30) business days written notice by the insurer to the Company and Canada by registered or certified mail in the event of any modification, cancellation

or termination of the insurance policy.

The Company shall provide Canada a copy of the insurance policy not later than 30 days after execution of the License Agreement, and thereafter upon the written request of Canada. This obligation shall apply each time the monetary limits are increased pursuant to clause 13.3.3, in which case the copy shall be provided not later than 30 days after the monetary limits in the insurance policy are increased. This obligation shall survive termination or expiration of the License Agreement.

If insurance required to meet the monetary limits in clause 13.3.3 is unavailable, the Parties shall review the situation, and Canada may elect to either allow the Company to obtain the insurance that is available, or alternatively terminate the License Agreement.

Canada’s liability for:

13.4.2    in any other way arising out of or related to the License Agreement, or

shall be limited to the Company’s actual direct (immediate and foreseeable at the time of negotiation to both Parties), provable damages in an amount not to exceed in the aggregate a sum equal to or less than the net consideration received by Canada from the Company under paragraph 5.2 (Royalty Percentage Rate) for the time period commencing from the Execution Date up to and including the date of judicial judgment or arbitrator’s decision.

Canada shall not be liable to the Company, its employees, servants, agents, successors, assigns, Affiliates or sub-licensees for damages in respect of:

13.5.1    incidental, indirect, special, punitive, exemplary damages;

(whether grounded in tort[*] strict liability, contract, trust or otherwise,) even if:

13.5.3    Canada was advised of the possibility of such damages, or

Further, Canada shall have no duty to warn the Company for matters arising directly or indirectly under the License Agreement.

The Company acknowledges and estopped from and waives any rights the Company might have to commence and prosecute any action whatsoever, regardless of form or grounds (including without limitation negligence, misrepresentation, fiduciary, deceit) against any of Canada’s employees, servants, agents or officers, arising out of any

13.6.1    claimed breach of the License Agreement;

13.6.2    transactions under the License Agreement;

13.6.3    negotiations leading to the License Agreement; or

13.6.4    in any other way related to the License Agreement.

For greater clarity, the Company’s remedies for any breach of or Dispute under the License Agreement, lies only against Canada, and only within the aforementioned parameters prescribed by the License Agreement.

Canada shall notify the Company of any claim that falls within the parameters of the respective indemnification obligations as soon as practical. In any case such notice shall be made forthwith upon notice that a claim may be prosecuted or a cause of action exists.

14.0    INFRINGEMENT

Subject to Article 13 (Indemnification), in the event of any threatened or actual suit against the Company in consequence of the exercise of any rights and licenses granted herein, the Company shall promptly inform Canada and the Parties will jointly decide on the steps to be taken in the circumstances. In any event, the Company will always have the sole right to defend itself as it determines against any suit or other action brought against the Company or its employees or agents.

Each Party will notify the other promptly in writing when any infringement of the Licensed Rights or Patents is uncovered or suspected.

The Company or its sub-licensee Merck (or its affiliates or sub-licensees) shall have the right to enforce the Patents against any infringement or alleged infringement thereof, and shall at all times keep Canada informed as to the status thereof. The Company or its sub-licensee Merck (or its affiliates or sub-licensees) may, at its own expense, institute suit against any such infringer or alleged infringer and prosecute such suit in a manner consistent with the terms and provisions hereof. Canada shall reasonably cooperate in any such litigation at the Company’s expense, and the Company shall keep Canada apprised in a timely manner of all litigation activities. In any litigation under this article, the Company or its sub-licensee Merck (or its affiliates or sub-licensees) shall not have the right to settle or otherwise compromise Canada’s position as a licensor or owner of the Patents without Canada’s prior written consent; provided that Canada shall act reasonably in considering any request for such consent and shall not unreasonably withhold, condition or delay such consent.

In the event of a recovery by the Company of punitive and non-punitive damages (net of legal fees and out of pocket costs of the action) under paragraph 14.3 for royalty-bearing products, the Company shall pay to Canada [*] of such recovery.

If the Company or its sub-licensee Merck (or its affiliates or sub-licensees) elects not to enforce the Patents as to any infringement or alleged infringement thereof, then the Company shall so notify Canada in writing within one (1) month of receiving notice that an infringement exists, and Canada may, in its sole judgment and at its own expense, take steps to enforce the Patents against such infringement or alleged infringement and control, settle, and defend such suit in a manner consistent with the terms and provisions hereof, and recover for its own account any damages, awards or settlements resulting therefrom.

15.0    TERMINATION

The License Agreement, at the option of Canada, without prejudice to any other rights in law of equity held by Canada (including any right of indemnity), may be terminated forthwith by Canada without compensation to the Company if:

The Company fails to use its commercially reasonable efforts to develop or Commercialize and does not cure such failure within ninety (90) days of written notice from Canada;

The Company fails to make any payment owed to Canada under the License Agreement and does not make such payment within sixty (60) days of the due date;

The Company uses or discloses Confidential Information of Canada in a manner inconsistent with its obligations under the License Agreement or fails to safeguard the Confidential Information of Canada;

The Company fails, neglects, refuses or is unable to comply with the business plan created and submitted under paragraph 4.1 (Business Plan);

The Company refuses, neglects or fails to meet quality standards or allow access for quality audit purposes contrary to paragraph 7.0 (Reports & Quality Control) or provide or allow the audit of the reports and records as required under Article 6.0 (Records and Audit);

The Company ceases to actively carry on business;

The Company breaches three or more provisions of the License Agreement within any consecutive twelve (12) month period, notwithstanding that such breaches were subsequently cured;

The Company breached a provision of another agreement with Canada that was executed with the Public Health Agency of Canada, and that breach occurred during the term of the License Agreement;

The Company was convicted of a criminal or regulatory offence, the nature of which directly or indirectly affects the ability of the Company to conduct itself hereunder or to Commercialize in an effective and timely manner, or otherwise prejudices Commercialization;

The Company commits or permits a breach of any of the other terms and conditions herein contained and does not remedy such breach within sixty (60) days after being required in writing to do so by Canada;

The Company expressly or implicitly repudiates the License Agreement by refusing or threatening to refuse to comply with any of the provisions of the License Agreement.

The License Agreement and all rights granted to the Company pursuant to the License Agreement shall immediately terminate and revert to Canada by operation of contract, without prejudice to any other rights in law of equity held by Canada (including any right of indemnity) and without compensation to the Company, effective the business day prior to the applicable triggering event, namely if:

(A) The Company assigns the License Agreement without the prior written consent of Canada, contrary to the provisions of paragraph 18.2 (No Assignment Without Consent); or

(B) The Company assigns this Licenses Agreement in connection with a Prohibited Entity Change of Control and Canada does not provide is consent after the consummation of such Prohibited Entity Change of Control as set forth in section 18.3(B); or

The Company becomes bankrupt or insolvent or otherwise

15.2.2.1    has a receiving or winding up order made or sought against it;

 

The Company acknowledges, and is estopped from alleging otherwise, that the termination provisions in paragraph 15.2 do not constitute a penalty, and are otherwise fair, just and proportional given:

15.3.1    the nature of the Parties;

15.3.2    their respective mandates and corporate objectives;

15.3.3    the allocation of risks under the License Agreement;

15.3.4    the goals of the Parties;

15.3.5    nature of the Licensed Rights; and

15.3.6    the consequences to Canada if the Company commits the aforementioned breaches.

Termination shall be implemented by a notice effective as of the date stated therein, but termination shall be subject to paragraph 15.6 (The Company’s Duties on Termination) and be without prejudice:

15.4.1    to the right of Canada to sue for and recover any royalties or other sums due Canada; and

15.4.2    to the remedy of either Party in respect of any previous breach of the License Agreement.

All sub-licenses, including those granted to Affiliates and to Merck, shall terminate with the License Agreement. If Merck has notified Canada of its desire to enter into a Direct Merck License, Canada shall grant a temporary license on the same terms and conditions as those set out in this License Agreement, with the exceptions set out in 15.8.1, 15.8.2 and 15.8.3. This temporary license shall be granted on a month to month basis and until such time as a Direct Merck License is executed pursuant to section 15.8. Canada and Merck shall make their best efforts to finalize and sign the Direct Merck License as soon as reasonably possible.

During the temporary license period, any and all royalties that would have been payable to Canada by the Company under this License Agreement (including amounts that would have been paid under paragraph 5.4 of this License Agreement had the sub-license agreement between the Company and Merck survived) shall be paid to Canada by Merck or its affiliate, as applicable).

A) Upon termination of the License Agreement by Canada, the Company shall at its own cost:

15.6.10 pay immediately to Canada any royalties, fees, reimbursements or other financial obligations irrespective of the fact such monies are owed, but for the termination, not yet payable; and

15.6.11 assign or transfer for [*] in total consideration, any and all authorizations, permits, certificates or other regulatory permissions obtained in order to Commercialize, to any third party identified by Canada or to Canada itself, within ninety (90) days of termination, unless otherwise requested by Canada.

B) Upon expiration of the License Agreement on July 28, 2033 (save and except for any rights and obligations that survive expiration): i) the Company (including Merck and its affiliates and its sub-sub-licensees) shall thereafter be forever released from the obligations set forth in Article 11.0 (Confidentiality/Fiduciary Obligations & Equitable Remedies) with respect to Canada’s Confidential Information and can use Canada’s Confidential Information without obtaining permission from Canada or making payment to Canada; and ii) Canada can use Canada’s Confidential Information as it sees fit.

All obligations of the Parties which expressly or by their nature survive termination or expiration, shall continue in full force and effect subsequent to and notwithstanding such termination or expiration, until they are satisfied or by their nature expire. For greater clarity, and without restricting the generality of the foregoing, the following provisions survive termination or expiration:

15.7.1    Paragraph 2.2 (Carve Out);

15.7.2    Article 5.0 (Fees and Royalties);

15.7.3    Article 6.0 (Records & Audit);

15.7.7    Paragraph 15.6 (Duties on Termination or Expiration).

15.8    Termination of License Agreement - Direct License to Merck

If Canada terminates this License Agreement under section 15.1 (By Canada for Cause) or if this License Agreement is automatically terminated under section 15.2.1 (Automatic Termination - Assignment), Canada shall give Merck written notice of such termination, and shall, at the written request of Merck, delivered within thirty (30) calendar days of receipt of such notice, enter into a direct license with Merck or its affiliate on the same terms and conditions as the License Agreement (except as set forth below) provided that Merck is not the cause of such termination (a “Direct Merck License”). If the License Agreement is terminated under section 15.2.2 (Automatic Termination - Bankruptcy), Canada shall endeavour, on the same basis as set out above, to enter into a Direct Merck License with Merck or its affiliate if such a written request is made by Merck and insofar as this is possible under applicable bankruptcy and insolvency laws. For clarity, if Merck or its affiliate enters into a Direct Merck License, then Merck or its affiliate (as applicable) shall no longer be considered a sub-licensee of Company with respect to the Licensed Rights under the License Agreement. The Direct-Merck License will contain the same terms

and conditions as this License Agreement except:

15.8.1.    Under the Direct Merck License, any and all royalties that would have been payable to Canada by the Company under this License Agreement (including amounts that would have been paid under paragraph 5.4 of this License Agreement had the sub-license agreement between the Company and Merck survived) shall be paid to Canada by Merck;

15.8.2    Notwithstanding anything to the contrary contained in this License Agreement, Canada’s consent shall not be required with respect to the assignment of the Direct Merck License in connection with a Change of Control of Merck (or its affiliate); and

15.8.3    Section 18.3.9 shall not apply if the Company had previously made a payment under section 18.3.9 of the License Agreement.

In all cases, if Merck’s sub-license from the Company is terminated, the Company shall give Merck [*], starting from the date of termination, to allow Merck (and its affiliates, sub-sublicensees and subcontractors) to continue to exercise the Licensed Rights in order to: (i) finish or wind-down any ongoing clinical trials and any work-in-progress; and (ii) sell any products remaining in inventory, that resulted from the exercise of the Licensed Rights, and the sub-license granted by the Company to Merck for the Licensed Rights. shall continue for such purposes.

16.0    ALTERNATE DISPUTE RESOLUTION (ADR)

If a Dispute arises between the Parties, then: within 6 months from when the allegedly aggrieved Party knows or should know of the Dispute, the contact individuals in Article 20.1 (Notice) shall,

16.1.1.3     resolve the Dispute within 7 days;

If the Parties are unable to resolve the Dispute within fourteen (14) calendar days from the receipt by the other Party of the written version of the Dispute, then within the following thirty (30) days the Dispute shall be referred to the Chief Public Health Officer, on behalf of Canada, and to the CEO, on behalf of the Company (or their directly reporting designates), to negotiate a resolution.

If, within thirty (30) days following the close of the meeting under paragraph 16.1.2 (Formal Negotiations), the Parties have not succeeded in negotiating a resolution, then the Parties shall jointly submit the Dispute to mediation.

If the Parties cannot agree to jointly submit the Dispute to mediation, then either Party may submit the Dispute to binding arbitration.

The Parties shall:

appoint a mutually acceptable mediator with sixty (60) days from the close of the formal negotiation meeting under sub-paragraph 16.1.2 (Formal Negotiations);

participate in good faith in the mediation and negotiations related thereto;

representatives sent to the mediation shall be empowered or have sufficient delegated authority to resolve, compromise, negotiate or settle the Dispute submitted to mediation, without seeking further instructions or approvals from any superiors or committees / corporate structures, unless the nature, seriousness or financial quantum of the Dispute by law or corporate policies or practices requires approval from the respective corporate or government structure. In such event, such approval shall be obtained within five (5) business days of the proffer of any settlement offer;

bear the costs of the mediation equally, except that each Party shall bear its own personal costs of the mediation;

a full, frank and timely manner all relevant facts, information and documents to facilitate the mediation; and

The mediation shall take place in the city that was not the site of the formal negotiations for the Dispute.

The Dispute shall be referred to binding arbitration by either or both Parties if the Parties are not successful in resolving the Dispute through mediation.

After negotiation (and if applicable, mediation), any subsisting Dispute between the Parties, shall be referred to arbitration by a written submission signed by either Canada or the Company.

The arbitration tribunal shall be governed by the UN Commercial Arbitration Code, referred to in the

Commercial Arbitration Act, R.S.C. 1985, c.C-34.6 (“Code”).

The arbitration tribunal shall consist of one arbitrator chosen by the Parties.

The scope of the arbitration shall be limited to the resolution of the Dispute submitted to arbitration.

The arbitration tribunal shall decide the Dispute (including limitations, set-off claims) in accordance with the laws in force in the Province of Ontario and any applicable federal laws.

The arbitration tribunal shall not be authorized to decide ex aequo et bono or as amiable compositeur.

Subject to subparagraph 16.6.5 (No Equity) the arbitration tribunal shall have all the powers of a court at law or in equity, including the power to make interim orders, orders of injunction (either mandatory or prohibitory), rectification, expungement and orders for interest. However in no case will the final decision breach the strictures of subparagraph 16.6.5 (No Equity).

The proceedings shall take place in the city that was not the site of the mediation (or if there was no mediation, in the city that was not the site of the negotiation meeting), unless the Parties agree otherwise.

The language used in the proceedings shall be English.

All written communication shall be delivered to the Parties hereto in the manner provided for in Article 20.1 (Notice).

The costs of the tribunal’s fees and expenses shall be shared equally by the Parties. The Parties shall bear their own costs except that the losing Party shall pay all costs, fees, levies and Taxes arising from and necessitated by the enforcement of the arbitration tribunal’s award, including, without limitation, registration enforcement charges or other judicial levies.

The Parties are not precluded from bringing an application to a Court having jurisdiction for interim or interlocutory relief, in law or in equity, including, without limitation, injunctive relief, if such relief is urgently required to preserve the rights or property of either or both of the Parties, pending the final determination of those rights in a subsequent arbitral proceeding as contemplated in this Article.

Subject to the Code, the Parties hereto agree that the award and determination of the arbitration tribunal shall be:

16.8.1     final and binding on both Parties;

    16.8.2     without right of appeal;

the judgment upon the award rendered by the arbitration tribunal may be entered in any Court having jurisdiction thereof or having jurisdiction over either of the Parties.

The arbitration tribunal retainer shall contain the obligation that the arbitration tribunal render a written decision with reasons within thirty (30) days from the close of the hearing or submission of written argument.

The Parties’ representatives at any arbitration throughout the arbitration shall be empowered or have sufficient delegated authority to resolve, compromise, negotiate or settle the Dispute submitted to arbitration, without seeking further instructions or approvals from any superiors or committees / corporate structures. The representatives shall either be the same persons as in paragraph 16.1.2 (Formal Negotiations) or their immediate subordinates.

 

Breach of paragraph 16.10 (Power to Settle), shall entitle the other Party to seek an adjournment of the arbitration proceedings, to give the breaching Party time to appoint a duly empowered representative within the thirty (30) days. All costs directly traceable to such delay, including arbitration tribunal costs and the non-breaching Party’s costs, shall be paid forthwith by the breaching Party.

Failure of the breaching Party to appoint such a representative within the thirty (30) day period shall be deemed a withdrawal or abandonment of the Dispute by the breaching Party and the arbitrator shall render a formal decision, finding in favour of the non-breaching Party.

If either Party has submitted the Dispute to court, which Dispute should properly have been submitted for resolution by arbitration, then the court filing Party shall discontinue the court proceedings forthwith, upon notice from the other Party, and both Parties shall remit the Dispute to arbitration hereunder.

During the progress of ADR, the Parties hereto shall continue to diligently perform their obligations under the License Agreement.

Neither Party shall be required to disclose documents that are privileged or created in contemplation of litigation. If a Party does disclose such a document during ADR, that disclosure

shall not be construed as a waiver of any privilege unless the disclosing Party so elects in writing.

The Parties shall keep confidential the existence of the proceeding under this article, and any element of the ADR (including, without limitation, all conduct, statements, promises, offers, views, pleadings, briefs, documents, testimonies, identity of witnesses, submissions, awards and opinions, whether oral or written), made in the course of the ADR, except as may be lawfully required in judicial or regulatory proceedings relating to the arbitration or otherwise. Without limiting the generality of the foregoing, and for greater clarity, neither Party may make any publicly accessible statements / publications nor any shareholder or press announcements concerning any element of the ADR beyond the fact of the ADR.

Subject to subparagraph 16.13.6 (Normally Admissible Evidence), all conduct, statements, promises, offers, views and opinions, whether oral or written, made in the course of the ADR by either Party, or the mediator or arbitrator, are not discoverable or admissible for any purposes, including impeachment, in any subsequent litigation or other proceedings involving the Parties.

Evidence that would otherwise be discoverable or admissible and was not created for an ADR, is not excluded from discovery or admission solely as a result of its use in the ADR.

All Disputes must be submitted to ADR within one (1) year from the time of the facts giving rise to the Dispute. Failure to submit the Dispute within the one (1) year period means a loss of all rights to submit the Dispute to ADR or litigation.

The failure, neglect or unwillingness of a Party to use or diligently participate in and prosecute a Dispute through ADR is a material breach of the License Agreement.

17.0    INTENT AND INTERPRETATION

The License Agreement constitutes the entire and exclusive agreement between the Parties pertaining to the Commercialization and licensing and supersedes all prior agreements, conditions, obligations, understandings, and negotiations both written and oral. The License Agreement sets forth all obligations, undertakings, conditions, representations and warranties forming part of, or in any way affecting or relating to the Commercialization. The Parties acknowledge that with respect to the Commercialization there are no agreements, obligations, undertakings, representations or warranties whether collateral, oral or written, between the Company and Canada other than those expressly set out in the License Agreement. Notwithstanding the foregoing, this License Agreement shall not supersede the MTA and the MTA shall remain in full force and effect.

Neither the License Agreement nor any provision thereof is intended to confer upon any person other than the Parties, any rights or remedies hereunder; provided however that the Company’s sub-licensee Merck is an express third party beneficiary of this License Agreement for the purposes of sections 15.5 and 15.8 only.

The License Agreement supersedes and revokes all negotiations, arrangements, letters of intent, offers, proposals, brochures, term sheets, representations, memoranda of understandings and information

conveyed, whether oral or in writing or electronically, between the Parties, or any other person purporting to represent the Company or Canada. Each of the Parties agrees that:

17.3.2     neither has relied on any such representations;

The Company agrees that it has conducted its own due diligence examinations in order to satisfy itself of the full, true and plain disclosure of all facts pertinent to the Licensed Rights and all representations made by Canada.

It is acknowledged by the Parties that each has had legal advice to the full extent deemed necessary by each Party. Furthermore, the Parties acknowledge that neither acted under any duress in negotiating, drafting and executing the License Agreement.

There shall be no presumption that any ambiguity in the License Agreement be resolved in favour of either of the Parties. For greater certainty, the contra proferentum rule shall not be applied in any interpretation of the License Agreement.

If a jurisdiction declares, finds or holds any part of the License Agreement invalid, void, unenforceable or contrary to public policy for any other reason, then:

if the invalid provision is not material or fundamental to the License Agreement, the invalid provision shall not affect the validity of the remainder which remainder shall continue if full force and effect and be construed as if the License Agreement had been executed without the invalid provision in that jurisdiction only;

if the invalid provision is material to the License Agreement then that provision shall be “read down” or replaced with a provision which accomplishes, to such extent as is possible, the original legal and business purpose of such provision in a valid and enforceable manner, in that jurisdiction and the remainder of the License Agreement shall remain binding on the Parties; and

if the invalid provision is fundamental to the License Agreement, including any of the elements of a bare license, then:

jurisdiction, then the License Agreement shall terminate.

The License Agreement will be for the benefit of and be binding upon the heirs, executors, administrators, permitted successors, permitted assigns, and permitted Affiliates of the Company and other legal representatives, as the case may be, of each of the Parties. Every reference in the License Agreement to any Party includes the heirs, executors, permitted administrators, permitted successors, permitted assigns, and Affiliates and other permitted legal representatives of the Party.

Reference to a Party will be read as if all required changes in the singular and plural and all grammatical changes rendered necessary by gender had been made.

The Parties expressly disclaim any intention to create a partnership, joint venture or joint enterprise. The Parties acknowledge and agree that:

Nothing in the License Agreement shall derogate or otherwise fetter the ability of Canada to regulate, administer, manage or otherwise deal with public health and all attendant matters thereto.

The application to the License Agreement of any Federal act or regulation includes any subsequent amendment, revision, substitution, consolidation to that act or regulation, notwithstanding that such amendment, revision or substitution occurred after the execution of the License Agreement or may have a retroactive effect.

Nothing in the License Agreement shall prohibit, restrict or affect the right or power of the Parliament of Canada to enact any laws whatsoever with respect to any area of law for which the Parliament of Canada has legislative jurisdiction, even if the enactment of any such law affects the License Agreement, its interpretation, or the rights, obligations, liabilities, vested or not, accrued or accruing, of the Parties.

The Parties shall comply with all applicable laws, as those laws may be amended, revised, consolidated, substituted, from time to time, even if such amendment, revision, consolidation, substitution derogates prospectively or retroactivity from the Parties’ vested or accrued rights, obligations and liabilities under the License Agreement.

No implied terms or obligations of any kind, by or on behalf of either of the Parties, shall arise from anything in the License Agreement. The express covenants and agreements herein contained and made

by the Parties are the only covenants and agreements upon which any rights against either of the Parties may be founded.

Notwithstanding any provision to the contrary in the License Agreement, the Company acknowledges that Canada is subject to the Access to Information Act, R.S.C. 1985, c.A-1 and related acts, and may be required to release, in whole or in part, the License Agreement and any other information or documents in Canada’s possession or control relating to the License Agreement and the Parties.

Subject to Article 16 (ADR) any Dispute, shall be governed firstly by applicable Canadian Federal laws, and secondly by the laws of the Province of Ontario. The Parties expressly exclude from the License Agreement:

The License Agreement shall be governed by and construed in accordance with the laws in force in the Province of Ontario, Canada and shall be treated in all respect as an Ontario, Canada contract. Subject to Article 16 (Alternate Dispute Resolution (ADR)) the Parties irrevocably and unconditionally attorn to and submit to the exclusive jurisdiction of the courts of Ontario, Canada and all courts competent to hear appeals therefrom with respect to any Dispute now or hereinafter arising under the License Agreement. The Parties waive any right each may have to object to an action being brought in those courts including, without limitation, by claiming that the action has been brought in an inconvenient forum or that those courts do not have jurisdiction.

If the License Agreement or any aspect of it becomes a subject of judicial proceedings whether in contract, tort, equity or otherwise, in the United States of America despite the ADR article and Forum Conveniens (paragraph 17.17), then the Company irrevocably waives any and all rights it has to a trial by jury in the United States. The Company agrees and consents that due to the technical and legal nature, including cross jurisdictional issues of the License Agreement or any aspect thereof, any such proceedings will be heard before a judge sitting alone.

For greater clarity, the Company waives any right to a trial by jury of any claim, demand action or caution of action

The Company agrees and consents that any such claim, demand, action or cause of action shall be decided by a court without a jury. Canada may file an original counterpart of the License Agreement with the court as written evidence of the consent of the Parties to the waiver of their right to a trial by jury. In

addition, the Company irrevocably waives any rights to triple/treble damages or punitive damages under U.S. or any other law.

The Company waives any and all of its rights to interpose any claims, deductions, setoffs or counterclaims of any nature in any Dispute with respect to the License Agreement.

If in a subsequent transaction a third party requires to review this License Agreement as part of a due diligence chain of title search, the Company hereby authorizes the release of this License Agreement subject to deleting any financial or proprietary or other Confidential Information contained herein.

The Parties acknowledge the truth and accuracy of the recitals and further acknowledge that the recitals may be used by a court, mediator or arbitrator to help resolve any Dispute.

Subject to making all payments required under the License Agreement, neither Party shall be in breach of any of its obligations under the License Agreement where the failure to perform or delay in performing any obligation is due, wholly or in part, directly or indirectly to the occurrence of a force majeure event including, without limitation:

but does not include:

including without limitation obtaining the appropriate insurance, using updated machinery;

The Party affected by a force majeure event as contemplated in subparagraph 17.24.1 (Force Majeure) shall:

    

The affected Party shall in the affected jurisdiction only:

If the force majeure event continues in excess of sixty (60) consecutive days, or in the aggregate 60 days over any consecutive 200 days, then at any time thereafter Canada shall have the option to renegotiate the License Agreement with the Company reasonably and in good faith. If the Parties are unable to agree to the terms of the proposed amended License Agreement within 60 days from the notice to negotiate, then the License Agreement may be terminated by Canada on the 61^st day.

Any obligations of a Party under the License Agreement shall be postponed automatically to the extent and for the period and only within the jurisdiction or jurisdictions that the affected Party is prevented from meeting those obligations by reason of any cause beyond its reasonable control (other than lack of funds and applicable regulatory approval). The affected Party shall immediately notify the other Party of the commencement, nature of such cause and probable consequence. The affected Party shall also use its reasonable best efforts to render performance in a timely manner, utilizing all resources reasonably required in the circumstances.

No condoning, excusing, or overlooking by either of the Parties of any default by the other Party, at any time or times, in performing or observing any of the Parties’ respective covenants, will operate as a waiver renunciation, surrender, of or otherwise affect the rights of the Parties in respect of any continuing or

subsequent default. No waiver of these rights will be inferred from anything done or omitted by the Parties, except by an express waiver in writing.

No custom, practice or usage regarding other License Agreements between Canada and other Parties shall preclude at any time the strict enforcement of the License Agreement by Canada or the Company.

Where a matter or thing is expressed in the present tense, it shall be applied to the circumstances as they arise, so that effect may be given to the License Agreement according to its true spirit, intent and meaning.

Time is of the essence in the License Agreement with respect to the financial and Commercialization obligations of the Company.

Any reference in the License Agreement to an Article, paragraph, sub-paragraph, will mean an Article, paragraph or sub-paragraph of the License Agreement, unless otherwise expressly provided.