1
Exhibit 99.2
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
OPTION AGREEMENT
by and among
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,
CAMBRIDGE NEUROSCIENCE PARTNERS, INC.
and
CAMBRIDGE NEUROSCIENCE, INC.
for
METHOD FOR REDUCING APOLIPOPROTEIN E-4 INDUCED
INHIBITION OF NEURON REMODELING
UC CASE NO. 96-223
2
TABLE OF CONTENTS
ARTICLE NO. PAGE NO.
BACKGROUND.............................................................1
1. DEFINITIONS.........................................................3
2. GRANT...............................................................6
3. OPTION FEE AND TERM.................................................7
4. EXERCISE OF THE OPTION..............................................8
5. TERMS OF THE PROPOSED LICENSE AGREEMENT.............................8
6. DUE DILIGENCE......................................................13
7. PATENT PROSECUTION AND MAINTENANCE.................................14
8. LIFE OF THE OPTION AGREEMENT.......................................17
9. TERMINATION FOR CAUSE..............................................18
10. USE OF NAMES AND TRADEMARKS.......................................18
11. CONFIDENTIALITY...................................................19
12. LIMITED WARRANTY..................................................20
13. INDEMNIFICATION AND INSURANCE.....................................21
14. NOTICES...........................................................22
15. ASSIGNABILITY.....................................................22
16. LATE PAYMENTS.....................................................23
17. NO WAIVER.........................................................23
18. FAILURE TO PERFORM................................................23
19. GOVERNING LAWS....................................................23
20. GUARANTEED PERFORMANCE............................................23
21. MISCELLANEOUS.....................................................24
2
3
OPTION AGREEMENT FOR
Method for Reducing Apolipoprotein E4-Induced
Inhibition of Neuron Remodeling
UC Case No. 96-223
This option agreement ("Option Agreement") is effective as of this 23rd
day of December, 1996 (the "Effective Date"), by and among THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA, ("The Regents"), a California corporation, having its
statewide administrative offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and Cambridge NeuroScience Partners, Inc. ("Optionee"), a
Delaware corporation, having its place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Cambridge NeuroScience, Inc. ("CNSI"), a
Delaware corporation, having a principal place of business at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
BACKGROUND
Certain inventions, generally characterized as and disclosed in UC Case
No. 96-223 (the "Invention"), are covered by Regents' Patent Rights (defined
below) and were made in the course of research at The J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Institutes ("Gladstone"), a charitable trust with of fines located at Irvine and
San Francisco, California, by Drs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ (collectively, the Inventors").
Gladstone and The Regents entered into an agreement dated June 8, 1977,
that agreement being amended on March 27, 1984, and further amended on January
21, 1986 (as amended, the "Gladstone/Regents Agreement"), establishing among
other items, that the Invention and Regents' Patent Rights shall be managed in
accordance with The Regents' policies and procedures and, as a result, the
patent applications included in Regents' Patent
3
4
Rights covering the Invention are or will be assigned to The Regents, as will
any resulting issued patents, whether domestic or foreign.
Gladstone is not a party to this Option Agreement but Gladstone is granted
certain rights with regard to sponsored research under a separate Research
Agreement and with regard to equity in Optionee under a separate Stockholders'
Rights Agreement (defined below), both executed concurrently with this Option
Agreement.
Development of the Invention was sponsored in part by The National
Institutes of Health (Grant No. NHLBI-HL41633) and as a consequence this Option
Agreement, any License Agreement (defined below), and the Invention are subject
to overriding obligations to the Federal Government (including a non-exclusive,
irrevocable license to use the Invention by or on behalf of the Government
throughout the world), under 35 U.S.C. 200-212 and applicable regulations.
The Regents elected on August 22, 1996, to retain title and granted the
aforementioned licenses to the U.S. Government.
CNSI and Gladstone entered into a Secrecy Agreement relating to the
Invention dated December 4, 1995.
CNSI and The Regents entered into a Secrecy Agreement relating to the
Invention with an effective date of March 1, 1996, and further identified as UC
Control No., 97-20-1035.
Optionee is a "small business firm" as defined in Section 2 of Public Law
85-536 (15 U.S.C. 632) and a Subsidiary (defined below) of CNSI formed for the
purpose of commercializing the Invention and New Inventions (defined below),
among other things.
Optionee wishes to evaluate the Invention and New Inventions under this
Option Agreement to determine its interest in obtaining an exclusive worldwide
license in the Field of Use (defined below) under Regents' Patent Rights
covering the Invention, and in connection therewith, to obtain an exclusive
option for such a license.
4
5
Optionee and Gladstone will enter concurrently into the Research Agreement
(defined below), and CNSI will guarantee the financial obligations of Optionee
under this Option Agreement and the Research Agreement as provided herein.
Optionee, CNSI, Gladstone and The Regents will also enter concurrently
into the Stockholders' Rights Agreement (defined below), and CNSI will guarantee
the performance of Optionee under same.
Pursuant to the Gladstone/Regents Agreement, Gladstone is obligated to
disclose to The Regents any and all New Inventions and to assign its rights to
any patent applications covering any New Inventions to The Regents.
Pursuant to the Research Agreement, The Regents has agreed to file patent
applications covering any and all New Inventions within the Field of Use for
which Optionee has agreed to pay the patent costs and wishes to obtain an
exclusive option for an exclusive worldwide license in the Field of Use under
Regents' Patent Rights covering any such New Inventions in the Field of Use.
The Regents wishes to grant to Optionee these options so that the
Invention and any New Inventions in the Field of Use may be developed to the
fullest extent and the benefits therefrom enjoyed by the general public.
In consideration of the promises and undertakings set forth above and
hereinafter, the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" means any corporation or other business entity in which
the Optionee owns or controls, directly or indirectly, fifty percent (50%) or
more of the outstanding stock or other voting rights entitled to elect directors
of such corporation or entity, or in which the Optionee is owned or controlled,
directly or indirectly, fifty percent (50%) or more of the outstanding stock or
other voting rights entitled to elect directors of Optionee; but in any country
where the local law does not permit foreign equity participation of fifty
percent (50%) or more, then an "Affiliate" includes any company in which the
Optionee owns or
5
6
controls or is owned or controlled by, directly or indirectly, the maximum
percentage of outstanding stock or voting rights permitted by local law.
1.2 "Business Plan" means a reasonably detailed plan of development and
commercialization for Licensed Product. The Business Plan must include, but is
not limited to, an up-to-date research report identifying: proposed Licensed
Product, projected market sizes, sales, costs, profits and anticipated market
introduction dates for the Licensed Product.
1.3 "Confidential Information" means confidential and proprietary
information and materials that are designated as confidential in writing by the
providing party, whether by letter or by use of an appropriate stamp or legend,
prior to or at the same time any such information or materials are disclosed.
Notwithstanding the foregoing, materials and other information which are orally,
visually or electronically disclosed, or are disclosed in writing without an
appropriate letter, stamp or legend, shall constitute Confidential Information
if the providing party, within thirty (30) days after such disclosure, delivers
to the other party a written document or documents describing the materials and
identifying the Confidential Information.
1.4 "Field of Use" means the prophylaxis, treatment and diagnosis of any
disease or disorder of, or injury to, the nervous system relating to
Apolipoprotein E.
1.5 "License Agreement" means the exclusive worldwide license agreement
between Optionee and The Regents that may result if Optionee exercises its
option under this Option Agreement pursuant to Article 4 (EXERCISE OF THE
OPTION).
1.6 "Licensed Method" means any method that is covered by Regents' Patent
Rights, the use of which would constitute, but for the license granted to the
Licensee pursuant to this Option Agreement, an infringement of any claim within
Regents' Patent Rights.
6
7
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
1.7 "Licensed Product" means any material either that is covered by
Regents' Patent Rights, that is produced by the Licensed Method, or that the use
of which would constitute, but for the license granted to the Licensee pursuant
to this Option Agreement, an infringement of any pending or issued claim within
Regents' Patent Rights.
1.8 "New Invention" means any potentially patentable invention arising
from the Research Program (as defined in the Research Agreement) which is (i)
conceived during the term of the Research Agreement by employees or agents of
Gladstone or by employees or agents of both Gladstone and Optionee/CNSI jointly
and (ii) constructively or actually reduced to practice during the term of the
Research Agreement.
1.9 **************** means **********************
(a)***************************** or (b) ***************************************
*******************************************, except for ***********************
*******************************************************************************
***************************************.
1.10 "Regents' Patent Rights" means any subject matter claimed in or
covered by any of the following: (a) ******************************************
*******************************************************************************
********;(b)*******************************************************************
*******************************************************************************
***************************** (c) The Regents' interest in patent applications
covering New Inventions and properly elected under Section 7.8 hereof; and (d)
divisions, continuations, substitutions, continuation-in-part applications and
any patents or reissues issuing on these applications, and any corresponding
foreign applications or patents
7
8
of any of the foregoing.
1.11 "Research Agreement" means the sponsored research and collaboration
agreement by and between Gladstone and Optionee executed on the Effective Date
and attached to this Option Agreement as Appendix A, to fund further research by
the Inventors at Gladstone.
1.12 "Stockholders' Rights Agreement" means the agreement entitled
"Stockholders' Rights Agreement" between Optionee, CNSI, The Regents and
Gladstone defining certain rights with respect to the securities of Optionee
executed concurrently with this Option Agreement.
1.13 "Subsidiary" means a corporation in which: (a) another corporation
owns at least the majority of the outstanding shares of capital stock or (b)
another corporation has the power to direct or cause the direction of the
management and policies or the power to elect or appoint fifty percent (50%) or
more of the members of the governing body.
2. GRANT
2.1 The Regents grants to Optionee under Regents' Patent Rights, subject
to Section 2.6, the exclusive right to make and use Licensed Product and to
practice the Licensed Method within the Field of Use for the sole purpose of
evaluating Optionee's interest in exercising its option to an exclusive
worldwide license under Regents' Patent Rights within the Field of Use, as
described below.
2.2 The Regents grants to Optionee the exclusive option to negotiate, in
good faith, the terms of the License Agreement subject to the provisions of
Article 4 (EXERCISE OF THE OPTION).
8
9
2.3 This Option Agreement and the Research Agreement constitute Optionee's
entire interest under Regents' Patent Rights and does not constitute a license
to sell Licensed Product or enter into any sublicense, partnering, distribution
or related agreements for the manufacture, use or sale of any Licensed Product
or practice of any Licensed Method.
2.4 Optionee and CNSI agree that during the period of confidentiality set
forth in Article 11 (CONFIDENTIALITY), it will give The Regents at least
fourteen (14) days' written notice prior to filing any patent application
covering the-Licensed Product or Licensed Method, their use or their production.
The foregoing notwithstanding, Optionee or CNSI shall have the right to file
such an application on shorter notice or without notice, if in its reasonable
judgment, due to an impending publication or other circumstances, the ability of
Optionee or CNSI to obtain patent protection would otherwise be jeopardized.
However, under such aforementioned shorter notice or without notice
circumstances, Optionee or CNSI will give such written notice to The Regents as
soon as possible, but in no instance, later than fourteen (14) days following
the filing of such patent application(s).
2.5 The licenses granted in this Option Agreement are subject to the
overriding obligations to the U.S. Government including those in 35 U.S.C.
200-212 and applicable governmental implementing regulations.
2.6 The Regents expressly reserves for itself and on behalf of Gladstone,
the right to publish any and all technical data resulting from any research
performed by Gladstone relating to the Invention and to make and use the
Invention, Licensed Product, Licensed Method and associated technology for
educational and research purposes only.
3. OPTION FEE AND TERM
3.1 This option shall extend for three (3) years, beginning on the
Effective Date and
9
10
expiring on the third anniversary of that date unless earlier exercised by
Optionee under Article 4 (EXERCISE OF THE OPTION), in which case, the option
thereupon terminates.
3.2 As partial consideration for this Option Agreement, Optionee shall pay
to The Regents option fees as follows:
(a) Twenty Five Thousand Dollars ($25,000) for the first year of the
Option Agreement, which first-year option fee shall be due and payable to The
Regents upon execution of this Option Agreement by Optionee and CNSI;
(b) Fifty Thousand Dollars ($50,000) for the second year of the
Option Agreement, which second-year option fee shall be due and payable to The
Regents upon the first anniversary of the Effective Date;
(c) One Hundred Thousand Dollars ($100,000) for the third year of
the Option Agreement, which third-year option fee shall be due and payable to
The Regents upon the second anniversary of the Effective Date, unless the option
is exercised prior to the second anniversary of the Effective Date.
3.3 As further consideration for this Option Agreement, Optionee will
comply with Section 2 of the Stockholders' Rights Agreement.
3.4 The above option fees are non-refundable, non-creditable, not an
advance against subsequent license issue fees or other license fees or royalties
and not creditable in any way towards Optionee's financial obligations under the
Research Agreement.
4. EXERCISE OF THE OPTION
4.1 If Optionee elects to exercise the option, it shall do so by
delivering to The Regents: (i) a written notification stating such, (ii) the
Business Plan and (iii) the option exercise fee described in Section 5.1.2
before this Option Agreement expires. Failure of
10
11
Optionee to properly notify The Regents will be deemed by The Regents as an
election by Optionee not to secure a license and The Regents will then be free
to market and license Regents' Patent Rights to others without further
obligation to Optionee.
4.2 Optionee shall have the right to exercise the option as to any or all
of Regents' Patent Rights. In its notification to The Regents pursuant to
Section 4.1, Optionee shall specify in writing those particular patents and
patent applications within Regents' Patent Rights to which it wishes a license
and those to which it has no interest. For those patents and patent applications
to which Optionee has no interest, Optionee shall have no further right to and
The Regents shall be free to license third parties to same and shall have no
further obligation to Optionee.
4.3 Optionee is prohibited from exercising the option any earlier than
thirty (30) days before the second anniversary of the Effective Date unless the
Research Agreement is terminated for breach on the part of Gladstone by Optionee
pursuant to Section 8.2 thereof prior to such date. Such exercise will in no way
affect the provisions of the Research Agreement.
5. TERMS OF THE PROPOSED LICENSE AGREEMENT
5.1 If Optionee exercises the option in accordance with Article 4
(EXERCISE OF THE OPTION), then The Regents and Optionee shall negotiate in good
faith to arrive at mutually agreeable terms and conditions for the License
Agreement. The License Agreement will include, but is not limited to, the
following provisions:
5.1.1 an exclusive worldwide license within the Field of Use, with
the right to sublicense, to make, have made, use, import, offer to sell and sell
Licensed Product and to practice Licensed Methods under Regents' Patent Rights;
11
12
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
5.1.2 an option exercise fee of ***********************************
due upon written notice by Optionee of its election to exercise its option as
per Section 4.1;
5.1.3 equity provisions as set forth in the Stockholders' Rights
Agreement;
5.1.4 an earned-royalty rate for sales by Optionee of**************
****** ********************************* based on net sales of products covered
by patent rights solely owned by The Regents and*******************************
********************************* based on net sales of products covered by
patent rights jointly owned by The Regents and Optionee;
5.1.5 Section 5.1.4 notwithstanding, if Optionee receives earned
royalties under a sublicense to a non-Affiliate, Optionee shall only be required
to pay to The Regents an earned royalty of ********************* of the royalty
received by Optionee under such sublicense ************************************
*****************************************************;
5.1.6 ************************************************** any
agreement relating to Licensed Product or Licensed Method according to the
following schedule measured from the effective date of the License Agreement:
(a) year 0-2, not applicable,
(b) year 3, ********************;
(c) year 4, ********************;
(d) year 5, ********************; and
(e) year 6 and thereafter, *******************.
12
13
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
5.1.7 a ***** Optionee *******************************************
relating to Licensed Product or Licensed Method ******************************
**** of the License Agreement;
5.1.8 **********************************************************
Licensed Product ***************************** Regents' Patent Rights;
5.1.9 ***********************************************************
************************* at the time of licensure;
5.1.10 mutually agreed upon diligence terms including milestone
dates and fees based on objective-performance standards and designed to achieve
commercialization of the Licensed Product;
5.1.11 an obligation to negotiate with Gladstone to participate in
future research relating to the Invention, including but not limited to,
targeted research and development, referred to in the Research Agreement
(Appendix A), within Gladstone's area of competence at comparable costs to
independent third parties;
5.1.12 confidentiality terms;
5.1.13 indemnification of The Regents and Gladstone by Optionee;
5.1.14 a warranty that is limited to The Regents' right to grant an
exclusive license under Regents' Patent Rights as set forth in Article 12
(LIMITED WARRANTY);
13
14
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
5.1.15 preference for U.S. industry to the extent required by
federal law;
5.1.16 continued payment of patent costs; and
5.1.17 provisions comparable to Section 7.8 of this Option Agreement
providing Optionee rights to New Inventions and provisions for amendment of the
License Agreement to cover additional Regents' Patent Rights as provided in
Section 1.10 hereof and as provided in the Research Agreement (Appendix A).
5.2 The option exercise fee, ****************** milestone fees and
**************** referred to above are non-creditable, non-refundable and not an
advance against royalties or any future research monies provided to Gladstone.
5.3 The License Agreement shall be subject to the overriding obligations
to the U.S. Government including those in 35 U.S.C. 200-212 and applicable
governmental implementing regulations.
5.4 In the event that the parties have been unable to agree on terms of
the License Agreement within the one hundred and twenty (120) day period from
the exercise of the option (the "Negotiation Period"), the parties agree that
any financial terms not yet agreed upon will be submitted to arbitration upon a
written request for arbitration delivered within ten (10) days after the
expiration of the Negotiation Period, as follows:
5.4.1 the arbitration shall be conducted in San Francisco,
California pursuant to the Commercial Arbitration Rules of the American
Arbitration Association, except as modified below;
14
15
5.4.2 the arbitration will be conducted before a single arbitrator
experienced in university technology transfer matters in the biotechnology
industry, provided that both parties are able to agree on the identity of such
single arbitrator. If the parties cannot agree on a single arbitrator, there
will be three arbitrators, with Optionee and The Regents each selecting one
independent arbitrator and the two so selected, choosing a third;
5.4.3 the arbitration shall be limited to the unagreed to financial
terms to be included in the License Agreement and shall not modify financial
terms that have been previously agreed to by the parties, either in Article 5
hereof or during the Negotiation Period;
5.4.4 any subsequent License Agreement must be consistent with The
Regents' patent policies;
5.4.5 the decision of the arbitrator or arbitration panel shall be
rendered within ninety (90) days of the written request for arbitration, and
shall be binding on The Regents if it is accepted by Optionee within thirty (30)
days of the decision. Optionee shall have the right, within thirty (30) days of
the decision, to reject the decision, in which case Optionee will forfeit all
rights to the Regents' Patent Rights that were to be included in the proposed
License Agreement subject to Section 5.4.7 below;
5.4.6 the Negotiation Period will automatically be extended until
thirty (30) days after the decision of the arbitrator or arbitration panel;
5.4.7 notwithstanding the rejection of Optionee of the arbitrator's
decision, if, for a period of two (2) years following the expiration of such
thirty (30) day period specified in Sections 5.4.5 and 5.4.6 above, The Regents
proposes to enter into a license agreement with a third party covering the
Regents' Patent Rights that were included in the proposed
15
16
License Agreement on terms more favorable to the third party than the terms
contained in the arbitrators' decision, then (i) The Regents shall deliver to
Optionee a notice specifying such terms (an "Offer Notice"), (ii) Optionee shall
have fifteen (15) days from receipt of the Offer Notice to either waive any
further rights or notify The Regents in writing of its desire to obtain a
license reflecting the terms of Offer Notice ("Acceptance Notice"), and (iii)
if, at the end of thirty (30) days from the Acceptance Notice, Optionee and The
Regents fail to enter into a definitive agreement reflecting such terms, The
Regents shall be free to enter into a license with the third party, the terms of
such license to be no more favorable to the third party than those set forth in
the Offer Notice. If Optionee waives its refusal right with respect to the terms
set forth in the Offer Notice or fails to deliver to The Regents an Acceptance
Notice within the requisite fifteen (15) day period, then The Regents shall be
free to enter into a license with the third party, the terms of such license to
be no more favorable to the third party than those set forth in the Offer
Notice; and
5.4.8 the cost of the arbitration will be paid for solely by
Optionee.
6. DUE DILIGENCE
6.1 Prior to the execution of this Option Agreement, Optionee shall have
raised a minimum of One Million Two Hundred and Fifty Thousand Dollars
($1,250,000), as detailed in Section 2 of the Stockholders' Rights Agreement.
Furthermore, unless Optionee raises the required funds, by selling stock to
investors other than CNSI or an Affiliate, to fund the second and third year
research support payments as set forth in the Research Agreement, CNSI must lend
Optionee all such amounts. All such loans shall be interest free loans.
6.2 Optionee shall execute the Research Agreement concurrently with the
execution of this Option Agreement. It is a material term of this Option
Agreement and any License Agreement that Optionee fund research at Gladstone
under the Research Agreement in an
16
17
amount equal to One Million Two Hundred and Fifty Thousand Dollars ($1,250,000)
the first year and a minimum of One Million Two Hundred and Fifty Thousand
Dollars ($1,250,000) per year thereafter, payable semi-annually each year for
three (3) years starting on the Effective Date to develop and evaluate Licensed
Product(s).
6.3 Optionee shall execute the Stockholders' Rights Agreement within
thirty (30) days of the Effective Date of this Option Agreement. This obligation
is a material part of this Option Agreement and any breach by Optionee of this
obligation or any breach of the Stockholders' Rights Agreement will be a breach
by Optionee of this Option Agreement.
6.4 Optionee shall provide to The Regents semi-annual progress reports
covering the development and testing of Licensed Product. Such progress reports
may include copies of reports received by Optionee from Gladstone as required of
Gladstone as set forth in the Research Agreement. The progress reports are due
to The Regents on June 30 and December 30 of each year, beginning December 30,
1997, and for the life of this Option Agreement.
6.5 The progress reports will include, but are not limited to, the
following topics so that The Regents may determine the progress of the
development and testing of Licensed Product:
o summary of work completed
o key scientific discoveries
o summary of work in progress
o current schedule of anticipated events or milestones
o a summary of resources (dollar value) spent in the reporting period
7. PATENT PROSECUTION AND MAINTENANCE
7.1 Subject to Section 7.6, The Regents shall diligently prosecute and
maintain the
17
18
United States and foreign patent applications and patents comprising Regents'
Patent Rights using counsel reasonably acceptable to Optionee, except for
Regents' Patent Rights consisting of New Inventions jointly owned with Optionee,
which will be prosecuted by Optionee as provided in Sections 7.4 and 7.5 herein.
The Regents shall promptly provide Optionee with copies of all relevant
documentation so that Optionee may be apprised of the continuing prosecution.
Optionee shall keep this documentation in confidence in accordance with the
provisions of Article 11 (CONFIDENTIALITY).
7.2 The Regents will hold title to all patents and patent applications
subject to this Option Agreement, except as provided for in the Research
Agreement, and The Regents' counsel will take instructions only from The Regents
but The Regents shall use reasonable efforts to amend any patent application to
include claims requested by Optionee and required to protect Licensed Product or
Licensed Method. Pursuant to Section 6.2 of the Research Agreement, The Regents
agrees to assert rights to the Invention and New Inventions in the Field of Use
as long as this Option Agreement is in effect.
7.3 Except as provided in the Research Agreement with respect to jointly
owned New Inventions, The Regents shall, at the request of Optionee, file,
prosecute and maintain patent applications and patents covered by Regents'
Patent Rights in foreign countries if available. The Regents shall notify
Optionee in writing at least three (3) months prior to any applicable deadline
for any foreign filings, and Optionee shall notify The Regents in writing of
those countries in which it wishes foreign filings to occur within forty-five
(45) days of the receipt of such request. Failure by Optionee to so notify The
Regents within the forty-five (45) day period shall be deemed to constitute an
election by Optionee not to request The Regents to secure foreign patent rights
in such countries on behalf of Optionee. The Regents has the right to file
patent applications at its own expense in any country in which Optionee has
elected not to secure foreign patent rights, and those patent applications and
resulting patents, if any, shall not thereafter be included in the licenses
granted under this Option Agreement.
18
19
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
7.4 Optionee shall control the preparation, filing, prosecution and
maintenance of United States and foreign patent applications, with respect to
New Inventions jointly owned by The Regents and Optionee. Such applications
shall be prepared, filed, prosecuted and maintained using counsel reasonably
acceptable to The Regents. The Regents and Gladstone shall cooperate fully with
and provide assistance to Optionee (or if the parties agree to have The Regents
exercise control, Optionee shall cooperate fully with and provide assistance to
The Regents) in connection with the preparation, filing, prosecution and
maintenance of such jointly owned patent applications, including, without
limitation, execution of all documents and performance of all acts reasonably
necessary to file and prosecute such patent applications and maintain, enforce
and defend such patents. Optionee and The Regents shall each provide the other
in a timely manner with copies of all jointly owned patent applications filed by
either pursuant to this Section, as well as those documents involved in the
prosecution thereof, so that the other shall have an opportunity to provide
comment on any such applications and documents. Such jointly owned patent
applications and documents shall be held in confidence in accordance with the
Provisions of Article 11 (CONFIDENTIALITY). Optionee shall bear the expenses
associated with the filing and prosecution of such jointly owned patent
applications.
7.5 Neither party, with respect to a New Invention jointly owned by
Optionee and The Regents, shall abandon such patent application and resulting
patent without first providing the other party with thirty (30) days' prior
written notice.
7.6 Optionee shall pay all past, present and future costs incurred by The
Regents and Gladstone in preparing, filing, prosecuting and maintaining all
United States and foreign patents and patent applications covered by Regents'
Patent Rights. Patent costs incurred as of the Effective Date are approximately
**********************************************.
19
20
The parties shall consult in good faith with each other regarding the
desirability of pursuing or defending any interferences or oppositions. The
costs of interferences and opposition, if approved by Optionee in writing, are
prosecution expenses and will be paid by the Optionee. If such costs are not
approved by Optionee, or Optionee chooses not to participate in such
interference and opposition, then such decision not to participate will be
deemed an election by Optionee not to pursue such action on behalf of Optionee.
Those patent applications and resulting patents, if any involved in such
interferences and opposition shall not thereafter be included in the licenses
granted under this Option Agreement, effective on the date The Regents provided
notice to Optionee of such interference and opposition, and The Regents will
have no further obligation to Optionee with respect thereto. Optionee shall
reimburse The Regents for all costs and charges within thirty (30) days
following receipt of a proper itemized invoice from The Regents for same. If
this Option Agreement is in effect two (2) months before the due date of PCT
filings, or four (4) months before the due date of National Phase filings, then
Optionee shall pay for the relevant PCT Chapter I, PCT Chapter II or National
Phase filings in all designated countries, notwithstanding the provisions of
Section 7.5 below. If Optionee decides not to proceed with such interference and
opposition, The Regents shall decide in its sole discretion, whether or not to
enter any interference proceedings or opposition.
7.7 Optionee may terminate its obligations with respect to any patent
application or patent in any or all designated countries upon three (3) months'
prior written notice to The Regents. The Regents will use its best efforts to
curtail the associated patent costs after notice is received from the Optionee.
The Regents may continue prosecution and/or maintenance of those applications or
patents at its sole discretion and expense and Optionee will have no further
right or licenses thereunder.
7.8 The Regents will promptly transmit to Optionee any disclosures of New
Inventions as provided in the Research Agreement. Within ninety (90) days of
receipt by
20
21
Optionee of a disclosure of a New Invention, Optionee shall inform The Regents
in writing, whether or not it wishes to include The Regents' interest in any New
Invention within the Field of Use within Regents' Patent Rights and pay patent
costs therefor under this Article. If Optionee does not elect or elects not to
include The Regents' interest in the New Invention within Regents' Patent
Rights, Optionee and CNSI shall have no further rights thereto. If Optionee does
elect to include The Regents interest in the New Invention within Regents'
Patent Rights, The Regents, to the extent it is legally able to do so, shall
include its interest in any patent application filed under this Section 7.8 in
this Option Agreement.
7.9 Optionee has a continuing responsibility to keep The Regents informed
of its large/small business entity status (as defined by the United States
Patent and Trademark Office).
8. LIFE OF THE OPTION AGREEMENT
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Option Agreement, this Option
Agreement is in effect from the Effective Date and shall remain in effect for
the period specified in Section 3.1 hereof. Upon proper exercise of the option
as provided in Section 4.1, Optionee may have an extension throughout the
Negotiation Period specified in Section 5.4 to conclude a final written License
Agreement, after which time The Regents shall have no obligation to Optionee
whatsoever, except as provided in Section 5.4 hereof.
8.2 Any termination of this Option Agreement will not affect the rights
and obligations set forth in the following Sections and Articles:
Section 2.4 Notice of filing patent applications
21
22
Section 5.4 Arbitration of License Agreement Financial Terms
Article 10 USE OF NAMES AND TRADEMARKS
Article 11 CONFIDENTIALITY
Article 13 INDEMNIFICATION AND INSURANCE
Article 16 LATE PAYMENTS
Article 20 GUARANTEED PERFORMANCE
8.3 Termination of this Option Agreement will not relieve a party of any
obligation or liability accrued prior to termination nor will it rescind
anything done by a party or any payments made by Optionee to The Regents prior
to the time termination becomes effective.
9. TERMINATION FOR CAUSE
9.1 If a party violates or fails to perform any material term of this
Option Agreement, then the aggrieved party may give written notice of default
("Notice of Default") to such party. If such party fails to repair the default
within forty-five (45) days of the date of notice, then the aggrieved party has
the right to terminate this Option Agreement upon delivery of a second written
notice so stating ("Notice of Termination").
9.2 If a Notice of Termination is delivered by a party, this Option
Agreement shall automatically terminate on the effective date of such notice.
Termination will not relieve a party of its obligation to pay all amounts under
this Option Agreement, the Research Agreement or the Stockholders' Rights
Agreement as of the date of termination and will not impair any accrued rights
of the party.
9.3 If this Option Agreement is terminated for cause, a party shall, upon
request made by another party, promptly return to the requesting party all
tangible personal property and confidential data (including copies, facsimiles,
and any derivatives thereof), belonging to
22
23
the party and provided to the requesting party.
9.4 The Regents will also have the right and option to terminate this
Option Agreement if the Research Agreement or the Stockholders' Rights Agreement
is materially breached or terminated by Optionee or CNSI prior to the agreed
upon expiration date of the Research Agreement or the Stockholders' Rights
Agreement and there has been no breach thereof by The Regents or Gladstone. Such
termination of this Option Agreement will be subject to Article 14 (NOTICES).
10. USE OF NAMES AND TRADEMARKS
10.1 Nothing in this Option Agreement confers to a party, the right to use
any name, trade name, trademark or other designation (including contraction,
abbreviation or simulation of any name, trade name, trademark or other
designation) of another party in advertising, publicity or other promotional
activities. Unless expressly required by law, the use by Optionee or CNSI of the
names, "The Regents of the University of California," "The University of
California," "The J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Institutes" or of any campus of the
University of California is prohibited without prior written consent of The
Regents or, if appropriate, Gladstone.
10.2 If a third party inquires whether a license to Regents' Patent Rights
is available, The Regents may disclose the existence of this Option Agreement
and the extent of the grant in Article 2 (GRANT), but may not disclose the name
of Optionee or CNSI, except where The Regents is required to release that
information under the California Public Records Act or other applicable law.
11. CONFIDENTIALITY
23
24
11.1 Each party shall safeguard confidential data, supplied by the another
party under this Option Agreement, against disclosure to others with the same
degree of care as it exercises with its own data of a similar nature. No party
shall use such data except to perform its obligations under this Option
Agreement and shall not disclose such data to others (except to its employees,
agents or consultants who are bound to such parties by a like obligation of
confidentiality) without the express written permission of the other party,
except that such party is not prevented from using or disclosing any of the data
that: (a) such party can demonstrate by written records was previously known to
it; (b) is now, or becomes in the future, public knowledge other than through
acts or omissions of such party; or (c) is lawfully obtained by such party from
sources independent of the other party. The secrecy obligations of each party
under these terms shall remain in effect for five (5) years from the expiration
or termination date of this Option Agreement.
11.2 The obligations of confidentiality and limited use hereunder apply to
any confidential information of a party relating to the subject matter of this
Option Agreement whether supplied under this Option Agreement or previously.
12. LIMITED WARRANTY
12.1 The Regents warrants to Optionee that it has the lawful right to
grant this option and that it is the owner of Regents' Patent Rights as of the
Effective Date.
12.2 This Option Agreement and the Invention are provided WITHOUT WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
EXPRESS OR IMPLIED. THE REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE
LICENSED PRODUCT OR LICENSED METHOD PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHT.
24
25
12.3 IN NO EVENT WILL THE REGENTS OR GLADSTONE BE LIABLE FOR ANY
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS
OPTION AGREEMENT OR THE MANUFACTURE, OR USE OF THE INVENTION, LICENSED PRODUCT,
OR LICENSED METHOD.
12.4 Nothing in this Option Agreement:
12.4.1 is a warranty or representation by The Regents as to the
validity, enforceability or scope of any Regents' Patent Rights;
12.4.2 is a warranty or representation that anything made, used or
otherwise disposed of under any license from The Regents is or will be free from
infringement of patents of third parties;
12.4.3 is an obligation to bring or prosecute actions or suit
against third parties for patent infringement, provided, however, that each
party shall promptly notify the other as to any such infringement of which it
becomes aware;
12.4.4 is an obligation to furnish any information or know-how not
provided in Regents' Patent Rights; or
12.4.5 confers by implication, estoppel or otherwise any license or
rights under any patents of The Regents other than Regents' Patent Rights.
13. INDEMNIFICATION AND INSURANCE
13.1 Optionee and CNSI shall indemnify, hold harmless and defend The
Regents, its officers, employees, and agents, the sponsors of the research that
led to the Invention and the
25
26
Inventors and their employer (Gladstone), against any and all claims, suits,
losses, liabilities, damages, costs, fees and expenses resulting from or arising
out of actions of Optionee under this Option Agreement. This indemnification
includes, but is not limited to product liability.
13.2 The Regents shall promptly notify Optionee and CNSI in writing of any
claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article. Optionee and CNSI will keep
The Regents informed on a current basis of their defense of any claims pursuant
to this Article.
(Remainder of this page deliberately left blank)
26
27
14. NOTICES
Notices or payments are properly given and effective on the date of
delivery if delivered in person or five (5) days after mailing if mailed by
first-class, certified mail, postage paid, to the respective addresses given
below or to such other addresses as are designated by written notice:
To Optionee: Cambridge NeuroScience Partners, Inc.
c/o Cambridge NeuroScience, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Finance and Business Development
with a copy to: ▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
To The Regents: The Regents of the University of California
Office of Technology Transfer
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Director
Research Administration and
Technology Transfer
UC Case No. 96-223
15. ASSIGNABILITY
This Option Agreement shall be binding on and inure to the benefit of The
Regents, its successors and assigns, but it is personal to Optionee. However,
Optionee may assign or transfer Optionee's rights and obligations under this
Option Agreement to an Affiliate or a successor to all or substantially all of
its assets or business relating to this Option Agreement,
27
28
whether by sale, merger or operation of law. In such instances, Optionee shall
notify The Regents of such assignment in writing within thirty (30) days
following such assignment.
16. LATE PAYMENTS
If fees or patent cost reimbursements are not received by The Regents when
due, Optionee shall pay to The Regents interest charges at a rate of ten percent
(10%) simple interest per annum. Interest is calculated from the date payment
was due until actually received by The Regents. Acceptance by The Regents of any
late payment of fees, patent costs or interest from Optionee under this Article
in no way affects the provisions of Article 17 (NO WAIVER).
17. NO WAIVER
No waiver by either party hereto of any breach or default of any of the
covenants or agreements herein set forth is a waiver as to any subsequent and/or
similar breach or default.
18. FAILURE TO PERFORM
In the event of a failure of performance due under the terms of this
Option Agreement and if it becomes necessary for either party to undertake legal
action against the other on account thereof, then the prevailing party will be
entitled to reasonable attorney's fees in addition to costs and necessary
disbursements.
28
29
19. GOVERNING LAWS
This Option Agreement WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
20. GUARANTEED PERFORMANCE
CNSI HEREBY GUARANTEES PERFORMANCE OF ALL OBLIGATIONS OF OPTIONEE UNDER
ARTICLES 3, 4, 5, 6, 7, 13 AND 16 OF THIS OPTION AGREEMENT, UNDER THE RESEARCH
AGREEMENT AND UNDER THE STOCKHOLDERS' RIGHTS AGREEMENT. Without limiting the
foregoing, CNSI specifically guarantees the research funding required under
Section 6.2 above.
21. MISCELLANEOUS
21.1 This Option Agreement is not binding upon the parties until it has
been signed below by each party: it then becomes effective as of the Effective
Date.
21.2 No amendment or modification hereof is valid or binding upon the
parties unless made in writing and signed on behalf of each party.
21.3 This Option Agreement, the Research Agreement (Appendix A) and the
Stockholder's Rights Agreement embody the entire understanding of the parties
and supersedes all previous communications, representations and understandings,
either oral or
29
30
written, between the parties relating to the subject matter hereof. The Regents
agrees to be bound by and perform the intellectual property requirements of
Gladstone/The Regents as set forth in and required by, the Research Agreement
(Appendix A).
21.4 Each party hereby agrees that it does not intend by any provisions of
this Option Agreement to violate any public policy, statutory or common laws,
rules or regulations. Should one or more provisions of this Option Agreement be
or become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions that it can be reasonably assumed that
the parties would have entered into this Option Agreement with such valid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Option Agreement shall not affect the
validity of this Option Agreement as a whole, unless the invalid provisions are
of such essential importance to this Option Agreement that it is to be
reasonably assumed that the parties would not have entered into this Option
Agreement without the invalid provisions.
21.5 In the event that any action shall be instituted in any court by a
party hereto for breach of this Option Agreement or the License Agreement or to
resolve any dispute with respect to either agreement, the prevailing party shall
be entitled to recover court costs and reasonable attorney's fees in such amount
or amounts as the court shall determine.
21.6 In the event of inconsistencies between this Option Agreement and the
Research agreement, this Option Agreement will prevail.
The Regents, Optionee and CNSI have executed this Option Agreement, in
triplicate originals, by their duly authorized representatives, on the day and
year hereinafter written.
30
31
CAMBRIDGE NEUROSCIENCE THE REGENTS OF THE UNIVERSITY
PARTNERS, INC. OF CALIFORNIA
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------ ------------------------------
(Signature) (Signature)
Name: ▇.▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
(Please print)
Title: President Title: Executive Director
------------------------------ Research Administration and
Technology Transfer
Date: Date: 12-19-96
------------------------------ ------------------------------
Approved as to legal form: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ 12/19/96
------------------ --------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Associate Resident Counsel Date
Office of Technology Transfer
University of California
CAMBRIDGE NEUROSCIENCE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
(Signature)
Name: ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Title: President and CEO
---------------------------
Date:
----------------------------
31