|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
2834
(Primary Standard Industrial
Classification Code Number) |
| |
87-3198325
(I.R.S. Employer
Identification Number) |
|
|
Christian Plaza
Mark Ballantyne Madison A. Jones William DuVal Cooley LLP 11951 Freedom Drive Reston, VA 20190 (703) 456-8000 |
| |
Ilir Mujalovic
Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 (212) 848-4000 |
|
| Large, accelerated filer ☐ | | | Accelerated filer ☐ | | | Non-accelerated filer ☒ | | |
Smaller reporting company ☒
Emerging growth company ☒ |
|
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Year Ended
December 31, |
| |
Six Months
Ended June 30, |
| ||||||||||||||||||
(in thousands, except share and per share data)
|
| |
2022
|
| |
2021
|
| |
2023
|
| |
2022
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Statements of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 3,445 | | | | | $ | 2,513 | | | | | $ | | | | | $ | | | ||
General and administrative
|
| | | | 2,257 | | | | | | 1,102 | | | | | | | | | | | | | | |
Total operating expenses
|
| | | | 5,702 | | | | | | 3,615 | | | | | | | | | | | | | | |
Loss from operations
|
| | | | (5,702) | | | | | | (3,615) | | | | | | | | | | | | | | |
Interest expense
|
| | | | 51 | | | | | | — | | | | | | | | | | | | | | |
Net loss
|
| | | $ | (5,753) | | | | | $ | (3,615) | | | | | $ | | | | | $ | | | ||
Basic and diluted net loss per share attributable to common
stockholders |
| | | $ | (2.89) | | | | | $ | (5.68) | | | | | $ | | | | | $ | | | ||
Weighted average common shares outstanding, basic and diluted(1)
|
| | | | 1,988,346 | | | | | | 636,849 | | | | | | | | | | | | | | |
Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)(2)
|
| | | $ | | | | | | | | | | | $ | | | | | | | | | ||
Pro forma weighted average common shares outstanding, basic and diluted (unaudited)(2)
|
| | | $ | | | | | | | | | | | $ | | | | | | | | |
| | |
As of June 30, 2023
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma(1)
|
| |
Pro Forma,
As Adjusted(2) |
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | | | | | $ | | | | | $ | | | |||
Working capital(3)
|
| | | | | | | | | | | | | | | | | | |
Total assets
|
| | | | | | | | | | | | | | | | | | |
Convertible preferred stock
|
| | | | | | | | | | | | | | | | | | |
Total stockholders (deficit) equity
|
| | | | | | | | | | | | | | | | | | |
| | |
As of June 30, 2023
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma,
As Adjusted(1) |
| |||||||||
| | |
(in thousands, except share and per share data)
|
| |||||||||||||||
Cash
|
| | | $ | | | | | $ | | | | | $ | | | |||
Series A convertible preferred stock, par value $0.0001 per share, 8,000,000 shares authorized, issued and outstanding actual: no shares authorized, issued and outstanding, pro forma and pro forma adjusted
|
| | | | | | | | | | | | | | | | | | |
Series A-1 convertible preferred stock, par value $0.0001 per share, 3,200,000 shares authorized, 1,092,707 shares issued and outstanding, actual: no shares authorized, issued and outstanding, pro forma and pro forma adjusted
|
| | | | | | | | | | | | | | | | | | |
Stockholders’ (deficit) equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, $0.0001 par value; no shares authorized, issued
or outstanding, actual; shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted |
| | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 16,980,000 shares authorized, shares issued and outstanding, actual; shares authorized, pro forma and pro forma as adjusted, shares issued and outstanding, pro forma; shares issued and outstanding, pro forma as
adjusted |
| | | | | | | | | | | | | | | | | | |
Additional paid-in capital
|
| | | | | | | | | | | | | | | | | | |
Accumulated deficit
|
| | | | | | | | | | | | | | | | | | |
Total stockholders’ (deficit) equity
|
| | | | | | | | | | | | | | | | | | |
Total capitalization
|
| | |
$
|
|
| | | |
$
|
|
| | | |
$
|
|
| |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | | | |
|
Historical net tangible book deficit per share as of June 30, 2023
|
| | | $ | | | | | | | | | |
|
Pro forma increase in historical net tangible book value per share attributable to the pro forma transactions described above
|
| | | | | | | | | | | | |
|
Pro forma net tangible book value per share as of June 30, 2023
|
| | | | | | | | | | | | |
|
Increase in pro forma net tangible book value per share attributable to new investors participating in this offering
|
| | | | | | | | | | | | |
|
Pro forma as adjusted net tangible book value per share after this offering
|
| | | | | | | | | | | | |
|
Dilution per share to new investors participating in this offering
|
| | | | | | | | | $ | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Weighted
Average Price Per Share |
| ||||||||||||||||||
| | |
Number
|
| |
Percentage
|
| |
Amount
|
| |
Percentage
|
| |||||||||||||||
Existing stockholders
|
| |
|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | | ||
New investors
|
| | | | | | | | | | | | | | | | | | | | | | | | $ | | | |
Total
|
| | | | | | | 100.0% | | | | | $ | | | | | | 100.0% | | | | | $ | | | |
| | |
Year Ended
December 31, |
| |
$ Change
|
| |
% Change
|
| |||||||||||||||
| | |
2022
|
| |
2021
|
| ||||||||||||||||||
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 3,445 | | | | | $ | 2,513 | | | | | $ | 932 | | | | | | 37% | | |
General and administrative
|
| | | | 2,257 | | | | | | 1,102 | | | | | | 1,155 | | | | | | 105% | | |
Total operating expenses
|
| | | | 5,702 | | | | | | 3,615 | | | | | | 2,087 | | | | | | 58% | | |
Loss from operations
|
| | | | (5,702) | | | | | | (3,615) | | | | | | (2,087) | | | | | | 58% | | |
Interest expense
|
| | | | 51 | | | | | | — | | | | | | 51 | | | | | | — | | |
Net Loss
|
| | | $ | (5,753) | | | | | $ | (3,615) | | | | | $ | (2,138) | | | | | | 59% | | |
| | |
Year Ended December 31,
2022 |
| |||
Direct Costs: | | | | | | | |
INVA8001
|
| | | $ | 1,381 | | |
INVA8002 (deprioritized)
|
| | | | 257 | | |
INVA8003
|
| | | | 230 | | |
Other development programs
|
| | | | 64 | | |
Indirect costs
|
| | | | 1,513 | | |
Total research and development expenses
|
| | | $ | 3,445 | | |
| | |
Year Ended
December 31, |
| |
Six Months Ended
June 30, |
| ||||||||||||||||||
| | |
2022
|
| |
2021
|
| |
2023
|
| |
2022
|
| ||||||||||||
Cash provided by (used in)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating activities
|
| | | $ | (5,250) | | | | | $ | (3,094) | | | | | $ | | | | | $ | | | ||
Investing activities
|
| | | | (6) | | | | | | (5) | | | | | | | | | | | | | | |
Financing activities
|
| | | | 5,520 | | | | | | 3,423 | | | | | | | | | | | | | | |
Net increase in cash
|
| | | $ | 264 | | | | | $ | 324 | | | | | $ | | | | | $ | | | |
|
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| |
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|
Pruritus Score
![]() |
| |
IGA Score
![]() |
|
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers: | | | | | | | |
Krishnan Nandabalan, Ph.D.
|
| | 60 | | |
Chairman, Chief Executive Officer, President
|
|
Shunichiro (Steve) Okada, M.D.
|
| | 65 | | | Chief Medical Officer | |
Salvatore Alesci, M.D., Ph.D.
|
| | 49 | | | Chief Scientific Officer | |
Aman Kant
|
| | 39 | | | Chief Business Officer | |
Michael J. Aiello, CPA
|
| | 43 | | | Chief Financial Officer | |
Non-Employee Directors: | | | | | | | |
Kerrie Brady, BPharm, M.S., M.B.A.
|
| | 61 | | | Director | |
Jason Fenton
|
| | 47 | | | Director | |
Demetrios Kydonieus, M.B.A.
|
| | 53 | | | Director | |
Jonathan Zalevsky, Ph.D.
|
| | 48 | | | Director | |
Name
|
| |
Fees Earned
or Paid in Cash($) |
| |
Option
Awards ($)(1) |
| |
Total ($)
|
| |||||||||
Kerrie Brady, Bpharm, M.S., M.B.A.(2)
|
| | | | — | | | | | | 116,070 | | | | | | 116,070 | | |
Jason Fenton(2)(3)
|
| | | | 15,000 | | | | | | — | | | | | | 15,000 | | |
Demetrios Kydonieus, J.D., M.B.A.(2)
|
| | | | — | | | | | | 116,070 | | | | | | 116,070 | | |
Vimal Mehta, Ph.D.(2)(4)
|
| | | | — | | | | | | 116,070 | | | | | | 116,070 | | |
Jonathan Zalevsky, Ph.D.(2)
|
| | | | | | | | | | 116,070 | | | | | | 116,070 | | |
Sandeep Laumas, M.D.(5)
|
| | | | — | | | | | | — | | | | | | — | | |
Name and Principal Position
|
| |
Salary ($)
|
| |
Option
Awards ($)(1) |
| |
All Other
Compensation ($)(2) |
| |
Total ($)
|
| ||||||||||||
Krishnan Nandabalan, Ph.D.
President and Chief Executive Officer |
| | | | 200,000 | | | | | | 131,175 | | | | | | 40 | | | | | | 331,215 | | |
Shunichiro (Steve) Okada, M.D.
Chief Medical Officer |
| | | | 450,000 | | | | | | 205,905 | | | | | | 17,321 | | | | | | 673,226 | | |
Salvatore Alesci, M.D., Ph.D.
Chief Scientific Officer |
| | | | 425,000 | | | | | | 205,905 | | | | | | 13,246 | | | | | | 644,151 | | |
| | | | | | | | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||
Name
|
| |
Grant
Date(1) |
| |
Number of
Securities Underlying Unexercised Options Exercisable |
| |
Number of
Securities Underlying Unexercised Options Unexercisable |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested ($) |
| |||||||||||||||||||||
Krishnan Nandabalan
President and Chief Executive Officer |
| | | | 12/01/2021(2)(3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 150,000 | | | | | | 238,500 | | |
| | | 11/16/2022(4) | | | | | | — | | | | | | 82,500 | | | | | $ | 1.54 | | | | | | 11/15/2032 | | | | | | — | | | | | | — | | | ||
Shunichiro (Steve) Okada
Chief Medical Officer |
| | | | 12/01/2021(3) | | | | | | 50,000 | | | | | | 50,000 | | | | | $ | 0.14 | | | | | | 11/30/2031 | | | | | | — | | | | | | — | | |
| | | 11/16/2022(4) | | | | | | — | | | | | | 129,500 | | | | | $ | 1.54 | | | | | | 11/15/2032 | | | | | | — | | | | | | — | | | ||
Salvatore Alesci
Chief Scientific Officer |
| | | | 12/01/2021(3) | | | | | | 50,000 | | | | | | 50,000 | | | | | $ | 0.14 | | | | | | 11/30/2031 | | | | | | — | | | | | | — | | |
| | | 11/16/2022(4) | | | | | | — | | | | | | 129,500 | | | | | $ | 1.54 | | | | | | 11/15/2032 | | | | | | — | | | | | | — | | |
Name
|
| |
Series A-1
Preferred Stock (#) |
| |
Aggregate
Purchase Price ($) |
| ||||||
Sunanda Family Trust(1)
|
| | | | 600,000 | | | | | | 84,000 | | |
Mehta Family Trust(2)
|
| | | | 600,000 | | | | | | 84,000 | | |
Aman Kant
|
| | | | 250,000 | | | | | | 35,000 | | |
Bearing Circle Capital LLC(3)
|
| | | | 50,000 | | | | | | 7,000 | | |
| | |
Number of
Shares Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
| |||
| | |
Before
Offering |
| |
After
Offering |
| |||
Greater than 5% Stockholders: | | | | | ||||||
InveniAI LLC.(1)
|
| | | | | | | | | |
Directors and Named Executive Officers: | | | | | | | | | | |
Krishnan Nandabalan, Ph.D.(2)
|
| | | | | | | | | |
Shunichiro (Steve) Okada, M.D.(3)
|
| | | | | | | | | |
Salvatore Alesci, M.D., Ph.D.(4)
|
| | | | | | | | | |
Kerrie Brady, BPharm, M.S., M.B.A.(5)
|
| | | | | | | | | |
Demetrios Kydonieus, J.D., M.B.A.(6)
|
| | | | | | | | | |
Jonathan Zalevsky, Ph.D.(7)
|
| | | | | | | | | |
Jason Fenton(8)
|
| | | | | | | | | |
All current directors and executive officers as a group (9 persons)(9)
|
| | | | | | | | | |
Underwriter
|
| |
Number
of Shares |
| |||
BofA Securities, Inc.
|
| | | | | | |
Total
|
| | | | | | |
| | |
Per Share
|
| |
Without Option
|
| |
With Option
|
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discount
|
| | | $ | | | | | | $ | | | | | | $ | | | |
Proceeds, before expenses, to us
|
| | | $ | | | | | | $ | | | | | | $ | | | |
| | | | | F-2 | | | |
| Financial Statements | | | | | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | |
| | |
December 31
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | | $ | 588 | | | | | $ | 324 | | |
Prepaid drug manufacturing costs
|
| | | | 148 | | | | | | — | | |
Prepaid expenses and other current assets
|
| | | | 41 | | | | | | 68 | | |
Total current assets
|
| | | | 777 | | | | | | 392 | | |
Fixed assets, net
|
| | | | 10 | | | | | | 5 | | |
Total assets
|
| | | $ | 787 | | | | | $ | 397 | | |
Liabilities, contingently redeemable convertible preferred stock and stockholders’ deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 497 | | | | | $ | 301 | | |
Accrued expenses
|
| | | | 373 | | | | | | 144 | | |
Other current liabilities
|
| | | | 196 | | | | | | 55 | | |
Line of credit due to parent
|
| | | | 1,815 | | | | | | — | | |
Total current liabilities
|
| | | | 2,881 | | | | | | 500 | | |
Line of credit due to parent
|
| | | | — | | | | | | 1,163 | | |
Other long-term liabilities
|
| | | | 48 | | | | | | — | | |
Total liabilities
|
| | | | 2,929 | | | | | | 1,663 | | |
Contingently redeemable convertible preferred stock: | | | | | | | | | | | | | |
Series A contingently redeemable convertible preferred stock, $0.0001 par value, 8,000,000 authorized and outstanding as of December 31, 2022 and 2021
|
| | | | 594 | | | | | | 594 | | |
Series A-1 contingently redeemable convertible preferred stock, $0.0001 par value, 3,200,000 and no shares authorized and 963,540 and no shares outstanding as of December 31, 2022 and 2021, respectively
|
| | | | 4,530 | | | | | | — | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 16,980,000 and 12,500,000 shares authorized as of December 31, 2022 and 2021, respectively; 2,790,000 and 1,310,000 shares issued and outstanding at December 31, 2022 and 2021, respectively
|
| | | | — | | | | | | — | | |
Additional paid in capital
|
| | | | 539 | | | | | | 192 | | |
Accumulated deficit
|
| | | | (7,805) | | | | | | (2,052) | | |
Total stockholders’ deficit
|
| | | | (7,266) | | | | | | (1,860) | | |
Total liabilities, contingently redeemable convertible preferred stock and stockholders’ deficit
|
| | | $ | 787 | | | | | $ | 397 | | |
| | |
For the Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Operating expenses: | | | | | | | | | | | | | |
Research and development
|
| | | $ | 3,445 | | | | | $ | 2,513 | | |
General and administrative
|
| | | | 2,257 | | | | | | 1,102 | | |
Total operating expenses
|
| | | | 5,702 | | | | | | 3,615 | | |
Loss from operations
|
| | | | (5,702) | | | | | | (3,615) | | |
Interest expense
|
| | | | 51 | | | | | | — | | |
Net loss
|
| | | $ | (5,753) | | | | | $ | (3,615) | | |
Basic and diluted net loss per share attributable to common stockholders
|
| | | $ | (2.89) | | | | | $ | (5.68) | | |
Weighted average common shares outstanding, basic and diluted
|
| | | | 1,988,346 | | | | | | 636,849 | | |
| | |
Redeemable Convertible Preferred Stock
|
| | | | | | | | | | | | | |
Additional
Paid in Capital |
| |
Net Parent
Investment |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| |||||||||||||||||||||||||||||||||
| | |
Series A
|
| |
Series A-1
|
| |
Common Stock
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net transfers from Parent
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 2,157 | | | | | $ | — | | | | | $ | 2,157 | | |
Net loss prior to formation of
company |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,528) | | | | | | — | | | | | | (2,528) | | |
Noncash distribution to Parent upon contribution
|
| | | | 8,000,000 | | | | | | 594 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 371 | | | | | | (965) | | | | | | (594) | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,150,000 | | | | | | — | | | | | | 162 | | | | | | — | | | | | | — | | | | | | 162 | | |
Early exercise of stock
options |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 160,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 30 | | | | | | — | | | | | | — | | | | | | 30 | | |
Net loss after formation of company
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,087) | | | | | | (1,087) | | |
Balance, December 31, 2021
|
| | | | 8,000,000 | | | | | | 594 | | | | | | — | | | | | | — | | | | | | 1,310,000 | | | | | | — | | | | | | 192 | | | | | | — | | | | | | (2,052) | | | | | | (1,860) | | |
Issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 850,000 | | | | | | — | | | | | | 119 | | | | | | — | | | | | | — | | | | | | 119 | | |
Early exercise of stock
options |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 630,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Vesting of early exercise stock
options |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27 | | | | | | — | | | | | | — | | | | | | 27 | | |
Issuance of Series A-1 redeemable convertible preferred stock, net of issuance costs of $94,878
|
| | | | — | | | | | | — | | | | | | 964 | | | | | | 4,530 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 201 | | | | | | — | | | | | | — | | | | | | 201 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,753) | | | | | | (5,753) | | |
Balance, December 31, 2022
|
| | | | 8,000,000 | | | | | $ | 594 | | | | | | 964 | | | | | $ | 4,530 | | | | | | 2,790,000 | | | | | $ | — | | | | | $ | 539 | | | | | $ | — | | | | | $ | (7,805) | | | | | $ | (7,266) | | |
| | |
For the Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Operating activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (5,753) | | | | | $ | (3,615) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation
|
| | | | 1 | | | | | | — | | |
Stock based compensation
|
| | | | 201 | | | | | | 81 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Prepaid drug manufacturing costs
|
| | | | (148) | | | | | | — | | |
Prepaid expenses and other assets
|
| | | | 27 | | | | | | (38) | | |
Accounts payable
|
| | | | 185 | | | | | | 301 | | |
Accrued expenses
|
| | | | 230 | | | | | | 144 | | |
Other current liabilities
|
| | | | 7 | | | | | | 33 | | |
Net cash used in operating activities
|
| | | | (5,250) | | | | | | (3,094) | | |
Investing activities | | | | | | | | | | | | | |
Purchases of fixed assets
|
| | | | (6) | | | | | | (5) | | |
Net cash used in investing activities
|
| | | | (6) | | | | | | (5) | | |
Financing activities | | | | | | | | | | | | | |
Net Parent investment
|
| | | | — | | | | | | 2,477 | | |
Borrowings from line of credit due to Parent
|
| | | | 1,062 | | | | | | 762 | | |
Payments on the line of credit due to Parent
|
| | | | (410) | | | | | | — | | |
Proceeds from officer line of credit
|
| | | | 297 | | | | | | — | | |
Payment of officer line of credit
|
| | | | (297) | | | | | | — | | |
Proceeds from early exercise of options
|
| | | | 88 | | | | | | 22 | | |
Proceeds from issuance of common stock
|
| | | | 119 | | | | | | 162 | | |
Proceeds from issuance of Series A-1 preferred stock
|
| | | | 4,625 | | | | | | — | | |
Series A-1 preferred stock financing costs
|
| | | | (84) | | | | | | — | | |
Proceed from prepayment of Series A-1 preferred stock issuance
|
| | | | 120 | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 5,520 | | | | | | 3,423 | | |
Net increase in cash
|
| | | | 264 | | | | | | 324 | | |
Cash, beginning of period
|
| | | | 324 | | | | | | — | | |
Cash, end of period
|
| | | $ | 588 | | | | | $ | 324 | | |
Supplemental cash flow information | | | | | | | | | | | | | |
Interest paid to related parties
|
| | | $ | 15 | | | | | $ | — | | |
Noncash settlement of payable to Parent under line of credit due to Parent
|
| | | $ | — | | | | | $ | 401 | | |
Series A-1 preferred stock financing costs in accrued expenses
|
| | | $ | 11 | | | | | $ | — | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Professional fees
|
| | | $ | 162 | | | | | $ | 108 | | |
Research and development expenses
|
| | | | 115 | | | | | | 15 | | |
Travel expenses
|
| | | | 60 | | | | | | — | | |
Other accrued expenses
|
| | | | 36 | | | | | | 21 | | |
| | | | $ | 373 | | | | | $ | 144 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Prepayment of preferred stock issuance
|
| | | $ | 120 | | | | | $ | — | | |
Early exercise of options liability
|
| | | | 37 | | | | | | 22 | | |
Insurance premium obligation
|
| | | | 39 | | | | | | 33 | | |
| | | | $ | 196 | | | | | $ | 55 | | |
| | |
Year Ended
December 31, 2021 |
| |||
Direct and corporate expenses
|
| | | $ | 2,527 | | |
Stock-based compensation
|
| | | | (50) | | |
Total transfer from parent per statement of cash flows
|
| | | $ | 2,477 | | |
| | |
For the Year Ended December 31,
|
| |||
| | |
2022
|
| |
2021
|
|
Expected life
|
| |
5.9 years−6.1 years
|
| |
5.2 years−6.1 years
|
|
Volatility
|
| |
95.1%−97.0%
|
| |
94.8%−95.0%
|
|
Risk free interest rate
|
| |
1.61%−3.77%
|
| |
1.15%−1.39%
|
|
Stock price
|
| |
$0.14−$1.54
|
| |
$0.14
|
|
Expected dividend yield
|
| |
−%
|
| |
−%
|
|
| | |
Number of
Shares |
| |
Weighted
Average Exercise Price per Share |
| |
Weighted-
Average Remaining Contractual Term |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
| | | | | | | | | | | | | | |
(Years)
|
| |
(in thousands)
|
| ||||||
Outstanding as of December 31, 2021
|
| | | | 1,758,200 | | | | | $ | 0.14 | | | | | | 9.9 | | | | | $ | — | | |
Granted
|
| | | | 1,315,500 | | | | | | 1.19 | | | | | | | | | | | | — | | |
Forfeited
|
| | | | (146,600) | | | | | | 0.14 | | | | | | | | | | | | — | | |
Exercised
|
| | | | (630,000) | | | | | | 0.14 | | | | | | | | | | | | 882 | | |
Outstanding at December 31, 2022
|
| | | | 2,297,100 | | | | | $ | 0.74 | | | | | | 9.3 | | | | | | 1,836 | | |
Vested and exercisable at December 31, 2022
|
| | | | 521,650 | | | | | $ | 0.14 | | | | | | 8.9 | | | | | $ | 730 | | |
| | |
Number of
Shares |
| |||
Unvested at December 31, 2021
|
| | | | 160,000 | | |
Options early exercised
|
| | | | 630,000 | | |
Vested in 2022
|
| | | | (190,000) | | |
Forfeited in 2022
|
| | | | — | | |
Unvested at December 31, 2022
|
| | | | 600,000 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Federal statutory income tax rate
|
| | | | 21.0% | | | | | | 21.0% | | |
State taxes, net of federal benefit
|
| | | | 6.2 | | | | | | 9.8 | | |
Permanent differences
|
| | | | (0.4) | | | | | | — | | |
Research and development credits
|
| | | | 2.5 | | | | | | 1.8 | | |
Valuation allowance
|
| | | | (29.3) | | | | | | (32.6) | | |
Effective tax rate
|
| | | | —% | | | | | | —% | | |
| | |
December 31,
|
| | | | |||||||||
| | |
2022
|
| |
2021
|
| | ||||||||
Deferred tax assets: | | | | | | | | | | | | | | | ||
Net operating losses
|
| | | $ | 893 | | | | | $ | 272 | | | | ||
Capitalized R&D
|
| | | | 836 | | | | | | — | | | | ||
Stock-based compensation
|
| | | | 36 | | | | | | 8 | | | | ||
Intangibles
|
| | | | 34 | | | | | | — | | | | ||
Other
|
| | | | 14 | | | | | | 13 | | | | ||
Research & development tax credits
|
| | | | 231 | | | | | | 62 | | | | ||
Valuation allowance
|
| | | | (2,043) | | | | | | (354) | | | | ||
Total deferred tax assets
|
| | | | 1 | | | | | | 355 | | | | ||
Deferred tax liabilities: | | | | | | | | | | | | | | | ||
Depreciation of fixed assets
|
| | | | (1) | | | | | | (1) | | | | ||
Total deferred tax liabilities
|
| | | | (1) | | | | | | (1) | | | | ||
Net deferred tax asset (liability)
|
| | | $ | — | | | | | $ | — | | | |
| | |
For the Years Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net loss (in thousands)
|
| | | $ | (5,753) | | | | | $ | (3,615) | | |
Weighted average common shares used in net loss per share attributable to common stockholders, basic and diluted
|
| | | | 1,988,346 | | | | | | 636,849 | | |
Basic and diluted net loss per common share outstanding
|
| | | $ | (2.89) | | | | | $ | (5.68) | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Contingently redeemable convertible preferred stock
|
| | | | 8,963,540 | | | | | | 8,000,000 | | |
Options to purchase common stock
|
| | | | 2,297,100 | | | | | | 1,758,200 | | |
Unvested portion of early exercised stock options
|
| | | | 600,000 | | | | | | 160,000 | | |
Total
|
| | | | 11,860,640 | | | | | | 9,918,200 | | |
| | |
Amount to be
paid |
| |||
SEC registration fee
|
| | | | * | | |
FINRA filing fee
|
| | | | * | | |
Nasdaq Global Market initial listing fee
|
| | | | * | | |
Blue sky qualification fees and expenses
|
| | | | * | | |
Transfer agent fees and expenses
|
| | | | * | | |
Accounting fees and expenses
|
| | | | * | | |
Legal fees and expenses
|
| | | | * | | |
Printing expenses
|
| | | | * | | |
Miscellaneous
|
| | | | * | | |
Total
|
| | | | * | | |
|
Exhibit
No. |
| |
Description
|
|
| 1.1* | | | Form of Underwriting Agreement. | |
| 3.1* | | | Amended and Restated Certificate of Incorporation of the Registrant (currently in effect). | |
| 3.2* | | | Form of Amended and Restated Certificate of Incorporation of the Registrant (to be effective upon the closing of this offering). | |
| 3.3* | | | Bylaws of the Registrant (currently in effect) | |
| 3.4* | | | Form of Amended and Restated Bylaws of the Registrant (to be effective upon the closing of this offering), | |
| 4.1 | | | Grid Note, by and between the Registrant and InveniAI LLC, dated November 24, 2021. | |
| 4.2 | | | Amendment to Grid Note, by and between the Registrant and InveniAI LLC, dated April 14, 2023. | |
| 4.3* | | | Amended and Restated Investors’ Rights Agreement, by and between the Registrant and certain of its stockholders, dated April 7, 2022. | |
| 5.1* | | | Opinion of Cooley LLP. | |
| 10.1+ | | | 2021 Equity Incentive Plan and Forms of Incentive Stock Option Agreement and Non-Statutory Stock Option Agreement. | |
| 10.2+* | | | 2023 Equity Incentive Plan and Forms of Stock Option Grant Notice, Stock Option Agreement, Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement. | |
| 10.3#^ | | | Asset Contribution Agreement, between InveniAI LLC and the Registrant, dated November 24, 2021. | |
| 10.4^ | | | Separation and Shared Services Agreement, between InveniAI LLC and the Registrant, dated November 24, 2021. | |
| 10.5 | | | Amendment No. 1 to Shared Services Agreement, between InveniAI LLC and the Registrant, dated January 1, 2023. | |
| 10.6+* | | | Form of Indemnification Agreement with Executive Officers and Directors. | |
|
Exhibit
No. |
| |
Description
|
|
| 10.7#^ | | | License Agreement, by and between InveniAI LLC and Daiichi Sankyo Company, Limited, dated September 1, 2021. | |
| 10.8* | | | Employment Agreement, by and between the Registrant and Krishnan Nandabalan, Ph.D. | |
| 10.9* | | | Employment Agreement, by and between the Registrant and Shunichiro (Steve) Okada, M.D. | |
| 10.10* | | | Employment Agreement, by and between the Registrant and Salvatore Alesci, M.D., Ph.D. | |
| 23.1* | | | Consent of Ernst and Young LLP, independent registered accounting firm. | |
| 23.2* | | | Consent of Cooley LLP (included in Exhibit 5.1). | |
| 24.1* | | | Power of Attorney (included on signature page). | |
| 107* | | | Filing fee table. | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
Krishnan Nandabalan, Ph.D.
|
| |
Chief Executive Officer, President and Director
(Principal Executive Officer) |
| |
, 2023
|
|
|
Michael J. Aiello
|
| |
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
| |
, 2023
|
|
|
Kerrie Brady
|
| |
Director
|
| |
, 2023
|
|
|
Jason Fenton
|
| |
Director
|
| |
, 2023
|
|
|
Demetrios Kydonieus
|
| |
Director
|
| |
, 2023
|
|
|
Jonathan Zalevsky
|
| |
Director
|
| |
, 2023
|
|
Exhibit 4.1
GRID NOTE
Up to US $4,000,000 | November 24, 2021 |
FOR VALUE RECEIVED, the undersigned, Invea Therapeutics, Inc., a Delaware corporation with an office at 2614 Boston Post Road Suite 33B, Guilford, CT 06437 (“Payor”), unconditionally promises to pay to the order of InveniAI LLC, a Delaware corporation with an office at 2614 Boston Post Road Suite 33B Guilford, CT 06437 (“Payee”), the principal sum of FOUR MILLION DOLLARS ($4,000,000), or so much thereof as shall have been advanced by Payee to or on behalf of Payor, together with interest on the unpaid balance of each advance, which shall accrue at a rate per annum equal to the applicable federal rate for short-term loans as of the date hereof, in each case calculated based on a 365-day year and actual days elapsed. The obligations of Payor under this Grid Note (this “Note”) shall be senior indebtedness of Payor and shall rank senior to all other indebtedness.
This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by Payor, for the exclusive benefit of Payor in furtherance of conducting its business. All advances under this Note require the prior written approval of Payee and a record thereof shall be maintained in Exhibit A to this Note, provided, however, that the failure to so record shall in no way limit Payor’s obligations with respect to repayment of principal or interest on any advance.
The entire balance of principal and accrued interest thereon shall be due and payable within 18 months upon execution or receiving a cumulative amount of TEN MILLION DOLLARS ($10,000,000) of financing, whichever is earlier. For the avoidance of doubt, the ten million dollars shall be in addition to the cumulative purchase of $280,000 of common stock by founders of the Company.
If this Note is not paid on demand, Payor agrees to pay, in addition to the unpaid principal and accrued interest, all reasonable costs and expenses incurred in attempting or effecting payment or collection hereunder, including, but not limited to, reasonable attorneys’ fees, whether or not suit is instituted.
Payor shall have the right at any time to prepay this Note, in whole or in part, without penalty, subject to the qualification, however, that no partial prepayment of the original sum shall in any way release, discharge or affect the obligation of Payor to make full payment in the amount of the balance of said principal sum at time of demand. Each and every payment (including all partial payments or prepayments) received by the Payee hereunder shall be applied first to any penalties for which the Payor is responsible under this Note which have not yet been paid, then to outstanding interest and then to outstanding principal. If any payment under this Note shall be specified to be made on a day which is not a business day, it shall be made on the next succeeding day which is a business day.
The amounts due hereunder are payable in lawful money of the United States of America to Payee at his address above, or at such other place as the holder of this Note shall from time to time designate, in immediately available funds.
No failure on the part of Payee or any other holder of this Note to exercise and no delay in exercise by Payee or any other holder of this Note of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power.
This Note shall be binding upon Payor and its successors and assigns.
THIS NOTE IS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT. ANY CLAIMS OR LEGAL ACTIONS BY ONE PARTY AGAINST THE OTHER ARISING OUT OF THIS NOTE SHALL BE COMMENCED AND MAINTAINED IN ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF CONNECTICUT, AND PAYOR HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH COURTS AND HEREBY WAIVES TRIAL BY JURY IN ANY SUCH LEGAL ACTION OR PROCEEDING.
Diligence, presentment, demand, protest and notice of any kind are hereby waived by Payor and all sureties, guarantors and endorsers hereof, if any.
In the event that any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part, or in any respect, or in the event that any one or more of the provisions of this Note shall operate, or would prospectively operate, to invalidate this Note, then, and in any such event, such provision or provisions only shall be deemed null and void and of no force or effect and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect, shall be valid, legal and enforceable, and shall in no way be affected, prejudiced or disturbed thereby.
IN WITNESS WHEREOF, Payor has caused this Note to be executed as of the date and year first above written.
INVEA THERAPEUTICS, INC. | ||
/s / Krishnan Nandabalan | ||
By: | Krishnan Nandabalan | |
Its: | CEO |
EXHIBIT A
Amount
of Advance | Date
of Advance | Amount
of Repayment | Date
of Repayment | Balance Remaining | ||||
$ | $ |
Exhibit 4.2
AMENDMENT TO GRID NOTE
This Amendment (this “Amendment”), dated as of April 14, 2023 (the “Amendment Effective Date”), is entered into by and between Invea Therapeutics, Inc., a Delaware corporation (the “Payor”), and InveniAl LLC, a Delaware limited liability company (the “Payee”). This Amendment amends that certain Grid Note, dated as of November 24, 2021, by and between Payor and Payee (as it may be further amended, supplemented or modified from time to time, the “Note”). Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Note.
RECITALS
A. On the terms and subject to the conditions set forth herein, Payor and Payee desire to amend the Note to extend the maturity date and to revise the terms governing acceleration of the Note, each as further set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties agree as follows:
1. Amendments. The third paragraph of the Note shall be removed and replaced in its entirety with the following:
“The entire balance of principal and accrued interest thereon shall be due and payable on the earlier to occur of (i) December 31, 2023 or (ii) consummation of financing with aggregate proceeds of at least TWENTY FIVE MILLION DOLLARS ($25,000,000), excluding indebtedness and the conversion of this Note, and with the principal purpose of raising capital (the “Financing Trigger”). For the avoidance of doubt, the Financing Trigger shall be in addition to the cumulative purchase of $280,000 of common stock by founders of the Company.”
2. No Other Amendments or Waivers. Except for the amendments expressly set forth in this Amendment, the Note shall remain unchanged and in full force and effect. The amendments set forth in this Amendment will be deemed effective as of the Amendment Effective Date. On and after the Amendment Effective Date, each reference in the Note to “this Note,” “hereunder,” “hereof,” “herein,” or other words of like import, and each reference to the Note in any other agreements, documents, or instruments executed or delivered pursuant to, or in connection with, the Note or this Amendment, will mean and be a reference to the Note as amended by this Amendment.
3. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart signature page to this Amendment by electronic mail in portable document format (.pdf) or other electronic transmission has the same effect as delivery of an executed original of this Agreement.
(Signatures on following page)
IN WITNESS WHEREOF, Payor and Payee have executed this Amendment as of the date first set forth above.
INVEA THERAPEUTICS, INC. | ||
By: | /s/ Michael Aiello | |
Name: | Michael Aiello | |
Title: | Chief Financial Officer | |
INVENIAI LLC | ||
By: | Krishnan Nandabalan | |
Name: | Krishnan Nandabalan | |
Title: | Chief Executive Officer |
Exhibit 10.1
INVEA THERAPEUTICS, INC.
2021 Equity Incentive Plan
OPTION
AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option Agreement, Invea Therapeutics, Inc. (the “Company”) has granted you an option under its 2021 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.
The details of your option, in addition to those set forth in the Grant Notice and the Plan, are as follows:
1. Vesting. Your option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.
2. Number of Shares and Exercise Price. The number of shares of Common Stock subject to your option and your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.
3. Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt Employee”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six months. Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).
4. Exercise prior to Vesting (“Early Exercise”). If permitted in your Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option; provided, however, that:
(a) a partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;
(c) you will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and
(d) if your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.
5. Method of Payment. You must pay the full amount of the exercise price for the shares you wish to exercise. The permitted methods of payment are as follows:
(a) by cash, check, bank draft, electronic funds transfer or money order payable to the Company;
(b) subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”;
(c) subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. You may not exercise your option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock;
(d) subject to Company and/or Board consent at the time of exercise, and provided that the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of the Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price plus, to the extent permitted by the Company and/or Board at the time of exercise, the aggregate withholding obligations in respect of the Option exercise; provided, further that you must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Shares of Common Stock will no longer be subject to the Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to you as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;
(e) subject to the consent of the Company and/or Board at the time of exercise, according to a deferred payment or similar arrangement with you; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or
(f) in any other form of legal consideration that may be acceptable to the Board.
6. Whole Shares. You may exercise your option only for whole shares of Common Stock.
7. Securities Law Compliance. In no event may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).
8. Term. You may not exercise your option before the Date of Grant or after the expiration of the option’s term. Except as set forth in your Grant Notice, the term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:
(a) immediately upon the termination of your Continuous Service for Cause;
(b) three months after the termination of your Continuous Service for any reason other than Cause, your Disability or your death (except as otherwise provided in Section 8(d) below); provided, however, that if during any part of such three month period your option is not exercisable solely because of the condition set forth in the section above relating to “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three months after the termination of your Continuous Service; provided further, that if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not expire until the earlier of (x) the later of (A) the date that is seven months after the Date of Grant, and (B) the date that is three months after the termination of your Continuous Service, and (y) the Expiration Date;
(c) 12 months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 8(d)) below;
(d) 18 months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;
(e) the Expiration Date indicated in your Grant Notice; or
(f) the day before the 10th anniversary of the Date of Grant.
If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three months after the date your employment with the Company or an Affiliate terminates.
9. Exercise.
(a) You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours. If required by the Company, your exercise may be made contingent on your execution of any additional documents specified by the Company as more fully set forth in Section below.
(b) By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, (ii) the lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (iii) the disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within 15 days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two years after the Date of Grant or within one year after such shares of Common Stock are transferred upon exercise of your option.
(d) By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of 180 days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with applicable FINRA rules (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 9(d). The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto. You further agree that the obligations contained in this Section 9(d) shall also, if so determined by the Company’s Board of Directors, apply in the Company’s initial listing of its Common Stock on a national securities exchange by means of a registration statement on Form S-1 under the Securities Act (or any successor registration form under the Securities Act subsequently adopted by the Securities and Exchange Commission) filed by the Company with the Securities and Exchange Commission that registers shares of existing capital stock of the Company for resale (a “Direct Listing”), provided that all holders of at least 5% of the Company’s outstanding Common Stock (after giving effect to the conversion into Common Stock of any outstanding Preferred Stock of the Company) are subject to substantially similar obligations with respect to such Direct Listing.
10. Transferability. Except as otherwise provided in this Section 10, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.
(a) Certain Trusts. Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust. You and the trustee must enter into transfer and other agreements required by the Company.
(b) Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement. If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(c) Beneficiary Designation. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.
11. Option not a Service Contract. Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option will obligate the Company or an Affiliate, their respective stockholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.
12. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.
(b) If this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for financial accounting purposes). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence will not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock will be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure will be your sole responsibility.
(c) You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein, if applicable, unless such obligations are satisfied.
13. Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. Because the Common Stock is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service.
14. Imposition of Other Requirements. You agree to execute further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of this option. You further agree to execute, to the extent requested by the Company, at any time and from time to time, any agreements entered into with holders of capital stock of the Company, including without limitation a right of first refusal and co-sale agreement, stockholders agreement and/or a voting agreement.
15. Notices. Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
16. Governing Plan Document. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your option and those of the Plan, the provisions of the Plan will control.
ATTACHMENT II
2021 Equity Incentive Plan
1. General.
(a) Eligible Stock Award Recipients. Employees, Directors and Consultants are eligible to receive Stock Awards.
(b) Available Stock Awards. The Plan provides for the grant of the following types of Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards and (vi) Other Stock Awards.
(c) Purpose. The Plan, through the grant of Stock Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.
2. Administration.
(a) Administration by the Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).
(b) Powers of the Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine (A) who will be granted Stock Awards; (B) when and how each Stock Award will be granted; (C) what type of Stock Award will be granted; (D) the provisions of each Stock Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Stock under the Stock Award; (E) the number of shares of Common Stock subject to, or the cash value of, a Stock Award; and (F) the Fair Market Value applicable to a Stock Award.
(ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Stock Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Stock Award fully effective.
(iii) To settle all controversies regarding the Plan and Stock Awards granted under it.
(iv) To accelerate, in whole or in part, the time at which a Stock Award may be exercised or vest (or the time at which cash or shares of Common Stock may be issued in settlement thereof).
(v) To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or a Stock Award Agreement, suspension or termination of the Plan will not impair a Participant’s rights under the Participant’s then-outstanding Stock Award without the Participant’s written consent except as provided in subsection (viii) below.
(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or bringing the Plan or Stock Awards granted under the Plan into compliance with the requirements for Incentive Stock Options or ensuring that they are exempt from, or compliant with, the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Stock Awards available for issuance under the Plan. Except as otherwise provided in the Plan or a Stock Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Stock Award without the Participant’s written consent.
(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Stock Options.
(viii) To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Stock Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Stock Awards without the affected Participant’s consent (A) to maintain the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment of the Stock Award solely because it impairs the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Stock Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws.
(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Stock Awards.
(x) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Stock Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
(xi) To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.
(c) Delegation to Committee. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(d) Delegation to an Officer. The Board may delegate to one or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(t) below.
(e) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
3. Shares Subject to the Plan.
(a) Share Reserve.
(i) Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 2,500,000 shares (the “Share Reserve”).
(ii) For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section does not limit the granting of Stock Awards except as provided in Section 7(a).
(b) Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.
(c) Incentive Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 7,500,000.
(d) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
4. Eligibility.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.
(b) Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five years from the date of grant.
(c) Consultants. A Consultant will not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or sale of the Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.
5. Provisions Relating to Options and Stock Appreciation Rights.
Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise) the substance of each of the following provisions:
(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of 10 years from the date of its grant or such shorter period specified in the Stock Award Agreement.
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Stock Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value of the Common Stock subject to the Stock Award if such Stock Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(c) Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:
(i) by cash, check, bank draft, electronic funds transfer or money order payable to the Company;
(ii) subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”;
(iii) subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company and/or the Board, at the time Participant exercises their Option, will include delivery to the Company of Participant’s attestation of ownership of such shares of Common Stock in a form approved by the Company. Participant may not exercise their option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock;
(iv) subject to Company and/or Board consent at the time of exercise, and provided that the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of the Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price plus, to the extent permitted by the Company and/or Board at the time of exercise, the aggregate withholding obligations in respect of the Option exercise; provided, further that Participant must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Shares of Common Stock will no longer be subject to the Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;
(v) according to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or
(vi) in any other form of legal consideration that may be acceptable to the Board.
(d) Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Award Agreement evidencing such SAR.
(e) Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:
(i) Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided in the Plan, neither an Option nor a SAR may be transferred for consideration.
(ii) Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii) Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.
(f) Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
(g) Termination of Continuous Service. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which period will not be less than 30 days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR will terminate.
(h) Extension of Termination Date. If the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s Stock Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of the period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.
(i) Disability of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six months if necessary to comply with applicable laws unless such termination is for Cause), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(j) Death of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six months if necessary to comply with applicable laws unless such termination is for Cause), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.
(k) Termination for Cause. Except as explicitly provided otherwise in a Participant’s Stock Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR (whether vested or unvested) from and after the date of such termination of Continuous Service.
(l) Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option or SAR (although the Stock Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company's then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.
(m) Early Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 8(l), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in Section 8(l) is not violated, the Company will not be required to exercise its repurchase right until at least six months (or such longer or shorter period of time required to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement.
(n) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 8(l), the Option or SAR may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the exercise of the Option or SAR.
(o) Right of First Refusal. The Option or SAR may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option or SAR. Such right of first refusal will be subject to the “Repurchase Limitation” in Section 8(l). Except as expressly provided in this Section 5(o) or in the Stock Award Agreement, such right of first refusal will otherwise comply with any applicable provisions of the bylaws of the Company.
6. Provisions of Stock Awards Other than Options and SARs.
(a) Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting. Subject to the “Repurchase Limitation” in Section 8(l), shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.
(iii) Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv) Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.
(v) Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
(b) Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:
(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
(iv) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.
(vi) Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.
(vii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code will contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, will be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule.
(c) Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section and the preceding provisions of this Section . Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.
7. Covenants of the Company.
(a) Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.
(b) Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of a Stock Award or the subsequent issuance of cash or Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities law.
(c) No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.
8. Miscellaneous.
(a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute general funds of the Company.
(b) Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Stock Award Agreement or related grant documents as a result of a clerical error in the papering of the Stock Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Stock Award Agreement or related grant documents.
(c) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Stock Award has been entered into the books and records of the Company.
(d) No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
(e) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Stock Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares subject to any portion of such Stock Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Stock Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Stock Award that is so reduced or extended.
(f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(g) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that the Participant is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h) Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the maximum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement.
(i) Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).
(j) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.
(k) Compliance with Section 409A of the Code. To the extent that the Board determines that any Stock Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements will be interpreted in accordance with Section 409A of the Code. Notwithstanding anything to the contrary in the Plan (and unless the Stock Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding a Stock Award that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant’s “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule.
(l) Repurchase Limitation. The terms of any repurchase right will be specified in the Stock Award Agreement. The repurchase price for vested shares of Common Stock will be the Fair Market Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested shares of Common Stock will be the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company will not exercise its repurchase right until at least six months (or such longer or shorter period of time necessary to avoid classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board.
9. Adjustments upon Changes in Common Stock; Other Corporate Events.
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, then: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards will be proportionately adjusted and such adjustment shall occur automatically. To the extent such adjustments cannot occur automatically, the Board shall have the power to make determinations as it deems necessary and its determinations and any adjustments under this section will be final, binding and conclusive.
(b) Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.
(c) Corporate Transaction. The following provisions will apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Corporate Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing or completion of the Corporate Transaction:
(i) arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);
(ii) arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
(iii) accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five days prior to the effective date of the Corporate Transaction), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Corporate Transaction, which exercise is contingent upon the effectiveness of such Corporate Transaction;
(iv) arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;
(v) cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Corporate Transaction, in exchange for such cash consideration (including no consideration) as the Board, in its sole discretion, may consider appropriate; and
(vi) make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Corporate Transaction, over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Corporate Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award.
(d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.
10. Plan Term; Earlier Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the 10th anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan will not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan.
11. Effective Date of Plan.
This Plan will become effective on the Effective Date.
12. Choice of Law.
The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.
13. Definitions. As used in the Plan, the following definitions will apply to the capitalized terms indicated below:
(a) “Affiliate” means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing definition.
(b) “Board” means the Board of Directors of the Company.
(c) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(d) “Cause” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company, or any of its employees or directors; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company, the Company’s employment policies, or of any statutory or other duty owed to the Company; (iv) such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
(e) “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; or
(iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.
Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the definition set forth herein will apply, and (C) if at any time the Company’s Certificate of Incorporation provides definitions of various analogous transactions that would be deemed a liquidation event for the Company, then such definition will apply as if it were the definition set forth herein except as is otherwise expressly provided in an individual written agreement between the Company or any Affiliate and the Participant.
(f) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
(g) “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).
(h) “Common Stock” means the common stock of the Company.
(i) “Company” means Invea Therapeutics, Inc., a Delaware corporation.
(j) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan.
(k) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
(l) “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(m) “Director” means a member of the Board.
(n) “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(o) “Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s stockholders, and (ii) the date this Plan is adopted by the Board.
(p) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
(q) “Entity” means a corporation, partnership, limited liability company or other entity.
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(s) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.
(t) “Fair Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.
(u) “Good Reason” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, a material and unreasonable diminution of such Participant’s duties (as determined by the Board in its sole discretion) without such Participant’s consent; provided, however, that the following shall not constitute Good Reason: (i) a change of title; (ii) a reduction in such Participant’s duties by virtue of the Company undergoing a Change in Control and/or being made part of a larger entity or group of entities; and/or (iii) cessation of such Participant’s service, if any, on the Board or a committee thereof. For such Participant to receive the benefits under the applicable written agreement between such Participant and the Company as a result of a voluntary resignation for Good Reason, unless otherwise provided in such agreement, all of the following requirements must be satisfied: (A) such Participant must provide notice to the Company of such Participant’s intent to assert Good Reason within thirty (30) days of the initial existence of the condition set forth in the previous sentence; (B) the Company will have thirty (30) days (the “Company Cure Period”) from the date of such notice to remedy the condition and, if it does so, such Participant may withdraw such Participant’s resignation or such Participant may resign with no benefits under the applicable written agreement; and (C) any termination of such Participant’s Continuous Service under this provision must occur within ten (10) days of the earlier of expiration of the Company Cure Period or written notice from the Company that it will not undertake to cure the applicable condition. Unless otherwise set forth in the applicable written agreement, should the Company remedy the condition as set forth above and then such condition arises again, such Participant may assert Good Reason again subject to all of the conditions set forth herein. Unless otherwise set forth in the applicable written agreement, the term “Company” for purposes of “Good Reason” will be interpreted to include any Affiliate of the Company to which such Participant provides services, if appropriate, as determined by the Board in its sole discretion.
(v) “Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(w) “Nonstatutory Stock Option” means an option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.
(x) “Officer” means any person designated by the Company as an officer.
(y) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
(z) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
(aa) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
(bb) “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(c).
(cc) “Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.
(dd) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(ee) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.
(ff) “Plan” means this 2021 Equity Incentive Plan.
(gg) “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).
(hh) “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.
(ii) “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).
(jj) “Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.
(kk) “Rule 405” means Rule 405 promulgated under the Securities Act.
(ll) “Rule 701” means Rule 701 promulgated under the Securities Act.
(mm) “Securities Act” means the Securities Act of 1933, as amended.
(nn) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
(oo) “Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.
(pp) “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right or any Other Stock Award.
(qq) “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
(rr) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.
(ss) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate
Exhibit 10.3
Certain information has been excluded from this agreement (indicated by “[***]”) because such information (i) is not material and (ii) is the type that the registrant treats as private or confidential.
ASSET CONTRIBUTION AGREEMENT
This Asset Contribution Agreement (this “Agreement”) is entered into as of November 24, 2021 (the “Execution Date”), by and between InveniAI LLC, a Delaware limited liability company located at 2614 Boston Post Road, Guilford, CT 06437 (“InveniAI”), and Invea Therapeutics, Inc., a Delaware corporation located at 2614 Boston Post Road, Guilford, CT 06437 (“Invea”).
WHEREAS, InveniAI identified a number of therapeutic candidates using its proprietary artificial intelligence-powered research and development engine known as ‘AlphaMeld®’; and
WHEREAS, the Board of Directors of InveniAI determined that it was in InveniAI’s best interest to restructure its business in order to realize the full potential of its assets, including such therapeutic candidates; and
WHEREAS, in accordance with the restructuring plan, InveniAI formed Invea, a product development biotechnology company, to develop and commercialize certain therapeutic candidates; and
WHEREAS, to allow such work to be carried out by Invea, InveniAI wishes to enter into this Agreement by which InveniAI agrees to contribute certain assets and liabilities to Invea and Invea accepts certain assets and liabilities from InveniAI pursuant to the terms and conditions.
WHEREAS, InveniAI desires to transfer to Invea certain additional assets and liabilities and grant to Invea certain rights in future therapeutic candidates identified by InveniAI pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the covenants contained herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties now agree to the following:
1. | Contribution of Assets & Option. |
A. | Initial Contribution of Assets. On the terms and subject to the conditions set forth in this Agreement, InveniAI hereby agrees to sell, contribute, assign, transfer, convey and deliver to Invea, and Invea agrees to acquire from InveniAI, all of InveniAI’s right, title and interest in and to drug candidates known as INVA8001, INVA8002 and INVA8003, together with any and all forms of such compounds and any salt, ester, hydrate, solvate, free acid form, free base form, crystalline form, co-crystalline form, amorphous form, polymorph, chelate, isomer, enantiomer, racemate, stereoisomer, tautomer or optically active form of any of the foregoing (collectively, the “Candidates”), and all of the assets associated with the Candidates (collectively, the “Assets”), free and clear of any security interest, lien, charge, option, claim or other encumbrance (each, a “Lien”), other than those Liens listed on Schedule 1 (collectively, the “Permitted Liens”). The Assets include the following to the extent used or held for use in connection with the Candidates as of the Effective Date: |
a. | The intellectual property set forth on Schedule 1(a) (collectively, the “Intellectual Property”); |
b. | All goodwill, if any associated with the Assets; |
c. | Except as set forth in Section 4 below, all of InveniAI’s rights under the Contracts (as defined below); |
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d. | All documentation, notebooks, logs, data and records associated with the Assets, and any other information necessary for the development of the Assets; |
e. | All claims, causes of action, rights of recovery, rights of setoff and rights of recoupment, whether or not known as of the Effective Date, relating to InveniAI’s ownership of the Assets; |
f. | All rights under or pursuant to all warranties, indemnities, representations, guarantees and similar rights, whether or not known as of the Effective Date, in favor of InveniAI with respect to the Candidates or the Assets; and |
g. | The assets specifically identified in Schedule 1(g). Assets identified in Schedule 1(g) are subject to modification and adjustment based financial audit findings |
B. | Option to Negotiate for Additional Product Candidates. [***] |
C. | Non-exclusive License. InveniAI hereby grants to Invea a perpetual, irrevocable, worldwide, fully-paid up, royalty-free, non-exclusive license, with the right to grant sublicenses (through multiple tiers), under any intellectual property rights owned or controlled by InveniAI as of the Effective Date that does not constitute Intellectual Property solely to research, develop, make, have made, use, import, export, sell, have sold, commercialize, or otherwise exploit Candidates. |
2. | Assumption of Liabilities. As of the Effective Date, Invea shall assume and will be responsible for and pay, perform, and discharge when due all liabilities associated with the Assets, including without limitation, payment of any fees required to maintain any registrations and applications for registration arising from the ownership or use of the Intellectual Property due on and after the Effective Date, and all obligations and liabilities of InveniAI under the Contracts to the extent that those obligations and liabilities relate to the period after the Effective Date, in each case exclusive of any liability or obligation arising thereunder as a result of any breach, default or failure of InveniAI to perform any covenants or obligations required to be performed by InveniAI prior to the Effective Date. In addition to the liabilities described in the previous sentence, in consideration of InveniAI’s contribution of the Assets to Invea, Invea shall assume from InveniAI and be responsible for all liabilities set forth on Schedule 2, hereto (all liabilities assumed by Invea, including liabilities set forth on Schedule 2, the “Assumed Liabilities”). Assumed Liabilities are subject to modification and adjustment based on financial audit findings. |
3. | Assignment of Contracts. To the extent that any Contract is not capable of being assigned or transferred without the consent or waiver of the other party thereto or any third party, or if such assignment or transfer, or attempted assignment or transfer would constitute a breach thereof, this Agreement shall not constitute an assignment or transfer thereof, or an attempted assignment or transfer of any such Contract. Schedule 3 lists those Contracts that InveniAI believes are not assignable without the written consent of the other party thereto (the “Required Consents”). To the extent permitted by applicable law, any consents and approvals of third parties required for the transfer to Invea of any of the Assets, including the Required Consents, that are not obtained or cannot be obtained without any conditions adverse to Invea or without any obligations imposed on Invea not specified in the Contract for which consent is being obtained prior to the Effective Date (the “Non-Assignable Contracts”), such Non-Assignable Contracts shall be held, as of and from the Effective Date, by InveniAI in trust for Invea and the covenants and obligations thereunder shall be performed by Invea in InveniAI’s name and all benefits and obligations existing thereunder shall be for Invea’s account. InveniAI shall take or cause to be taken at Invea’s expense such actions in its name or otherwise as Invea may reasonably request so as to provide Invea with the benefits of the Non-Assignable Contracts and to effect collection of money or other consideration that becomes due and payable under the Non-Assignable Contracts, and InveniAI shall promptly pay over to Invea all money or other consideration received by it in respect of the Non-Assignable Contracts. As of and from the Effective Date, InveniAI authorizes Invea, to the extent permitted by applicable law and the terms of the Non-Assignable Contracts, at Invea’s expense, to perform all of the obligations and receive all the benefits of InveniAI under the Non-Assignable Contracts. |
4. | Intellectual Property Registrations. InveniAI shall authorize and request that any officials of any state or foreign country whose duty it is to issue intellectual property registrations (including letters patent) (a) issue all registrations from any from any applications for registrations, and (b) transfer any applications or registration as applicable, in each case that are included in the Intellectual Property to Invea at InveniAI’s expense. |
5. | Consideration. The full consideration for the contribution of the Assets hereunder shall be: |
a. | The issuance by Invea to InveniAI of Eight Million (8,000,000) shares of preferred stock of Invea. |
b. | For each Candidate, Invea shall pay one-time clinical development milestone payments to InveniAI as follows: |
[***]
c. | Invea shall pay InveniAI Two Million Five Hundred Dollars ($2,500,000) payable as a lump as follows: $1,250,000 within 30 days of closing IPO and $1,250,000 within 30 days of the first anniversary of the IPO. |
6. | Deliveries. Each party shall execute and deliver to the other party any such documents and instruments as shall be reasonably requested by the other party or the other party’s counsel that are reasonably necessary to complete the transactions set forth herein. The parties will enter into a mutually agreed upon investors’ rights agreement, right of first refusal and co-sale agreement, and voting rights agreement. |
7. | Representations and Warranties of InveniAI. |
a. | InveniAI has full power and authority to enter into this Agreement and to consummate the transactions contemplated herein. InveniAI has taken all action required by law, by the organizational documents of InveniAI, or otherwise, to authorize the transactions contemplated herein. This Agreement, when executed and delivered by InveniAI, will constitute a valid and legally binding obligation, enforceable against InveniAI in accordance with its terms, except as the same may be restricted, limited or delayed by applicable bankruptcy or other laws affecting creditors’ rights generally or by equitable principles and except as to the remedy of specific performance which may not be available under the laws of various jurisdictions. |
b. | The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereunder will not (i) violate any provision of, result in a breach of, or constitute a default under, any law or any order, writ, injunction or decree of any court, governmental agency or arbitration tribunal applicable to InveniAI; (ii) constitute a violation of or a default under, or a conflict with, any term or provision of the governing documents of InveniAI; or (iii) constitute a violation of or a default under any contract, commitment, indenture, lease, instrument or other agreement, or any other restriction of any kind to which InveniAI is a party or is bound. |
c. | InveniAI has taken all action reasonably necessary to prosecute its existing intellectual property applications material to the Candidates and to maintain all Intellectual Property in full force and effect as of the Effective Date, and has not taken or failed to take any action that could reasonably have the effect of waiving any material rights to the Candidates or the Intellectual Property. As of the Effective Date, no Intellectual Property is or has been involved in any interference, opposition, cancellation, concurrent use, invalidity, reissue, reexamination, revocation, litigation or other proceeding, in which the scope, validity or enforceability of Intellectual Property is being or has been contested or challenged, and to InveniAI’s knowledge, no such proceeding has been threatened with respect to any Intellectual Property. |
d. | InveniAI has not received any written notice from any person, and does not have any knowledge of, any claim, regarding the use of, or challenging or questioning InveniAI’s right or title in, any of the Intellectual Property or alleging infringement or misappropriation of any Intellectual Property. |
e. | There is no claim, litigation, proceeding or governmental investigation pending or, to InveniAI’s knowledge, threatened, or any order, injunction, or decree outstanding, against InveniAI, that would prevent or have a material adverse effect on the rights, duties or obligations of the parties as set forth in this Agreement. |
f. | Schedule 7(f) sets forth a complete and accurate list of all equipment (including computers, computer servers, information systems, telephone systems and database systems and office equipment), supplies, furniture, fixtures, and all other tangible personal property, wherever located (collectively, “Tangible Assets”). Any Tangible Assets to be contributed to Invea pursuant to this Agreement are in good operating condition and in good repair, normal wear and tear excepted. |
g. | Schedule 7(g) contains a complete list of the contracts, commitments, understandings, open purchase orders, contractor agreements or other agreements, including license agreements, equipment leases and manufacturers’ and vendors’ warranties relating to items included in the Assets and all similar rights against third parties relating to items included in the Assets (collectively, the “Contracts”). True and complete copies of all Contracts have been delivered to Invea. All Contracts listed on Schedule 7(g) were entered into in connection with and in the ordinary course of InveniAI’s business, consistent with past practice. All the Contracts listed on Schedule 7(g) are in full force and effect and, to InveniAI’s knowledge, there is no breach of any of the provisions of the Contracts by any party thereto. To InveniAI’s knowledge, no condition exists that, with notice or lapse of time or both, would constitute a default by any party to any of those Contracts. To InveniAI’s knowledge, no party to any of the Contracts listed on Schedule 7(g) has made, asserted or has any defense, set-off or counterclaim under any of the Contracts or has exercised any option granted to it to cancel or terminate its agreement, to shorten the term of its agreement or to renew or extend the term of its agreement, and InveniAI has not received any notice to that effect. |
8. | Representations and Warranties of Invea. |
a. | Invea has full power and authority to enter into this Agreement and to consummate the transactions contemplated herein. Invea has taken all action required by law, by the organizational documents of Invea, or otherwise, to authorize the transactions contemplated herein. This Agreement, when executed and delivered by Invea, will constitute a valid and legally binding obligation, enforceable against Invea in accordance with its terms, except as the same may be restricted, limited or delayed by applicable bankruptcy or other laws affecting creditors’ rights generally or by equitable principles and except as to the remedy of specific performance which may not be available under the laws of various jurisdictions. |
b. | The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereunder will not (i) violate any provision of, result in a breach of, or constitute a default under, any law or any order, writ, injunction or decree of any court, governmental agency or arbitration tribunal applicable to Invea; (ii) constitute a violation of or a default under, or a conflict with, any term or provision of the governing documents of Invea; or (iii) constitute a violation of or a default under any contract, commitment, indenture, lease, instrument or other agreement, or any other restriction of any kind to which Invea is a party or is bound. |
c. | There is no claim, litigation, proceeding or governmental investigation pending or, to Invea’s knowledge, threatened, or any order, injunction, or decree outstanding, against Invea, that would prevent or have a material adverse effect on the rights, duties or obligations of the parties as set forth in this Agreement. |
9. | Indemnification. |
a. | InveniAI shall indemnify and hold harmless Invea, and its directors, officers, employees, agents, and other representatives, from and against all loss, liability, claims, expenses, damages, fines, or penalties (including reasonable attorneys’ fees) (collectively, “Losses”) arising from or related to (i) InveniAI’s breach of this Agreement, and (ii) any other liability or claim, whether commenced before or after the Effective Date, arising out of InveniAI’s ownership of the Candidates and the Assets prior to the Effective Date (regardless of whether such liability or claim was known by Invea as of the Effective Date). |
b. | Invea shall indemnify and hold harmless InveniAI, and its directors, officers, employees, agents, and other representatives, from and against all Losses arising from or related to (i) Invea’s breach of this Agreement, (ii) the failure by Invea to pay, perform or discharge when due any of the Assumed Liabilities (including under any Contract assigned to Invea), and (iii) Invea’s ownership, development and commercialization of the Assets after the Effective Date (including under any Contract assigned to Invea). |
10. | Recusal. The Parties covenant and agree that as long as Krishnan Nandabalan is a member of senior management or the governing board of InveniAI, BioXcel LLC and Invea, he may participate in discussions at the senior management and governing board levels for each of InveniAI, BioXcel LLC and Invea but shall not vote on matters coming before either governing board material to this Agreement, the Amended & Restated Separation and Shared Services Agreement or other agreements relating to the relationship between the Parties. Each Party shall ensure that Krishnan Nandabalan recuses himself with respect to governing board matters consistent with this Section 10. |
11. | Confidentiality. Each party shall maintain the confidentiality of all data, information, records, reports and all other nonpublic information provided to it by the other party (the “Confidential Information”), and shall not disclose any Confidential Information to third parties for any reason unless and only to the extent jointly agreed to, in writing, by the parties or as required by law. The foregoing applies to information communicated orally, in writing, by computer processes, and includes without limitation, this Agreement, any and all meeting notes, business plans, financial statements, analyses and/or research materials, corporate documents, and correspondence. |
12. | Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, without giving effect to principles governing conflicts of law. |
13. | Specific Performance. Each of the parties acknowledges and agrees that the other party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the parties agrees that the other party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in addition to any other remedy to which they may be entitled, at law or in equity. |
14. | Assignment. No party may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other party, except that either party may, without such consent, assign its rights and delegate its duties to a successor to such party’s entire business. |
15. | Entire Agreement. This Agreement, including the schedules hereto, contains a complete statement of all the arrangements between the parties with respect to its subject matter, supersedes any previous agreements between them relating to that subject matter, and cannot be amended, modified or terminated except in a written document executed by the parties. |
16. | Severability. The invalidity of any provision or portion of a provision of this Agreement shall not affect the validity of any other provision of this Agreement or the remaining portion of the applicable provision. If any provision of this Agreement or the application of a particular provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such party or circumstances other than those to which it is determined to be invalid or enforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by applicable law. |
17. | Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties. No waiver by either party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. |
18. | Counterparts. This Agreement may be executed in one or more counterparts, which together shall constitute a single instrument. Facsimile or electronic delivery of an executed counterpart shall be valid and binding for all purposes. |
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have caused this Asset Contribution Agreement to be duly executed as of the Execution Date.
INVENIAI LLC | INVEA THERAPEUTICS INC. | |
/s/ Aman Kant | /s/ Krishnan Nandabalan | |
Signature | Signature | |
Aman Kant | Krishnan Nandabalan | |
Name Printed | Name Printed | |
Chief Business Officer | Chief Executive Officer | |
Title | Title |
Exhibit 10.4
SHARED SERVICES AGREEMENT
This Shared Services Agreement (this “Agreement”) is entered into as of November 24, 2021 (the “Execution Date”), by and between InveniAI LLC, a Delaware corporation located at 2614 Boston Post Road Suite 33B, Guilford, CT 06437 (“InveniAI”), and Invea Therapeutics, Inc., a Delaware corporation located at 2614 Boston Post Road Suite 33B, Guilford, CT 06437 (“Invea”) in order to state the obligations of each. InveniAI and Invea are sometimes referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, InveniAI identified a number of therapeutic candidates using its proprietary artificial intelligence-powered research and development engine known as ‘AlphaMeld®’; and
WHEREAS, the Board of Directors of InveniAI determined that it was in InveniAI’s best interest to restructure its business in order to realize the full potential of its assets, including such therapeutic candidates; and
WHEREAS, in accordance with the restructuring plan, InveniAI formed Invea, a product development biotechnology company, to develop and commercialize certain of the therapeutic candidates; and
WHEREAS, Invea plans to develop and commercialize such therapeutic candidates; and
WHEREAS, to allow such work to be carried out by Invea, InveniAI desires to furnish the office space, equipment, described herein subject to the terms and conditions of this Agreement; and
WHEREAS, Invea is in need of InveniAI’s expertise and know-how with respect to artificial intelligence in drug discovery; and
WHEREAS, InveniAI desires to provide and Invea wishes to accept certain other financial support from InveniAI to support the efforts of Invea and to assist Invea with paying for the office space, equipment, and services described herein; and
WHEREAS, Invea desires to cease accepting space, equipment, services, and financial support pursuant to a separation plan, which is attached as Exhibit A (the “Separation Plan”) and InveniAI desires to adhere to the Separation Plan.
NOW, THEREFORE, in consideration of the foregoing recitals and the terms and conditions set forth herein, the Parties hereto, intending to be legally bound, hereby agree as follows:
1. | Shared Office Space and Equipment. |
a. | Office Space. InveniAI shall make available to Invea sufficient space in the office leased by InveniAI and located at 2614 Boston Post Road Suite 33B, Guilford, CT 06437 (the “Office”) during the Term (as defined below (the “Invea Space”), to use for all purposes related to the conduct of Invea’s business. In addition to the Invea Space, all common space in the Office, including conference rooms, the kitchen and the pantry shall be available for use by Invea (such common space and Invea Space together, the “Space”). |
b. | Equipment. InveniAI shall provide for use by Invea of such furniture, fixtures, and office equipment as are reasonably necessary and appropriate for the operation of Invea, including furniture, fixtures, and office equipment as InveniAI may hereafter acquire during the Term of this Agreement. If Invea believes that any particular item of furniture or equipment is necessary for the effective conduct of Invea’s operations, and if InveniAI determines not to acquire such item, then Invea shall have the right to acquire the same at Invea’s own expense and locate it in the Office, such item(s) to be and remain the property of Invea. |
c. | Compliance with Lease. Invea agrees, at all times, to comply with and to cause its employees, contractors and agents to comply with all terms and conditions set forth in the real property lease between InveniAI and its landlord, as it may be amended from time to time; provided that InveniAI shall promptly provide Invea with a copy of such lease and any such amendments. |
d. | Compensation. In consideration of the use of the Space and equipment, Invea shall pay to InveniAI a fee equal to $5,700 per month. |
2. | Shared Services. |
a. | The Services. InveniAI shall perform for and on behalf of Invea the services set forth on Exhibit B (the “Services”) during the Term, which Services shall include the use of the AlphaMeld AI Platform. |
b. | Performance Standards. InveniAI shall perform the Services in a timely, competent manner and in a nature and at levels consistent with InveniAI’s conduct of its own business. |
c. | Compensation. |
In consideration of the provision of the following Services, in addition to amounts paid pursuant to Section 3:
i. | Invea shall pay to InveniAI for Services related to intellectual property prosecution and management as outlined in Exhibit B. |
ii. | Invea shall pay to InveniAI the sum of the amounts calculated by multiplying the actual hours spent towards Services for and on behalf of Invea with the rates for each type of employee for Services by InveniAI as outlined in Exhibit B. |
iii. | Invea shall pay InveniAI the sum of the amounts calculated by multiplying the number of dedicated resources for and on behalf of Invea with rates for each type of employee for Services by InveniAI through its subsidiary in India as outlined in Exhibit B. |
d. | AlphaMeld Services (Invea Programs). On or before December 31, 2022, Invea shall have the option to enter into a Licensing Agreement with InveniAI by which InveniAI shall perform product identification and related services for Invea, including through the utilization of the AlphaMeld® Platform (with a term not to exceed the tenth (10th) anniversary of the Execution Date). The Parties agree to negotiate the terms of such Licensing Agreement in good faith and that such agreement will incorporate reasonable market-based terms; provided, that, under such Licensing Agreement, Invea shall pay an annual access fee of $2.0 million in full consideration of all rights and services to be provided by InveniAI utilizing the AlphaMeld® Platform with respect to internal Invea programs. |
e. | AlphaMeld Services (Partnered Programs). Prior to the tenth (10th) anniversary of the Execution Date, Invea shall have InveniAI perform product identification and related services (including through the utilization of the AlphaMeld® Platform) with respect to third party programs under collaboration with Invea in the fields for the Gut-Brain axis as applicable to gut inflammation and hepato-biliary diseases. Invea must engage InveniAI as its sole provider with respect to Partnered Programs as applicable to Gut-Bran axis and hepato-biliary diseases. The provision of such services will be subject to the mutual agreement of the Parties regarding the terms and conditions of such services, including any financial consideration with respect thereto. |
3. | Financial Support and Payment. |
a. | Financial Support. InveniAI shall provide a line of credit to Invea, which shall be capped at Four Million Dollars ($4,000,000) (the “Total Funding Amount”), pursuant to and in accordance with the terms and conditions of that certain Grid Note between the Parties, which is attached as Exhibit C (the “Grid Note”). InveniAI shall not be obligated to fund the operations of Invea beyond the Total Funding Amount. In the event Invea determines that it will require additional funding to support its operations and to execute the Separation Plan, Invea and InveniAI will, in good faith, assess increasing the Total Funding Amount, and, at the discretion of the Parties, shall amend the terms of the Grid Note or execute a new note to reflect any new funding. |
b. | Payment. Invea shall pay to InveniAI amounts due under Sections 1(d), 2(c) and 3(a). InveniAI shall send invoices to InveniAI for such amounts within thirty (30) days after the end of each calendar month. Invea shall pay each invoice within sixty (60) days after receipt thereof. If any portion of any invoice is disputed, Invea shall pay the undisputed amount, and the Parties shall use good faith efforts to reconcile the disputed amount as soon as possible. |
c. | Reimbursement for Past Support. The Parties recognize that InveniAI contributed services and support to Invea in connection with its organization and development prior to the date funding under the Grid Note was available to Invea in the amount of Four Million Dollars ($4,000,000). Invea shall reimburse InveniAI $430,260 for such contributed services and support on the earliest to occur of: (x) thirty days after the IPO (as defined in the Contribution Agreement); (y) ten (10) days after Invea receives funding of at least $5,000,000 other than through the IPO; and (z) December 31, 2022. |
4. | Separation Plan. InveniAI and Invea hereby acknowledge that the Services and the Space shall decrease over time in accordance with the Separation Plan. The Parties further acknowledge that Invea plans to cease accepting all operational and financial support from InveniAI pursuant to the timeline set forth in the Separation Plan. The Parties agree to adhere to the terms of the Separation Plan. In the event Invea determines that the Separation Plan must be amended due to changes related to the business of Invea, including the development or commercialization of the therapeutic candidates, Invea shall notify InveniAI in writing and the Parties shall, in good faith, assess any continued support required by Invea. Any amendments to the Separation Plan shall be agreed upon in writing by the Parties and shall be attached in Exhibit A hereto. |
5. | Recusal. The Parties covenant and agree that, in support of the Separation Plan as long as Krishnan Nandabalan is a member of senior management or the governing board of both InveniAI and Invea, he may participate in discussions at the senior management and governing board levels for each of InveniAI and Invea but shall not vote on matters coming before either governing board material to this Agreement, the Contribution Agreement or other agreements relating to the relationship between the Parties. Each Party shall ensure that Krishnan Nandabalan recuses himself with respect to governing board matters consistent with this Section 5. |
6. | Confidentiality. Each Party shall maintain the confidentiality of all data, information, records, reports and all other nonpublic information provided to it by the other Party (the “Confidential Information”), and shall not disclose any Confidential Information to third parties for any reason unless and only to the extent jointly agreed to, in writing, by the Parties or as required by law. The foregoing applies to information communicated orally, in writing, by computer processes, and includes without limitation, this Agreement, any and all meeting notes, business plans, financial statements, analyses and/or research materials, corporate documents, and correspondence. |
7. | Intellectual Property Rights. InveniAI and Invea intend for any work product, including designs, business plans, correspondence (printed or electronic), discoveries, inventions, improvements, software, works of authorship, information, know-how, or other materials made, conceived, reduced to practice or developed in whole or in part by InveniAI during the Term or within six (6) months after the expiration of the Term in connection with the Services or that relate to the Confidential Information or the business of Invea (the “Developments”) to be works made for hire. Invea shall own all right, title and interest in and to the Developments, and shall be deemed to be the author of the Developments for copyright purposes. Any and all forms of intellectual property rights including, without limitation, patents, trademarks, copyrights, mask rights, trade secrets and proprietary know-how related to or covering property therein resulting from the Services shall be owned by Invea and may be registered exclusively in the name of Invea in the U.S. Copyright Office, the U.S. Patent and Trademark Office, and other similar registries in other countries. InveniAI shall promptly and shall cause its employees to promptly disclose to Invea all Developments and Confidential Information relating to the Services and perform all actions reasonably requested by Invea, whether during or after the Term, to establish and confirm Invea’s ownership of Developments, Confidential Information and related intellectual property, including, without limitation, the execution and delivery of assignments, consents, powers of attorney and other instruments, and provide reasonable assistance to Invea or any of its affiliates in connection with (a) the prosecution of any applications for patents, trademarks, trade names, service marks, reissues thereof or other legal protection thereon, (b) the maintenance, enforcement and renewal of any rights that may be obtained, granted or vest therein, and (c) the prosecution and defense of any actions, proceedings, oppositions or interferences relating thereto. For clarity, Developments shall include any new product candidates and any related inventions identified through the use of AlphaMeld in performing the Services. |
8. | Term and Termination. |
a. | Term. Unless terminated earlier in accordance with the terms hereof, the term of this Agreement shall commence as of Effective Date and terminate immediately upon the completion of the Separation Plan (the “Term”). |
b. | Termination on Mutual Agreement. This Agreement may be terminated by mutual agreement of the Parties hereto at any time during the Term. |
c. | [Section intentionally left blank] |
d. | Termination on Insolvency of Invea. If Invea becomes bankrupt or insolvent, or makes any assignment for the benefit of creditors, or if a receiver is appointed to take charge of its property and such proceeding is not vacated or terminated within thirty (30) days after its commencement or institution, InveniAI may immediately terminate this Agreement by written notice after the thirty (30)-day period has passed. Any such termination shall be without prejudice to accrued rights of InveniAI, and to other rights and remedies for default. |
e. | Termination for Breach. Either Party may terminate this Agreement upon thirty (30) days’ prior written notice if the other Party is in material breach of this Agreement and fails to cure such material breach within such thirty (30)-day period. |
9. | Miscellaneous. |
a. | Compliance with Applicable Law. In connection with the performance of this Agreement, both Parties shall comply with all applicable federal, state and local laws and regulations. Without limiting the foregoing, InveniAI shall maintain compliance with all laws and regulations governing the employment of its employees. The Parties shall cooperate with each other to effect such compliance. |
b. | Coordination Meetings. The Parties agree to meet and confer in good faith on a regular basis to discuss the Services provided hereunder. |
c. | Independent Contractors. The relationship between InveniAI on the one hand and INVEA on the other is that of independent contractors, and none of the provisions of this Agreement is intended to create, nor will be construed to create, an agency, partnership or joint venture relationship between the Parties. No Party to this Agreement or any of their respective officers, members or employees, will be deemed to be the agent, employee or representative of another Party by virtue of this Agreement. |
d. | Force Majeure. No Party shall be deemed to be in default of this Agreement if prevented from performing any obligation hereunder for any reason beyond its control, including but not limited to, acts of God, war, civil commotion, fire, flood or casualty, labor difficulties, shortages of or inability to obtain labor, materials or equipment, governmental regulations or restrictions, or unusually severe weather. In any such case, the Parties agree to negotiate in good faith with the goal of preserving this Agreement and the respective rights and obligations of the Parties hereunder, to the extent reasonably practicable. It is agreed that financial inability shall not be deemed a matter beyond a Party’s reasonable control. |
e. | Entire Agreement. This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and supersede any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof. |
f. | Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. Neither Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party. In the event that InveniAI sells, exclusively out-licenses or otherwise disposes of AlphaMeld to a third party, InveniAI shall assign this Agreement to such third party and cause such third party to assume this Agreement, solely with respect to the continued provision of Services (including the use of AlphaMeld in connection therewith) to Invea. |
g. | Counterparts. This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together will constitute one and the same instrument. The transmission of a copy of an executed signature page hereof by facsimile or portable document format (.pdf) shall have the same effect as the delivery of a manually executed counterpart hereof. |
h. | Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. |
i. | Notices. All notices, requests, demands, claims, and other communications hereunder shall be in writing and delivered to a Party at the address listed above. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (a) when delivered personally to the recipient, (b) one (1) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), or (c) four (4) business days after being mailed to the recipient by certified or registered mail. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. |
j. | Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. BOTH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. |
k. | Amendments. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by both of the Parties. |
l. | Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. |
m. | Incorporation of Exhibits. The Exhibits identified in this Agreement are incorporated herein by reference and made a part hereof. |
n. | No Waiver. The failure of any Party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. The waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. No right, remedy or election given by any term of this Agreement shall be deemed exclusive but shall be cumulative with all of the rights, remedies and elections available at law or in equity. |
[Signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Separation and Shared Services Agreement as of the Execution Date.
INVENIAI LLC | INVEA THERAPEUTICS, INC. | |||
By: | /s/ Aman Kant | By: | /s/ Krishnan Nandabalan | |
Name: | Aman Kant | Name: | Krishnan Nandabalan | |
Title: | Chief Business Officer | Title: | Chief Executive Officer |
Exhibit 10.5
AMENDMENT NO. 1 TO SHARED SERVICES AGREEMENT
This Amendment No. 1 (this “Amendment”) is entered into as of this 1st day of January 2023 and hereby amends the Shared Services Agreement (the “Agreement”) dated November 24, 2021 by and between InveniAl LLC, a Delaware limited liability company (“InveniAl”), and Invea Therapeutics, Inc., a Delaware corporation (“Invea”).
The Agreement shall remain in full force and effect, except as is otherwise provided herein.
1. | The first sentence of Section 1(a) of the Agreement is hereby amended and restated in its entirety as follows: |
“Office Space. InveniAl shall make available to Invea sufficient space in the office leased by InvenAl and located at 2614 Boston Post Road Suite 33B and 33AR, Guilford, CT 06437 (the “Office”) during the Term (as defined below (the “Invea Space”), to use for all purposes related to the conduct of Invea’s business.”
2. | Clause (ii) of Section 2(c) of the Agreement is hereby amended and restated in its entirety as follows: |
“Invea shall pay to InveniAl the sum of the amounts calculated by multiplying the actual hours spent towards Services for and on behalf of Invea with the most current rates for each type of employee for Services by InveniAl as outlined in the statements of work.”
3. | Clause (iii) of Section 2(c) of the Agreement is hereby deleted in its entirety. |
4. | Exhibit A of the Agreement is hereby amended as follows: |
The “Financing” clause shall be deleted in its entirety and replaced with the following:
“Financing: Invea will be initially supported by InveniAl (parent) with grid note for up to $4M. Invea is expect to obtain financing through private or public investment.”
Clause (iii) of Section II of Table 1 is deleted in its entirety.
Section (III) (Financial Support & Payment: Grid Note for $4M) is amended under “Expected Timeframe” by removing all language and replacing it in its entirety with the following:
“Repaid upon the earlier of December 31, 2023 or $25M cumulative financing.”
5. | Exhibit B of the Agreement is hereby amended as follows: Section A:2(b) is removed in its entirety and replaced with the following: |
“InveniAl shall make available, through a statement of work, employees for the performance of the services listed in this Section 2. Each statement of work shall include hourly rates and FTE requirements on a case by case basis.
a. | 1-VP Translational Drug Discovery |
b. | 1- AI Applications Support |
c. | 1 — Computational biologists |
d. | 1 — Director of AI Applications |
e. | 1 — Financial Support” |
Section A:3 is removed in its entirety.
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date and year first above written.
INVENIAI LLC | ||
By: | /s/ Krishnan Nandabalan | |
Name: | Krishnan Nandabalan | |
Title: | CEO & President | |
INVEA THERAPEUTICS, INC. | ||
By: | /s/ Michael J. Aiello | |
Name: | Michael J. Aiello | |
Title: | CFO |
Agreed to and acknowledged:
INVENIAI LLC | ||
By: | /s/ Krishnan Nandabalan | |
Name: | Krishnan Nandabalan | |
Title: | CEO & President | |
INVEA THERAPEUTICS, INC. | ||
By: | /s/ Michael J. Aiello | |
Name: | Michael J. Aiello | |
Title: | CFO |
Exhibit 10.7
Certain information has been excluded from this agreement (indicated by “[***]”) because such information (i) is not material and (ii) is the type that the registrant treats as private or confidential.
LICENSE AGREEMENT
ASB17061 (Chymase Inhibitor)
This LICENSE AGREEMENT is made and entered into as of Septebmer 1st, 2021 (the “EFFECTIVE DATE”), by and between InveniAI LLC, a Delaware corporation located at 2614 Boston Post Road, Suite 33B, Guilford, CT 06437, U. S. A. (“INVENIAI”) and Daiichi Sankyo Company, Limited, a Japanese corporation located at 3-5-1, Nihonbashi-honcho, Chuo-ku, Tokyo 103-8426, Japan (“DS”).
BACKGROUND
WHEREAS, DS is dedicated to the creation and supply of innovative pharmaceutical therapies to improve standards of care and address diversified, unmet medical needs of people globally by leveraging world-class science and technology. In addition to a strong portfolio of active therapies in clinical trials, DS also has a portfolio of drugs discontinued in clinical trials including ASB17061, a chymase inhibitor that DS discontinued in Phase 2 clinical trials in atopic dermatitis; and
WHEREAS, INVENIAI has developed a platform for the identification of potential pharmaceutical product opportunities called Artificial Intelligence Innovation Lab, consisting of (i) its proprietary AlphaMeldTM platform, which is a cloud-based Artificial Intelligence platform that utilizes proprietary machine learning and deep learning based neural networks to identify product opportunities in therapeutic areas, (ii) cross-functional teams at its Integrated Center of Excellence, and (iii) domain expertise, to generate novel pharmaceutical product concepts and identify potential approaches to development of such concepts; INVENIAI has developed a novel hypothesis for ASB17061; and
WHEREAS, INVENIAI desires the right to develop, test, certify for marketing, and commercialize throughout the world one or more human therapeutic products containing ASB17061 as described in this AGREEMENT; and
WHEREAS, DS has intellectual property and substantial know-how and expertise relating to ASB17061 and its manufacture; and
WHEREAS, DS, on the terms of this AGREEMENT, is willing to license INVENIAI under the DS PATENTS and DS KNOW-HOW for the development and commercialization of PRODUCTs;
NOW, THEREFORE, the PARTIES hereby agree as follows:
1. | DEFINITIONS |
For the purposes of this AGREEMENT, the following words and phrases, whether used in the singular or plural, shall have the following meanings:
1.1 “AFFILIATE” shall mean any corporation, partnership or other entity, whether de jure or de facto, that, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership or control with, a PARTY, where ownership or control means the ownership or voting control of at least fifty per cent (50%) of the outstanding voting stock or other equity interests of a corporation, partnership or entity (or such lesser percentage that is in a particular jurisdiction the maximum percentage allowed to be owned by a foreign owner).
1.2 “AGREEMENT” shall mean this License Agreement including all Schedules and Exhibits to this License Agreement.
1.3 “ASB17061” shall mean the chymase inhibitor developed by DS and designated ASB17061. Chemical structure of ASB17061 is described in Exhibit A attached hereto.
1.4 “CHANGE OF CONTROL” as to a PARTY shall mean that: (i) any person or entity acquires, directly or indirectly, the beneficial ownership of any voting security of such PARTY or the percentage ownership of a person or entity in the voting securities of such PARTY is increased through stock redemption, cancellation or other recapitalization, and immediately after such acquisition or increase such person or entity is, directly or indirectly, the beneficial owner of voting securities representing fifty percent (50%) or more of the total voting power of the then-outstanding voting securities of such PARTY; (ii) the stockholders or equity holders of such PARTY shall approve a merger, consolidation, recapitalization, or reorganization of such PARTY, a reverse stock split of outstanding voting securities (or consummation of any such transaction if stockholder or equity holder approval is not obtained), other than any such transaction which would result in stockholders or equity holders of such PARTY immediately prior to such transaction owning at least 50% of the outstanding securities of the surviving entity in such transaction immediately following such transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or (iii) the stockholders or equity holders of such PARTY shall approve a plan of complete liquidation of the PARTY or an agreement for the sale or disposition by the PARTY of all or substantially all of that portion of the PARTY’s assets that bears on or is required for performance under this AGREEMENT.
1.5 “COMMERCIALLY REASONABLE EFFORTS” means that effort [***] taking into account, by example and without limitation, such factors as [***]
1.6 “DS KNOW-HOW” shall mean the inventions, discoveries, processes, methods (including pharmacokinetic and other assay methods), all information (including regulatory data, dossiers, data from all clinical and preclinical studies, documentation of pharmacokinetics, pharmacodynamics and safety of ASB17061 as in the IND dossier), and know-how owned and/or controlled by DS and/or any of its AFFILIATES as of the EFFECTIVE DATE that is not generally known and is reasonably necessary or useful for the EXPLOITATION of ASB17061 but excluding any invention to the extent covered or claimed by a DS PATENT.
1.7 “DS PATENT(S)” shall mean (a) the patent applications, divisional, re-examination, and reissue patent applications and patents and counterpart patent applications and patents in any country that claim priority therefrom set forth in Exhibit B (Patent List) and (b) EXTENSIONS to (a) and (b)
1.8 “EFFECTIVE DATE” shall have the meaning given by the preamble to this AGREEMENT.
1.9 “EMEA” shall mean the European Agency for the Evaluation of Medicinal Products.
1.10 “EXPLOIT” shall mean to make, have made, import, use, sell, or offer for sale, including to research, develop, commercialize, register, modify, enhance, improve, manufacture, have manufactured, hold or keep (whether for disposal or otherwise), formulate, optimize, have used, export, transport, distribute, promote, market, have sold or otherwise dispose of, and EXPLOITATION shall be construed accordingly.
1.11 “EXTENSION(S)” shall mean any rule, process or policy whereby either the duration of any patent may be extended or the expiration thereof may be delayed, and/or any form of governmentally-recognized marketing, data or regulatory exclusivity that may be obtained or continued for a PRODUCT, together with the result of pursuing or applying such rule, process or policy, including Supplementary Protection Certificates, data package exclusivity and other patent term extensions (including those available under the Hatch Waxman Act (United States Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417) and any amendments thereto, patent term adjustments under 35 USC § 154, and extensions under 35 USC § 156), orphan drug designations, and marketing exclusivity rights based on pediatric testing or applications.
1.12 “FDA” shall mean the Food and Drug Administration of the US.
1.13 “FIELD” shall means all human diseases. For clarity, [***].
1.14 “FIRST CLINICAL TRIAL” shall mean the initiation of the first clinical trial of the first PRODUCT that is started (which initiation shall occur when the first patient receives the first dose),
1.15 “GOVERNMENTAL APPROVAL” shall mean all approvals, product and/or establishment licenses, registrations, permits, or authorizations, including pricing and reimbursement approvals, of any federal, state or local regulatory agency, department, bureau or other GOVERNMENTAL AUTHORITY, necessary for the manufacture, packaging, distribution, use, storage, importation, export, transport, marketing and sale of a PRODUCT for therapeutic use in humans.
1.16 “GOVERNMENTAL AUTHORITY” shall mean any national, supra-national (e.g., EMEA, FDA), regional, state or local regulatory agency, department, bureau or other governmental entity responsible for issuing any technical, medical or scientific licenses, registrations, authorizations and/or approvals of ASB17061, and pricing, third party reimbursement or labelling approvals that are necessary for the manufacture, distribution, use, storage, importation, export, transport, marketing and sale of ASB17061.
1.17 “INDICATION” shall mean the disease or condition that a particular PRODUCT is intended to treat. Potential INDICATIONS for PRODUCTs will be deemed for purposes of this AGREEMENT to be [***].
1.18 “MAA” or “NDA” means a new drug, biologic or other application for product license approval, health registration, marketing authorization application, common technical document, regulatory submission, notice of compliance or similar application required to be approved before commercial sale or use of a PRODUCT as a pharmaceutical or medicinal product in any formulation or dosage form (excluding all pricing and reimbursement approvals).
1.19 “NET SALES” shall mean [***].
1.20 “PHASE II CLINICAL TRIAL” shall mean a well-controlled clinical study, as set forth in the DEVELOPMENT PLAN, that is conducted by or for INVENIAI or its sublicensees and that involves the administration of the PRODUCT to human beings, and in which the primary objective is to obtain formal proof of efficacy of the PRODUCT in a sub-group of patients or in a general population
1.21 “PHASE III CLINICAL TRIAL” shall mean any clinical study, as set forth in the DEVELOPMENT PLAN for any INDICATION, that is conducted after the PHASE II CLINICAL TRIAL by or for INVENIAI or its sublicensees and that involves the administration of a PRODUCT to humans, and in which the study design has been developed in consultation with the EMEA or FDA or equivalent regulatory agency in the TERRITORY to achieve the primary objective of the study providing a basis for filing an MAA or NDA or their equivalent in any country.
1.22 “PRODUCT” shall mean any product in the FIELD containing ASB17061 or any salt, free acid or free base, solvate, hydrate and polymorphic form thereof as either the single active ingredient or as one of multiple active ingredients.
1.23 “QUARTER” shall mean each of the three-month periods ending on March 31, June 30, September 30 and December 31 of any YEAR.
1.24 “TERRITORY” shall mean the world.
1.25 “THIRD PARTY” shall mean any person or entity other than the PARTIES and their AFFILIATES.
1.26 “US” shall mean the United States of America and its territories and possessions, including the Commonwealth of Puerto Rico.
1.27 “USD” or “$” shall mean United States Dollars.
1.28 “YEAR” shall mean a calendar year or a portion thereof during the term of this AGREEMENT, ending either on December 31 or on the termination of this AGREEMENT.
1.29 Word Usage. References to a “day” or “days” are to calendar day(s) unless otherwise indicated. The words “including”, “includes”, “e.g.”, and “such as” are used in their non-limiting sense and have the same meaning as “including without limitation” and “including but not limited to”. References to Sections, subsections, and clauses in this AGREEMENT are to the same with all their subpart. “Herein” means anywhere in this AGREEMENT. The headings used in this AGREEMENT shall not be used as an instrument of interpretation or definition, but shall only serve for purposes of convenience.
2. | LICENSES |
2.1 DS PATENT and DS KNOW-HOW license. DS grants to INVENIAI, and INVENIAI accepts, the exclusive right and license, with the right of sublicense, throughout the TERRITORY under the DS PATENTS and DS KNOW-HOW to research, develop, make, have made, use, sell, offer for sale, have sold, import and otherwise EXPLOIT PRODUCTs for all INDICATIONS in the FIELD in the TERRITORY.
2.2 Exclusivity. INVENIAI shall not directly or indirectly market, distribute or sell, or license any THIRD PARTY to market, distribute or sell any products [***] in the FIELD in any country in the TERRITORY during the [***].
2.3 Document Disclosure. Within a reasonable period that will be agreed between PARTIES, DS will disclose all the DS’ document and data listed in Exhibit C to this AGREEMENT. DS otherwise has no obligation to disclose any technical and personnel supports and/or instructions including, but not limited to, teleconference or hands-on guidance. DS will disclose such document and data in the language in which they were drafted and DS shall not be obligated to translate those. Disclosure of such document and data will be done through an electronic data room or other reasonable means, as determined by DS after consulting with INVENIAI. [***]
3. | RESEARCH AND DEVELOPMENT |
3.1 Development Risk. INVENIAI, as between INVENIAI and DS, will assume full financial risk and cost and regulatory responsibility for the further preclinical and clinical development, the manufacture of ASB17061 as active pharmaceutical ingredient and dosage forms for the commercialization of PRODUCTs.
3.2 IND applications. DS will transfer ownership of the current IND of ASB17061 and PRODUCT, including those related to synthesis of ASB17061 and production of ASB17061 and PRODUCT dosage forms, and the equivalent regulatory filings in countries outside the US to INVENIAI at INVENIAI’s cost; to the extent permitted by law. INVENIAI shall then be the holder of such IND and equivalent filings thereof and responsible for compliance with any and all regulatory requirements.
4. | DILIGENCE AND CAPABILITIES, PLANS AND REPORTING |
4.1 Diligence. INVENIAI shall use COMMERCIALLY REASONABLE EFFORTS to develop PRODUCT(S), obtain GOVERNMENTAL APPROVALS for PRODUCT(S), and commercialize PRODUCT(S) in the TERRITORY and such other countries in the TERRITORY that INVENIAI determines, using commercially reasonable judgment, are appropriate for such commercialization.
4.2 Progress Reports. INVENIAI will provide [***] to DS throughout the term of this AGREEMENT, summarizing INVENIAI’s activities and progress during the period starting [***] related to the development of PRODUCTs, [***]. Such [***] reports shall be provided within [***] of the [***]. Nevertheless, INVENIAI shall in all events be and remain solely responsible for the completion of the development of PRODUCTs, their GOVERNMENTAL APPROVAL, the manufacture and packaging of PRODUCTs from ASB17061, and their commercialization.
4.3 PRODUCT Launch. Without limiting its general obligations under Section 4.1, INVENIAI will exert its COMMERCIALLY REASONABLE EFFORTS to obtain, as rapidly as possible, all required pricing approvals and approvals of labelling and marketing materials for a PRODUCT in each country in the TERRITORY in which a GOVERNMENTAL APPROVAL for such PRODUCT has been granted, and to launch such PRODUCT in such country. Notwithstanding the foregoing, DS acknowledges that it may not be commercially reasonable for INVENIAI to seek pricing approvals or launch a PRODUCT in every country.
5. | MARKETING |
INVENIAI shall be solely responsible for the formulation and execution of a marketing strategy for the PRODUCTs and for all promotional, marketing and commercialization of the PRODUCTs in each country in the TERRITORY that INVENIAI determines, using commercial reasonable judgment, to market PRODUCTs in, either using its own or/and its AFFILIATE resources or by partnering with a THIRD PARTY in a co-commercialization arrangement, or by sublicensing such rights to a THIRD PARTY.
6. | PAYMENTS AND ROYALTIES |
6.1 Initial payment. Within [***] days of execution of this AGREEMENT, INVENIAI would pay DS a one-time, non-refundable, upfront payment in the amount of two hundred and fifty thousand US dollars ($250,000).
6.2 Milestone payments. INVENIAI will pay DS up to a total of six hundred thousand US dollars ($600,000) milestone payments after achieving of the following milestone events with a PRODUCT, in each case within [***] days, as follows:
[***]Each milestone payment shall be paid only upon the first achievement of such milestone and no amounts would be due for subsequent or repeated achievements of the same milestone. In the event that next milestone event(s) occurs prior to achievement of one or more former milestone events, or the FIRST COMMERCIAL SALE (defined below) occurs prior to achievement of one or more of milestone events, INVENIAI shall pay DS the unpaid milestone payments upon occurrence of the FIRST COMMERCIAL SALE.
6.3 Royalties.
6.3.1 Calculation. INVENIAI will pay DS a royalty equal of [***] of NET SALES during each QUARTER [***]. INVENIAI’s obligation to pay royalties (the “ROYALTY TERM”) will, on a country-by-country basis, commence in the TERRITORY on the date of the first sale of the PRODUCT therein (the “FIRST COMMERCIAL SALE”) and end on the latest of (a) the date of expiration or termination of all valid claims of PATENTS covering PRODUCTs, or (b) date of expiration of any applicable market exclusivity period for the PRODUCT; or (c) the tenth (10th) anniversary of the FIRST COMMERCIAL SALE in such country. Notwithstanding the foregoing, on a country-by-country, and PRODUCT-by-PRODUCT basis, INVENIAI may extend the applicable ROYALTY TERM for additional two (2) years with [***] prior written notice to DS.
6.3.2 Exchange rate. Royalty payments will be made in USD. Where NET SALES are received in currencies other than USD, INVENIAI will calculate the applicable royalty in USD using the average of (a) the exchange rate at the end of the last day of the applicable QUARTER and (b) the exchange rate at the end of the last day of the immediately prior QUARTER, in each case as provide by The Wall Street Journal (US, Eastern Edition) or such other source as the PARTIES mutually agree.
6.4 Payment Method. All payments by INVENIAI to DS under this AGREEMENT shall be paid in USD, and all such payments shall he made by bank wire transfer in immediately available funds to the following bank account or otherwise designated by DS in writing:
[***]
6.5 Late payment. All payments under this AGREEMENT shall earn interest from the date due until paid at a rate equal to the lesser of the maximum rate permissible under applicable law or [***].
6.6 Tax withholding. If local law requires INVENIAI to withhold tax on payments under this AGREEMENT, INVENIAI may withhold such taxes. Such withholdings on payments under this AGREEMENT are only allowed if INVENIAI reasonably cooperates with DS in benefiting from the reduced withholding tax laid down in the US-Japan Tax treaty and shall in no case exceed the withholding tax rate for royalty payments mentioned irrespective of whether the payments are made by INVENIAI a sublicensee or any other party, such that for the tax purpose all payments due under this AGREEMENT by INVENIAI shall either be made or deemed to have been made by INVENIAI, being a US company. DS will reasonably assist INVENIAI in benefiting from the reduced withholding tax rate as laid down in the tax treaty, which withholding tax rate is currently zero percent (0%). In case the Double Taxation Convention should be amended in the future, INVENIAI will (i) promptly notify DS of such requirement, (ii) remit such amount to the proper tax authorities, and (iii) provide DS with the necessary tax receipts in a timely manner.
6.7 Other taxes. Except with respect to withholding taxes, any sales taxes, turnover taxes, value added taxes and indirect taxes, which are applicable to the royalty and milestones payments or any of the activities of INVENIAI or its AFFILIATES or distributors, shall, as between INVENIAI and DS be borne or reimbursed by INVENIAI; provided that INVENIAI shall not be responsible for any income taxes (or any other taxes levied on DS’s receipt of any payments) assessed on DS as a result of any royalty, milestone or other payments made to it pursuant to this AGREEMENT. The PARTIES shall cooperate in good faith to reduce as far as law permits in a given country the taxes imposed on any payment or activities under this AGREEMENT.
6.8 NET SALES Reports. Within [***] of the close of each QUARTER during which NET SALES are recognized, INVENIAI shall deliver a report specifying in the aggregate and on a country-by-country [***] basis: [***] DS shall issue INVENIAI an invoice for the amount of the corresponding royalty payments, which invoice INVENIAI shall pay DS within [***] of its receipt thereof. All such reports are INVENIAI CONFIDENTIAL INFORMATION.
6.9 Right to audit. INVENIAI shall keep and maintain, and shall cause its AFFILIATES and sublicensees to keep and maintain detailed and accurate books and records with regard to all sales of PRODUCTs, NET SALES, and payments to be made under this AGREEMENT, and the basis of calculation thereof, for a period of at least [***] after the applicable payment of royalties. DS shall have the right, at its own expense, on reasonable notice and not more often than once annually, to have INVENIAI’s and/or its AFFILIATES’ or sublicensees’ royalty reports, inspected and audited by an independent auditor appointed by DS and reasonably acceptable to INVENIAI, during normal business hours for the purposes of verifying the amount of royalties, payments and other charges due. DS shall maintain the confidentiality of CONFIDENTIAL INFORMATION obtained in any such inspection or audit, and shall put the information and records inspected to no other use than the verification of amounts due under this AGREEMENT and the enforcement of this AGREEMENT. If such an audit determines that payments due to DS made during the period under review were [***] or more below the amount actually due, then the reasonable expense of the audit shall be borne by INVENIAI, and INVENIAI shall pay to DS any amount shown to be due by the audit within [***] after receipt of a notice from DS, containing a copy of the audit report and setting forth the amount due.
7. | SUPPLY OF ASB17061 AND PRODUCTION OF PRODUCT |
7.1 ASB17061 and PRODUCT supplies. DS will use COMMERCIALLY REASONABLE EFFORTS to supply existing batches of ASB17061 [***] to INVENIAI at no cost; provided, however, that once they have left DS’ premises, transportation of such existing batches shall be made by sole cost, risk and responsibility of INVENIAI. [***]. For clarity, [***]. Except for the transfers of the existing batches, DS has no obligation to provide any technical supports and instructions with regard to CMC and clinical supply of ASB17061 and PRODUCTs including, but not limited to, teleconference or hands-on guidance.
7.2 Commercial Production, Marketing and Distribution. INVENIAI shall be responsible for (a) manufacture and production of PRODUCTs and dosage forms in sufficient quantities to service worldwide sales of PRODUCTs, (b) marketing and distribution of PRODUCTs upon GOVERNMENTAL APPROVAL, either using its own or/and AFFILIATE’s resources or by partnering with a THIRD PARTY in a co-commercialization arrangement, or by sublicensing such rights to a THIRD PARTY. INVENIAI shall also be responsible for obtaining all necessary approvals for the manufacture and distribution of PRODUCTs and dosage forms.
7.3 PRODUCT Recall. Except as provided in any supply agreement, any and all recall decisions with respect to ASB17061 or PRODUCT distributed by INVENIAI shall be the responsibility of INVENIAI, at its risk and expense.
8. | GOVERNMENTAL APPROVALS / REGULATORY AFFAIRS. |
8.1 Regulatory affairs related to ASB17061. INVENIAI will be responsible, at its risk and expense, for preparing, filing, and prosecuting any and all regulatory filings required for the production of ASB17061.
8.2 Responsibility for REGULATORY APPLICATIONS. INVENIAI is responsible, at its risk and expense, for preparing, filing, and prosecuting all regulatory applications with respect to PRODUCTs, and for obtaining all necessary GOVERNMENTAL APPROVALS for the PRODUCTs, throughout the TERRITORY.
8.3 General responsibility. INVENIAI shall have exclusive authority and responsibility for complying with all regulatory requirements and maintaining all GOVERNMENTAL AUTHORITY contacts relating to regulatory applications or otherwise with respect to the PRODUCT in the TERRITORY, including obtaining all required GOVERNMENTAL APPROVALS, the maintaining and updating thereof, the reporting of product complaints or any adverse drug reactions, the compliance of promotional materials with applicable rules and regulations, and the filing of promotional materials with GOVERNMENTAL AUTHORITIES, if permissible according to mandatory applicable laws.
8.4 Regulatory communications. As part of INVENIAI’s periodic reports, INVENIAI shall provide to DS summaries of all major communications from or to any GOVERNMENTAL AUTHORITY regarding any GOVERNMENTAL APPROVALS relating to the PRODUCT, or their manufacture or sale, and shall promptly report to DS communications from or to any GOVERNMENTAL AUTHORITY regarding any recalls, facility suspensions or closures, or serious adverse events relating to the PRODUCT.
8.5 Approval ownership. All GOVERNMENTAL APPROVALS within the TERRITORY relating to ASB17061 or a PRODUCT obtained by INVENIAI shall be the property of INVENIAI or any applicable INVENIAI AFFILIATE and shall be held, to the extent legally permissible, in INVENIAI’s or such AFFILIATE’s name.
8.6 Delegation. INVENIAI may delegate any of its rights or obligations under this Section 8 to any sublicensee or THIRD PARTY with which INVENIAI is developing or commercializing any PRODUCT.
9. | INTELLECTUAL PROPERTY |
Any and all intellectual property conceived of, discovered, developed, made and/or reduced to practice by or on behalf of INVENIAI under this AGREEMENT in regards to the PRODUCT (“INVENIAI PATENT(S)”) will be owned by INVENIAI. Any and all rights concerning the DS PATENTS shall remain the sole property of DS, except as otherwise provided for herein.
10. | PATENT PROSECUTION, INFRINGEMENTS AND LITIGATION |
10.1 PATENT prosecution. INVENIAI shall pursue patent protection for any INVENIAI PATENT, at its own expense for such pursuit. DS shall retain the sole right and the obligation to diligently use COMMERCIALLY REASONABLE EFFORTS to prosecute and maintain the DS PATENTS. DS shall use COMMERCIALLY REASONABLE EFFORTS and inform INVENIAI in a timely manner of any changes in the status of DS PATENTS. If DS, in its sole discretion, decides to abandon the prosecution or maintenance of DS PATENTS, then DS shall notify INVENIAI in writing thereof, and following the date of such notice, INVENIAI shall have the right to assume control, at its own expense, of the prosecution and maintenance of DS PATENTS. Should INVENIAI exercise such rights, DS will assign and transfer the affected DS PATENTS to INVENIAI at no cost to INVENIAI, and such assigned DS PATENTS will be deemed INVENIAI PATENTs under this AGREEMENT. INVENIAI will be responsible for registering such transfer to each patent office at its own expense.
10.2 EXTENSIONS. INVENIAI shall be responsible for obtaining all available EXTENSIONS to such INVENIAI PATENTS, including EXTENSIONS based on a marketing, data or regulatory exclusivity (e.g., pediatric exclusivity, data package exclusivity, formulation and dosage etc.) relating to PRODUCTs at its own expense. INVENIAI shall cooperate with DS in the course of the procedure for EXTENSIONS of DS PATENTS relating to PRODUCTs and shall bear expense of such EXTENSIONS of DS PATENTS.
10.3 THIRD PARTY infringement suits. In the event of the institution of any suit by a THIRD PARTY against either PARTY, INVENIAI, or their respective AFFILIATES, sublicensees or distributors for patent infringement involving the manufacture, use, sale, distribution or marketing of ASB17061 or PRODUCT anywhere in the TERRITORY, INVENIAI (or whose AFFILIATES or distributors are sued) shall be responsible for any defense of such suit at its own expense.
10.4 PATENT enforcement. In the event that DS or INVENIAI becomes aware of actual, suspected or threatened infringement of a DS PATENT anywhere in the TERRITORY, that PARTY shall promptly notify the other PARTY thereof, with all available information about the situation. INVENIAI shall have the right obligation, to bring, at its own expense, an appropriate action against any THIRD PARTY and to defend any opposition or declaratory judgment action for non-infringement or invalidity. DS shall provide reasonable assistance at INVENIAI’s expense in any such enforcement efforts or litigation at the reasonable request. INVENIAI shall notify DS prior to bringing such enforcement action and shall keep DS timely informed of all actions important to DS’s right and DS PATENTS. DS shall have the right, but not the obligation, at its own expense to join as a party in any enforcement action brought by INVENIAI.
10.5 Recoveries. Any damages paid by THIRD PARTY as a result of such an enforcement action (whether by way of settlement or otherwise) will be applied first to reimburse both PARTIES for all costs and expenses incurred, with the remainder [***].
11. | PUBLICATIONS |
11.1 The PARTIES shall not disclose to the public or any THIRD PARTY the or the terms described in this AGREEMENT except with the prior written consent of the other PARTY or as required by law. Notwithstanding the foregoing, (a) either PARTY may disclose such terms as are required to be disclosed in its publicly-filed financial statements or other public statements pursuant to applicable laws, regulations and stock exchange rules (e.g., the US. Securities and Exchange Commission or any other stock exchange on which securities by such PARTY may be issued); provided, that in making such disclosures, each PARTY shall redact the terms of this AGREEMENT to the extent reasonably possible, (b) either PARTY shall have the further right to disclose the material financial terms of this AGREEMENT under confidentiality undertakings to any potential acquirer, merger partner or potential providers of financing and their advisors, and (c) either PARTY shall have the right to disclose information regarding the development or commercialization status of a PRODUCT to the extent such disclosure is customary and material to their current or prospective investors, or required by applicable laws or stock exchange rules. Neither PARTY shall make other statement to the public regarding the execution and/or any other aspect of the subject matter of this AGREEMENT, except: (i) where such PARTY reasonably believes disclosure is required under applicable laws or ethical commercial practice, (ii) for customary discussions with current or prospective investors and analysts, and (iii) such PARTY may use the text of a statement previously approved by the other PARTY. Either PARTY shall make COMMERCIALLY REASONABLE EFFORTS to coordinate with the other PARTY all press releases and announcements that relate to this AGREEMENT or any PRODUCT developed under this AGREEMENT.
11.2 Neither PARTY shall make any form of scientific publication which discloses CONFIDENTIAL INFORMATION of the other PARTY or information to which such other PARTY has an exclusive license without the prior written consent of the other PARTY, except that nothing in this AGREEMENT will limit INVENAI’s right to disclose the contents of any document or documents supplied under Section 2.3 pertaining to scientific, in-vivo (pk, pd, toxicology), clinical data on human safety & efficacy; provided, however, that INVENAI shall not disclose DS’ CONFIDENTIAL INFORMATION relating to CMC and manufacturing information of the PRODUCT without the prior written consent of DS. For clarity, INVENIAI will not publish any CONFIDENTIAL INFORMATION comprising personal data or protected health information in documents supplied under Section 2.3.
12. | CONFIDENTIALITY |
12.1 “CONFIDENTIAL INFORMATION” means information, data and materials a PARTY (“RECIPIENT”) receives from the other PARTY (“DISCLOSER”) orally, visually or in writing or to which RECIPIENT gains access in the course of performing or exercising its rights under this AGREEMENT and, in each case, that (a) marked “Confidential” or “Proprietary,” (b) DISCLOSER advises RECIPIENT is “Confidential” or “Proprietary” at the time of disclosure or soon thereafter, or (c) RECIPIENT should reasonably know to be confidential or proprietary to DISCLOSER or another party with whom DISCLOSER does business.
12.2 RECIPIENT will not disclose the DISCLOSER’s CONFIDENTIAL INFORMATION to any THIRD PARTY except as a DISCLOSER officer approves in advance in writing (including by email), and will not use DISCLOSER CONFIDENTIAL INFORMATION for any purpose other the performance of this AGREEMENT. RECIPIENT will safeguard DISCLOSER’s CONFIDENTIAL INFORMATION and to protect it against disclosure, misuse, espionage, loss and/or theft by any person, including implementing adequate firewalls and data security protections.
12.3 RECIPIENT, notwithstanding the foregoing, will have no obligation under this Section 12 with respect to information RECIPIENT can demonstrate was (a) public knowledge as of the date of disclosure to RECIPIENT, other than as a result of acts attributable to RECIPIENT in violation hereof; (b) rightfully known by RECIPIENT (as shown by its written records) prior to the date of disclosure to RECIPIENT by a THIRD PARTY; (c) disclosed to RECIPIENT on an unrestricted basis from a THIRD PARTY not under a duty of confidentiality to the DISCLOSER; or (d) independently developed by employees or agents of RECIPIENT without access to the CONFIDENTIAL INFORMATION of the DISCLOSER. In addition, if RECIPIENT is required to disclose information by law, order or regulation of an administrative agency or a court of competent jurisdiction, RECIPIENT shall provide notice thereof to the DISCLOSER and grant the DISCLOSER a reasonable opportunity to object, time permitting, to any such disclosure or to request confidential treatment.
13. | REPRESENTATIONS, WARRANTIES AND DISCLAIMERS |
13.1 Representations and Warranties of DS. DS represents and warrants as follows as of the EFFECTIVE DATE:
13.1.1 The license, sale, manufacture or use of ASB17061 and the PRODUCTs contemplated under this AGREEMENT do not infringe any patent owned or controlled by DS or its AFFILIATES (other than the DS PATENTS licensed under this AGREEMENT) and, to DS’s knowledge, (a) the sale and use of ASB17061 and PRODUCTs does not infringe any existing valid and enforceable rights of any THIRD PARTY and (b) the manufacture of ASB17061 using the starting materials, intermediates, solvents, reagents, and any ancillary materials described by the DS KNOW-HOW does not infringe any existing valid and enforceable rights of any THIRD PARTY; and
13.1.2 DS owns or controls all the DS PATENTS and DS KNOW-HOW free and clear of any liens, licenses, obligations, transfer agreements, transfer restrictions, enforceable claims, royalties, reversionary rights or encumbrances whatsoever. DS is unaware of any assertion or claim challenging the ownership, use, validity or enforceability of any of the DS PATENTS, DS KNOW-HOW and, to DS’s knowledge, there is no basis for any such claim. Any licenses associated with the DS PATENTS and DS KNOW-HOW are valid and binding and are enforceable in accordance with their respective terms, and there are no material breaches or defaults under this AGREEMENT; and
13.1.3 DS is unaware of any infringement of the DS PATENTS by any THIRD PARTY; and
13.1.4 Any data and information provided to INVENIAI by DS prior to the EFFECTIVE DATE relating to the preclinical studies and clinical studies of ASB17061 and the PRODUCT accurately represent the underlying raw data in all material respects (except to the extent DS has notified INVENIAI that a specific document, report, or data set has not undergone quality control procedure). The data and information provided to INVENIAI or to be transferred under this AGREEMENT includes all information and data relating to any preclinical or clinical study conducted by DS or any of its licensees. DS has provided to, or made available for review by, INVENIAI all material reports and data collections containing information about adverse safety issues (including adverse drug experiences) related to ASB17061 and the PRODUCT of which it has knowledge; and
13.1.5 DS KNOW-HOW transferred to INVENIAI shall be all material know-how and methods used by DS to manufacture ASB17061, and, to DS’s knowledge, the DS KNOW-HOW provided under this AGREEMENT is sufficient to enable a reasonably experienced contract manufacturer to manufacture the ASB17061.
13.1.6 DS represents and warrants that it has made all payments to past and present employees and contractors in respect of any DS PATENTS and DS KNOW-HOW made prior to the EFFECTIVE DATE.
EXCEPT TO THE EXTENT PROVIDED HEREIN, DS DOES NOT WARRANT THE VALIDITY OF THE DS PATENTS, NONINFRINGEMENT OF THIRD PARTY PATENTS, THE USEFULNESS OF THE DS KNOW-HOW OR THE COMMERCIAL EXPLOITABILITY OR READINESS FOR PRODUCTION OF ASB17061 OR ANY PRODUCT.
13.2 Representations and Warranties of both PARTIES. Each of DS and INVENIAI hereby represent and warrants to the other PARTY that as of the EFFECTIVE DATE as follows:
13.2.1 It is duly organized, validly existing and in good standing under the laws of the jurisdiction of incorporation. It has the requisite legal and company power and authority to conduct its business as presently being conducted and as proposed to be conducted by it and is duly qualified to do business in those jurisdictions where its ownership of property or the conduct of its business requires; and
13.2.2 It has all requisite legal and company power and authority to enter into this AGREEMENT and to perform the services contemplated under this AGREEMENT. All company actions on its part, its boards of director or managers, or similar governing body and its equity holders necessary for (i) the authorization, execution, delivery and performance by it of this AGREEMENT, and (ii) the consummation of the transactions contemplated hereby, have been duly taken.
EXCEPT TO THE EXTENT PROVIDED HEREIN, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE DS PATENTS, THE DS KNOW-HOW, ASB17061, THE PRODUCT, OR ANY OTHER SUBJECT MATTER OF THIS AGREEMENT. EACH PARTY HEREBY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
14. | LIMITATION OF LIABILITY |
EXCEPT FOR BREACHES OF SECTION 12 (CONFIDENTIALITY), NEITHER PARTY SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER FROM THE PERFORMANCE OR BREACH OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT REDUCE OR AFFECT THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER SECTION 15. THE FOREGOING LIMITATIONS SHALL NOT AFFECT ANY LIABILITY OF A PARTY IN THE EVENT OF A PARTY’S WILLFUL MISCONDUCT.
15. | INDEMNIFICATION AND INSURANCE |
15.1 Indemnification by both PARTIES. Each PARTY shall indemnify and hold harmless the other PARTY and its AFFILIATES and their respective officers, directors, employees, agents, counsel, successors, and assigns (collectively “Entities”) from and against any and all losses, claims, damages and liabilities (and all expenses associated therewith, including reasonable attorneys’ fees, experts’ fees, and other defense costs at all levels of proceedings and preparation) arising out of or resulting from negligence or willful misconduct of such PARTY, including any breaches of any representation or warranty of such PARTY thereof.
15.2 Indemnification by INVENIAI. INVENIAI shall indemnify, defend and hold harmless DS and its Entities from and against losses, damages and liability to which DS or its Entities may become subject as a result of any THIRD PARTY claim against DS or its Entities from and against any and all losses, claims, damages and liabilities (and all expenses associated therewith, including reasonable attorneys’ fees, experts’ fees, and other defense costs at all levels of proceedings and preparation) arising out of arising or resulting from the research, development or commercialization of the PRODUCTs by INVENIAI, including any production, testing, regulatory approvals (or failure to obtain regulatory approvals), promotion, sale, labelling, recall, or use of any PRODUCT, including liabilities for personal injury or product liability, except to the extent such losses, claims, damages, and liabilities are the result of the negligence or intentional conduct of the INDEMNITEE (as hereinafter defined) of DS.
15.3 Indemnification procedures. The person or entity (“the INDEMNITEE”) that intends to claim indemnification under Section 15.1 shall promptly notify the PARTY required to indemnify under this AGREEMENT (“the INDEMNITOR”) of any loss, liability, damage or expense, or any claim, demand, action or other proceeding with respect to which the INDEMNITEE intends to claim such indemnification. The INDEMNITOR’s indemnity obligations under Section 15.1 shall not apply to amounts paid in any settlement if effected without the consent of the INDEMNITOR, which consent shall not be unreasonably withheld or delayed. The INDEMNITOR shall not settle or consent to an adverse judgment in any such claim, demand, action or other proceeding that adversely affects the rights or interests of any INDEMNITEE or imposes additional obligations on such INDEMNITEE, without the prior express written consent of such INDEMNITEE. The INDEMNITEE shall cooperate fully with the INDEMNITOR and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.
15.4 Insurance. During the term of this AGREEMENT [***], INVENIAI shall obtain and maintain, respectively, at its sole cost and expense, product liability insurance in amounts, which are reasonable and customary in the pharmaceutical industry for companies of comparable size and activities at the respective place of business of INVENIAI. Such product liability insurance to be maintained by INVENIAI shall insure against all liability, including personal injury, physical injury, or property damage arising out of the manufacture, sale, distribution, or marketing of any PRODUCT. INVENIAI shall provide written proof of the existence of such insurance to DS upon request.
16. | RELATIONSHIP |
This AGREEMENT shall not create any employer-employee relationship between the PARTIES, nor shall it be deemed to establish a joint venture or partnership between them. Neither PARTY shall at any time enter into or incur, or hold itself out to THIRD PARTIES as having the authority to enter into or incur, on behalf of the other PARTY, any commitment, expense or liability whatsoever. Nothing contained in this AGREEMENT shall be construed, by implication or otherwise, as an obligation incurred by either PARTY to enter into any further agreement with the other PARTY.
17. | ASSIGNMENT |
17.1 This AGREEMENT shall be binding upon and inure to the benefit of the PARTIES and their respective successors and permitted assigns. Neither PARTY shall assign its rights and obligations under this AGREEMENT unless: (i) such assignment is to an AFFILIATE or sublicensee of INVENIAI and INVENIAI remains obligated for all its obligations under this AGREEMENT, (ii) such assignment is to an AFFILIATE of DS and DS remains obligated for all its obligations under this AGREEMENT, (iii) such assignment is in to a successor in interest to the assigning PARTY by merger, corporate reorganization or sale of substantially all of the assigning PARTY’s outstanding equity, or the purchaser of all or substantially all of the assets of assigning PARTY to which this AGREEMENT relates, or (iv) the other PARTY grants its prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
17.2 Neither the use of contractors to make or package PRODUCTs for sale by INVENIAI or its AFFILIATES nor the appointment of distributors or other resellers of PRODUCTs shall constitute the grant of sublicenses by INVENIAI.
18. | ENTIRE AGREEMENT |
This AGREEMENT embodies the entire understanding between the PARTIES and supersedes any prior understandings and agreements between and among them respecting the subject matter hereof. There are no implied licenses, representations, agreements, arrangements or understandings, oral or written, between the PARTIES relating to the subject matter of this AGREEMENT which are not fully expressed in this AGREEMENT.
19. | SEVERABILITY |
Any of the provisions of this AGREEMENT that are determined to be invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining provisions hereof and without affecting the validity or enforceability of any of the terms of this AGREEMENT in any other jurisdiction.
20. | WAIVER AND AMENDMENT |
20.1 No waiver of this AGREEMENT or any of the provisions hereof, shall be valid unless made in writing and signed by a duly authorized representative of the PARTY sought to be bound thereby. The waiver by either PARTY of any right under this AGREEMENT or of a breach by the other PARTY shall not be deemed a waiver of any other right under this AGREEMENT or of any other breach by said other PARTY whether of a similar nature or otherwise.
20.2 This AGREEMENT may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of both PARTIES.
21. | COUNTERPARTS |
This AGREEMENT may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This AGREEMENT may be executed by pdf or other electronically transmitted signatures and the PARTIES agree that execution of this AGREEMENT by industry standard electronic signature software shall have the same legal force and effect as the exchange of original signatures.
22. | FORCE MAJEURE |
Neither PARTY shall be liable to the other for a failure to perform any of its obligations under this AGREEMENT, except for payment obligations previously incurred, during any period in which such performance is delayed due to circumstances beyond its reasonable control, including pandemic, public health emergency, war, earthquake, hurricanes, tornados and cyclones, Act of God, labor difficulties of THIRD PARTIES, interruption of transit, delays in performance or supplies from its suppliers and subcontractors, acts of any government or government agency or GOVERNMENTAL AUTHORITY, acts, omissions or delays of the other PARTY, delays in receiving any INDs or REGULATORY APPROVALS; provided such PARTY notifies the other of the delay and uses its reasonable best efforts to avoid or remove such causes of non-performance and continues performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the PARTIES shall discuss what, if any, modification of the terms of this AGREEMENT may be required in order to arrive at an equitable solution. If either PARTY, however, is unable to fulfil its obligations under this AGREEMENT due to such events, and such inability continues for a period of more than [***], then the other PARTY shall have the right to terminate this AGREEMENT by giving at least [***] prior notice of termination to the other PARTY.
23. | DISPUTE RESOLUTION |
23.1 If a dispute arising out of or in connection with this AGREEMENT, including any question regarding its existence, validity or termination arises between the PARTIES relating to the interpretation or performance of this AGREEMENT or any other matter arising under this AGREEMENT, including the grounds for the termination hereof, the PARTIES agree to hold a meeting within [***] after notification by one PARTY to the other PARTY of such dispute expressly referring to this provision, attended by individuals from their respective senior management with decision-making authority, to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies.
23.2 If, within [***] after such meeting, or, if such meeting does not occur, within [***] months after the notification of the dispute, the PARTIES have not succeeded in resolving the dispute, such dispute, on the written request of one PARTY delivered to the other PARTY, shall be submitted to and settled by final and binding arbitration, in accordance with the Rules of the London Court of International Arbitration in effect on the date that a request for arbitration is filed, by three arbitrators. The seat of arbitration shall be The Japan Commercial Arbitration Association (JCAA) in Tokyo, Japan and the language of the proceedings shall be English. Judgment on the award of the arbitrators may be entered in any court having jurisdiction thereof. Without prejudice to the foregoing, either PARTY may seek appropriate preliminary or interim equitable relief from a court of competent jurisdiction.
23.3 Each PARTY is required to continue to perform its obligations under this AGREEMENT pending final resolution of any such dispute.
24. | ATTORNEYS’ FEES |
In any action or proceeding to enforce rights under this AGREEMENT, the prevailing PARTY shall be entitled to recover its costs and reasonable attorneys’ fees.
25. | GOVERNING LAW |
This AGREEMENT shall be exclusively governed by the laws of Japan, without giving regard to its conflict of law principles.
26. | NOTICES |
Any notice, request, approval or other document required or permitted to be given under this AGREEMENT shall be in writing and shall be deemed to have been given when delivered in person, or sent by overnight courier service, postage prepaid, or sent by certified or registered mail, return receipt requested, or by facsimile transmission, to the following addresses of the PARTIES and to the attention of the persons identified below (or to such other address, addresses or persons as may be specified from time to time in a written notice). Any notices given pursuant to this AGREEMENT shall be deemed to have been given and delivered upon the earliest of (i) if sent by courier service, the date.
(a) | If to DS: |
[***] |
(b) | If to INVENIAI: |
[***] |
27. | TERM AND TERMINATION |
27.1 Term. This AGREEMENT will be effective as of the EFFECTIVE DATE and, unless terminated earlier as provided in this Section 27, will remain in effect until the last to expire the ROYALTY TERM.
27.2 Termination by INVENIAI for Safety Reasons. At any time, INVENIAI may terminate this AGREEMENT in its entirety for any material safety reasons of the PRODUCT upon written notice to DS.
27.3 Termination for Material Breach. Either party will have the right to terminate this AGREEMENT in its entirety upon delivery of written notice to the other party in the event of any material breach by such other party of any material terms or conditions of this AGREEMENT, provided that such termination will not be effective if such breach has been cured (a) within [***] after written notice thereof is given by requesting party to breaching party in the event of a material breach that arises out of the failure to make a payment in accordance with the terms of this AGREEMENT or (b) within [***] after written notice thereof is given by requesting party to breaching party in the event of any other material breach.
27.4 Termination for Insolvency. If, at any time during the ROYALTY TERM, (a) a case is commenced by or against either PARTY under Title 11, United States Code, as amended, or analogous provisions of applicable laws outside the United States (the “Bankruptcy Code”) and, in the event of an involuntary case under the Bankruptcy Code, such case is not dismissed within [***] after the commencement thereof, (b) either PARTY files for or is subject to the institution of bankruptcy, liquidation or receivership proceedings (other than a case under the Bankruptcy Code), (c) either PARTY assigns all or a substantial portion of its assets for the benefit of creditors, (d) a receiver or custodian is appointed for either PARTY’s business, or (e) a substantial portion of either PARTY’s business is subject to attachment or similar process; then, in any such case ((a), (b), (c), (d) or (e)), the other PARTY may terminate this AGREEMENT upon written notice to the extent permitted under applicable laws.
27.5 Licenses upon Expiration. Upon expiration of the ROYALTY TERM, the licenses granted herein to INVENIAI with respect to the PRODUCTs shall become perpetual, fully paid and royalty-free non-exclusive licenses.
27.6 Return of CONFIDENTIAL INFORMATION. Upon termination of this AGREEMENT (other than the expiration thereof as provided in Section 27.4 above), each PARTY will promptly return to the other party (or as directed by such other party destroy and certify to such other party in writing as to such destruction) all of such other party’s CONFIDENTIAL INFORMATION provided by or on behalf of such other party hereunder that is in the possession or control of such party, except that such party will have the right to retain one (1) copy of intangible CONFIDENTIAL INFORMATION of such other party for legal purposes. Upon a party’s request, the other party will provide written evidence that all CONFIDENTIAL INFORMATION of the requesting party was returned or destroyed by any THIRD PARTY granted access to such CONFIDENTIAL INFORMATION.
27.7 Survival. Sections 7.2, 7.3, 8, 9, 10, 13, 14, 15, 16, 17, 18, 19, 20, 22, 23, 24, 25 and 27.4 to 27.7 will survive expiration or termination of this AGREEMENT for any reason until they are fully effectuated or performed, and Section 6.9 will survive for [***] after the expiration or termination of the ROYALTY TERM, and Sections 11 and 12 will survive for [***] after the expiration or termination of this Agreement. Expiration or termination of this AGREEMENT for any reason will neither relieve the parties of any liability or obligation (including financial obligations) that accrued hereunder prior to the effective date of such termination or expiration, nor preclude either party from pursuing all rights and remedies it may have hereunder or at law or in equity, with respect to any breach of this AGREEMENT.
27.8 The DS PATENTS and DS KNOW-HOW constitute “intellectual property” for purposes of Section 101(35A) or any successor section of the Bankruptcy Code. If DS as a debtor in possession or a trustee in bankruptcy in a case under the Bankruptcy Code rejects this AGREEMENT, INVENIAI may elect to retain its rights under this AGREEMENT as provided in Section 365(n) or any successor section of the US Bankruptcy Code. Neither DS nor its trustee in bankruptcy will interfere with the rights of INVENIAI as provided in this AGREEMENT. In further of the foregoing, DS hereby consents to the assumption of this AGREEMENT by INVENIAI in any case under Chapter 11 of the United States Bankruptcy Code to the extent that such consent is required under 11 U.S.C. Section 365(c)(1).
[Remainder of page intentionally left blank. Signature page follows.]
IN WITNESS WHEREOF, the PARTIES have executed this AGREEMENT as of the EFFECTIVE DATE.
InveniAI LLC | Daiichi Sankyo Company, Limited | |||
By: | /s/ Aman Kant | By: | /s/ Go Saito | |
Name: | Aman Kant | Name: | Go Saito | |
Title: | Chief Business Officer | Title: | VP, Global R&D Planning | |
Date: | 2021-Sep-07 | Date: | 2021-9-07 |
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