Exhibit 10.15
(Certain information has been omitted from the this exhibit and filed
separately with the SEC pursuant to a request for confidential treatment under
Rule 24b-2.)
LICENSE AGREEMENT
AGREEMENT made and effective as of the 24th day of January, 1996, by
and between CNS, Inc., a Delaware corporation ("Licensee"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ("Licensor").
R E C I T A L S
WHEREAS, Licensor is now and has been engaged in developing certain
Products (as defined in Subsection 1.1) for use as diet and/or smoking
alternative/suppression/cessation aids;
WHEREAS, the Products embody inventions and designs owned by Licensor
and Licensor has available certain know-how relating to the Products;
WHEREAS, Licensor owns or controls, or may hereafter own or control,
certain know-how, trademarks, patents or patent applications relating to the
Products;
WHEREAS, Licensor desires to license to Licensee and Licensee desires
to license from Licensor certain trademarks, know-how, patents and patent
applications of Licensor relating to the Products.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements hereinafter set forth and other good consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. GENERAL DEFINITIONS. As used herein, the following terms shall be
defined in the manner set forth below:
1.1 Products. The term "Products" shall mean (i) the diet aid known as
"WILL- POWER" and any other diet aid developed by Licensor containing
2-Acetylpyridine and (ii) the smoking alternative/suppression/cessation aid
known as "QUIT'M" and any other smoking alternative/suppression/cessation aid
developed by Licensor containing 2-Acetylpyridine; the term "Products" shall
also include all parts and components thereof.
1.2 Know-how. The term "Know-how" shall mean any and all tangible and
intangible information, technology, documents and materials in the possession
and control of Licensor, necessary in order to enable Licensee to utilize fully
the rights granted by Licensor to Licensee hereunder and shall include, without
limiting the foregoing, the ideas, concepts, confidential information, trade
secrets and techniques, as well as all the materials, documents, manuals,
schematics, blueprints, specifications, patterns, art work, bills of materials
and technical specifications and other information of Licensor relating to the
Products.
1.3 Licensed Patents. The Term "Licensed Patents" shall mean the
following: (i) the United States patents listed on Exhibit 1.3 attached hereto;
(ii) the rights, patents and patent applications, if any, in any country or
jurisdiction in the world corresponding to the United States patents listed on
Exhibit 1.3 attached hereto; and (iii) any division, continuation,
continuation-in-part, divisional, reissued or extended letters patent,
applications and ▇▇▇▇▇ patents, utility models, utility model conversions,
inventor's certificates relating to any of the foregoing United States patents
and patents pending and foreign patent rights, which may be developed, acquired
or controlled by Licensor and which relate to the Products during the term of
this Agreement and with respect to which Licensor shall have the right to grant
the license hereinafter provided.
1.4 Contract Year and Quarter. The term "Contract Year" shall mean each
period of twelve consecutive months commencing on January 1 of each year during
the term of this Agreement. The term "Contract Quarter" shall mean each period
of three consecutive months commencing January 1, April 1, July 1 and October 1
during the term of this Agreement.
1.5 Net Sales. The term "Net Sales" shall mean the net amount collected
by Licensee from any end-user, sublicensee, assignee or other person relating to
or arising from the sale of Products after the deduction of (i) any amounts
repaid or credited by reason of rejections or returns and (ii) trade and
quantity discounts actually allowed and taken.
1.6 Earned Royalty. The term "Earned Royalty" shall mean the royalty
payable to Licensor on Products.
1.7 Licensed Trademarks. The term "Licensed Trademarks" shall mean
Licensor's trademarks "WILL-POWER" and "QUIT'M".
2. GRANT OF LICENSES.
2.1 Patent, Trademark and Know-how License. Licensor hereby grants to
Licensee an exclusive, worldwide, transferable (subject to the terms of
Subsection 2.2) license to manufacture, have manufactured, use, sell and
otherwise practice the Products, Licensed Patents, Licensed Trademarks and all
Know-how and any invention disclosed or claimed in any of the Licensed Patents.
2.2 Sublicenses and Assignments. Subject to the further provisions of
this Subsection 2.2, Licensee may sublicense and/or assign to any third party,
including affiliates of Licensee, any and all rights granted hereunder. For any
sublicense and/or assignment granting rights to sell Products to parties other
than Licensee to be valid, Licensee shall, prior to any such assignment or
sublicense, enter into a written assignment and/or sublicense agreement with
such proposed sublicensee and/or assignee under which the assignee and/or
sublicensee agrees (i) that payments of fees, royalties and other fixed payments
shall be made 50% to Licensee and 50% to Licensor at commercially reasonable
rates based upon the sale of Products, and (ii) to provide Licensee and Licensor
records, data and other information necessary to verify the assignee's and/or
sublicensee's performance of its obligations under such sublicense and/or
assignment agreement. Licensee agrees that it shall take all such action as is
reasonable in order to fully enforce the obligations of any such sublicensee
and/or assignee under any such sublicense and/or assignment agreement.
2.3 Patent Costs. Licensor shall be responsible for and pay all patent
costs and expenses to be incurred in obtaining, prosecuting, owning and
maintaining any of the Licensed Patents issued or to be issued under the law of
any jurisdiction, including filing, prosecution, working and maintenance costs
and taxes; provided, however, that Licensee shall, at Licensor's request, be
responsible for and pay all costs and expenses to be incurred in maintaining any
of the Licensed Patents issued or to be issued in a foreign jurisdiction, which
payments will be deducted from any future royalty payments on foreign sales of
the Products.
2.4 Exploitation. Except as set forth in Section 8, Licensee shall not
be under any obligation to use, exploit, develop or market any license under
this Agreement. Licensee shall be entitled to use its sole business judgment in
deciding the manner and extent, if any, of any exploitation of any licenses
granted hereunder and in deciding whether to use any other products, devices,
techniques or technology competing therewith in any field of use.
2.5 Right of First Refusal. In the event Licensor conceives of or
develops any other product that is a medical device, Licensee shall have right
of first refusal to manufacture and market such product. Licensor shall give
written notice of such product to Licensee, and Licensee shall have three months
to exercise its right by written notice to Licensor. If such right is exercised,
Licensor and Licensee shall negotiate in good faith and enter into a license
agreement for such product. If such right is not timely exercised, Licensor may
manufacturer and market the product or enter into an agreement with a third
party.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Licensor's Representations and Warranties. Licensor hereby warrants
and represents to Licensee as follows:
(a) This Agreement has been duly authorized, executed and delivered by
Licensor and constitutes a valid and binding obligation of Licensor, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by Licensor and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in any material breach of any
of the provisions of, or constitute a material default under, or result in a
material violation of, or require any authorization, consent or approval, under
the provisions of any agreement or instrument to which Licensor is bound or
affected, or any law, statute, rule, regulation, judgment order or decree to
which Licensor is subject.
(b) Licensor owns the exclusive rights to the Products, Licensed
Patents, Licensed Trademarks and Know-how and Licensor has not previously
granted any of such rights to a third party.
(c) To Licensor's knowledge, the Products, Licensed Patents, Licensed
Trademarks and Know-how do not infringe on any patent, trademark, copyright or
other intellectual property right of any third party.
(d) Licensor has not received notice of any claims, actions, suits or
proceedings pending or threatened affecting Licensor, the Licensed Patents, the
Licensed Trademarks or Knowhow, which, if adversely determined, would have an
adverse effect upon Licensee's ability to manufacture, have manufactured, use or
sell the Products or otherwise practice the rights and technology licensed to
Licensee by Licensor under this Agreement, and to Licensor's knowledge, there is
no reasonable basis for anyone to bring such claims, actions, suits or
proceedings.
(e) Licensor has not received any claim from any third-party
proceedings relating to the Licensed Patents, Licensed Trademarks, Know-how, or
the Products which are based upon infringement of any patent or trademark or
misappropriation or misuse of trade secrets.
(f) The Products are effective for their intended uses of appetite and
smokingdesire suppressant and the concentrations of the active and inactive
ingredients are at levels that the Flavor and Extract Manufacturers Association
generally regards as safe, and, to Licensor's knowledge, the Products are safe
for their intended uses.
(g) Licensor has disclosed all information in its possession or control
which, in his reasonable opinion, would be material to Licensee entering into
this Agreement, and to the best of his information does not contain any untrue
statements of a material fact or omit to state a material fact.
3.2 Licensee's Representations and Warranties. Licensee hereby warrants
and represents to Licensor as follows:
(a) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) This Agreement has been duly authorized, executed and delivered by
Licensee and constitutes a valid and binding obligation of Licensee, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by Licensee and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in any material breach
of any of the provisions of, or constitute a material default under, or result
in a material violation of, or require any authorization, consent or approval,
under the provisions of Licensee's Certificate of Incorporation or Bylaws or any
other agreement or instrument to which Licensee is bound or affected, or any
law, statute, rule, regulation, judgment order or decree to which Licensee is
subject.
4. CONSIDERATION AND REPORTS.
4.1 Fixed License Fees. Licensee agrees to pay to Licensor the
following amounts: (a) $50,000 within ten (10) days of the execution of this
Agreement; (b) $25,000 within ten (10) days of Licensee obtaining all necessary
regulatory approvals to market the Product currently known as "WILL-POWER"; and
(c) $25,000 within ten (10) days of Licensee obtaining all necessary regulatory
approvals to market the Product currently known as "QUIT'M"; provided, however,
that if "QUIT'M" is marketed as both an appetite and smoking suppressant, both
the amounts due under (b) and (c) shall be due.
4.2 Stock Options. Within thirty (30) days after the execution of this
Agreement, and in partial consideration of consulting services Licensor will
provide to Licensee regarding the Products, Licensee shall execute and deliver
to Licensor options to purchase an aggregate of 100,000 shares of Licensee's
Common Stock in substantially the form and on the terms of the Non-Qualified
Stock Options attached hereto as exhibit 4.2.
4.3 Royalties. Licensee agrees to pay to Licensor royalties at the rate
of 6% of Net Sales on each Product (i.e., the WILL-POWER and QUIT'M Products)
during the period commencing upon receiving all necessary regulatory approvals
to market such Product and terminating upon the expiration or invalidation of
the Licensed Patent applicable to such Product. The royalty provided for in this
Section 4 shall be terminated as to a particular Product if and when the
Licensed Patents relating to such product are invalidated or expire. The Earned
Royalty due hereunder shall be payable each Contract Quarter as set forth in
Subsection 4.5.
4.4 Minimum Royalties. To maintain its rights hereunder, Licensee shall
pay to Licensor minimum royalties during the term Licensor is obligated to make
royalty payments to Licensee for each Product under Section 4.3 above at the
rate of [Confidential Treatment Requested] per Contract Year (or a pro-rated
amount if the term is shorter than a Contract Year) for each Product (i.e.,
WILL-POWER and QUIT'M Products). Such royalties shall be paid each Contract
Quarter as follows: (i) [Confidential Treatment Requested]; (ii) less the
aggregate amount of Earned Royalties actually paid to Licensor for the Contract
Quarter then ended; (iii) less the amount of royalties paid to Licensor in any
Contract Quarter for that Contract Year which exceeded [Confidential Treatment
Requested]; and (iv) less the aggregate amount of royalties paid by any
sublicensee or assignee of this Agreement; provided, however, that in no event
shall aggregate royalty payments to Licensor hereunder be less than
[Confidential Treatment Requested] for any Contract Year. Licensee's failure to
pay any and all amounts payable under the preceding sentence within forty-five
(45) days after receipt of written notice from Licensor that such amounts have
not been timely paid shall render the licenses granted hereunder void and
thereupon, Licensee shall have no further rights or interests of any kind or
nature with respect to the Products, Know-how, Licensed Trademarks or Licensed
Patents and Licensee shall take any and all action that Licensor may request to
further document the provisions hereof. In the event that Licensee complies with
Section 4.3 but fails to pay the minimum royalties due under this Section 4.4,
Licensor's exclusive remedy is to terminate this Agreement, and Licensor will
not be entitled to any damages or injunctive or mandatory relief.
4.5 Quarterly Payments and Reports. All royalties due Licensor from
Licensee hereunder shall be payable on a Contract Quarterly basis. Within thirty
(30) days after the end of each Contract Quarter during the term of this
Agreement, Licensee shall pay to Licensor the royalty due Licensor under
Subsections 4.3 and 4.4 through the end of the preceding Contract Quarter and
shall furnish Licensor with a written statement within forty-five days after the
end of each Contract Quarter setting forth the number of Products sold and the
Net Sales received during such Contract Quarter, and the resulting amount of the
royalty due Licensor under Subsections 4.3 and 4.4.
4.6 Late Payment. Licensee shall pay a late payment fee to Licensor
calculated at a variable rate of 2% over the prime per annum interest rate as
set from time to time by Norwest Bank Minneapolis, N.A., Minneapolis, Minnesota
(the "Interest Rate"), on any and all amounts that are at any time overdue and
payable to Licensor under this Agreement, such interest being calculated on each
such overdue amount from the date when such amount became due to the date of
actual payment thereof. Such late payment fee shall be in addition to and not in
lieu of any and all other rights or remedies that Licensor may have under this
Agreement or law relating to a default by Licensee under this Agreement.
4.7 Records. During the term of this Agreement and for three (3) years
after termination of this Agreement, Licensee shall at all times maintain
accurate and up-to-date records containing complete data from which amounts due
to Licensor under this Agreement may be readily calculated. Further, Licensee
shall preserve and permit examination of such records by Licensor's
representatives at reasonable intervals and under reasonable conditions during
the term of this Agreement and for three (3) years thereafter and, upon request,
shall supply to Licensor's representatives all information useful in making a
proper audit and verification of Licensee's performance of its obligations under
this Agreement.
5. INDEMNIFICATION.
5.1 Indemnification by Licensor. Licensor shall indemnify and hold
Licensee harmless from and against any and all claims, damages, costs (including
reasonable attorneys' fees), judgments and liabilities of any kind or nature
arising out of the breach by Licensor of any of his warranties, representations
and covenants under this Agreement.
5.2 Indemnification by Licensee. Licensee shall indemnify and hold
Licensor harmless from and against any and all claims, damages, costs (including
reasonable attorneys' fees), judgments and liabilities of any kind or nature (a)
arising out of the breach by Licensee of any of its covenants under this
Agreement or (b) arising out of or related to the use, development,
manufacturing or marketing of the Products, Licensed Trademarks, Know-how or
Licensed Patents, including but not limited to, product liability claims.
6. PROTECTION AGAINST INFRINGEMENT. In the event that either party
becomes aware of activity on the part of any, or claim made by a, third party
which may constitute or relate to an infringement of the Licensed Patents, or
any other intellectual property rights with respect to which Licensee is granted
a license hereunder, such party shall give the other party written notice
thereof. At Licensee's sole discretion, Licensee may, at its sole expense,
initiate and thereafter diligently maintain reasonable efforts to prevent and
▇▇▇▇▇ such infringement, including the initiation of an appropriate civil action
for infringement and the taking of such other action as may be necessary or
appropriate, to enforce the Licensed Patents or other intellectual property
rights with respect to which Licensee is granted a license hereunder or to
defend any similar action initiated by a third party. In such event, (i)
Licensor will cooperate fully in all respects and permit the use of his name in,
and as a party to, all such suits and execute all pleadings, documents and other
papers necessary or appropriate in conjunction therewith and (ii) Licensee shall
receive the full benefits of any action it takes pursuant to this subsection,
including retaining all sums recovered in any such suit or in settlement
thereof, and if such proceeds do not fully reimburse Licensee for its legal
expenses incurred in connection with such litigation, Licensee may deduct such
amount from future royalty payments to Licensor. Licensor may, at his option and
his cost and expense, participate in meetings with Licensee and/or its counsel
and receive all pleadings, documents and other related papers useful for the
purpose of keeping Licensor informed of the status of any proceedings commenced
by Licensee pursuant to this Section 6. Licensor may, at his option, join
Licensee in the defense of the intellectual property rights by agreeing to pay
Licensee a minimum of six percent of Licensee's legal costs; provided, however,
that if Licensee and Licensor are successful in such joint defense, then any
damages awarded shall be divided as follows: (a) reimbursement to Licensor and
Licensee for legal expenses (pro rata to actual expenses in the event that the
damages awarded or actually collected are insufficient to cover 100% of the
parties' total legal expense); (b) if any award remains after such payments,
Licensor shall receive six percent of the full amount of the award, but not to
exceed amounts paid by Licensor to Licensee for legal expenses; and (c) if any
award remains after such payments, such remaining amount shall be allocated 75%
to Licensee and 25% to Licensor.
7. TERM AND TERMINATION.
7.1 Term. This Agreement shall commence on the effective date hereof
and shall expire, unless earlier terminated pursuant to the terms of this
Agreement, upon the expiration of the last of the Licensed Patents to expire.
Notwithstanding the above, royalties shall not be due on any Product where any
Licensed Patent covering such Product has expired.
7.2 Termination. (a) If either party defaults in any of its obligations
under this Agreement, the other party shall have the right to terminate this
Agreement by giving ninety (90) days' written notice of termination specifying
the reason for termination, provided that such notice will be of no effect and
termination will not occur if the specified default is cured prior to the
expiration of said ninety (90) day notice period.
(b) Upon the termination of any license granted under this Agreement,
Licensee may, after the effective date of such termination, sell any of its (i)
completed Products, (ii) Products then in the process of manufacture and (iii)
Products with respect to which manufacture has been committed at the time of
termination by reason of either (x) any contracts for the purchase of materials
to be used in the manufacture of such Products or (y) any contract for the sale
of such Products. All such sales and uses shall be subject to the royalty
provisions of Section 4 of this Agreement as though the termination of this
Agreement had not occurred.
(c) Except as expressly provided in Subsection 7.2(b), after
termination of this Agreement, Licensee may not use, develop, market or sell the
Products, Licensed Trademarks, Know-how, or Licensed Patents in any way or
manner and Licensee shall take any and all steps reasonably requested by
Licensor to fully document the complete vesting of all rights licensed hereunder
to Licensee in Licensor upon any such termination.
7.3 Continuing Obligations. Termination shall not relieve or release
either party from its obligations to make any payment which may be owing to the
other under the terms of this Agreement or from any other liability which either
party may have to the other arising out of the terms of this Agreement.
Additionally, notwithstanding anything contained herein to the contrary,
Sections 3 and 5, and Subsections 4.3, 4.5, 4.6 and 4.7 shall survive
termination of this Agreement and remain in full force and effect; provided,
that Licensor and Licensee hereby acknowledge that they may not bring claims
against one another based upon the representations and warranties contained in
Section 3, except to the extent such representations and warranties are not
accurate as of the date hereof.
8. ADDITIONAL AGREEMENTS.
8.1 Pre-IND Meeting. Licensee shall meet with the FDA to discuss
procedures and specific requirements necessary to obtain approval to market the
Product currently known as QUIT'M.
8.2 Preliminary Clinical Study. Licensee shall conduct at its expense a
preliminary clinical study on the Product currently known as QUIT'M to determine
its efficacy for smoking alternative/suppression/cessation as established by the
FDA in the Pre-IND meeting and whether it achieves a minimum cessation success
rate of 20%. Licensee shall commence such study no later than May 1, 1996.
8.3 Regulatory Filing. Upon successful completion of the preliminary
clinical study referenced in Subsection 8.2 above, Licensee shall promptly
conduct further clinical studies, if any such studies are necessary to obtain
FDA approval, and prepare and submit at its expense the necessary regulatory
filings to the FDA for the purpose of satisfying federal requirements before
sale of the Products may begin. Licensor shall at Licensee's request provide any
necessary background information, knowledge or test results in his possession to
assist in this area.
8.4 Non-Compete. Licensor agrees to not manufacture, market or license
the rights to manufacture and/or market to any other party any other product
designed as a diet aid or smoking alternative/suppression/cessation aid during
the term of this Agreement.
8.5 Cooperation. Licensor agrees to cooperate with and assist Licensee
in developing and marketing the Products. Licensor shall enter into a Consulting
Agreement in the form attached hereto as Exhibit 8.5.
9. MISCELLANEOUS.
9.1 Force Majeure. Neither party shall be responsible for any delay or
failure in the performance of any obligation hereunder due to strikes, lockouts,
fires, floods, acts of God, embargoes, wars, riots, or act or order of any
government or governmental agency; provided, however, nothing set forth in this
Subsection 9.1 shall be construed to relieve Licensee of the requirement that it
pay minimum royalties pursuant to Subsection 4.4 hereof or suffer a loss of the
licenses herein granted.
9.2 Waiver. The waiver or failure of either party to enforce the terms
of this Agreement in one instance shall not constitute a waiver of said party's
right under this Agreement with respect to other violations.
9.3 Remedies. Except as otherwise provided herein, the election by
either party of any particular right or remedy shall not be deemed to exclude
any other right or remedy and all rights and remedies of either party shall be
cumulative. Except as otherwise provided herein, the parties agree that, in
addition to any other relief afforded under the terms of this Agreement or by
law, each party shall have the right to enforce this Agreement by injunctive or
mandatory relief to be issued against the other party, it being understood that
both damages and specific performance shall be proper modes of relief and are
not to be considered as alternative remedies.
9.4 Notices. All notices and replies thereto required hereunder shall
be in writing, signed by the party giving notice, placed in an envelope and
either delivered by hand or sent by facsimile or registered mail, postage
prepaid, return receipt requested, and properly addressed to the other party.
Notices sent by mail shall be deemed received on the date of receipt indicated
by the receipt verification provided by the United States Postal Service.
Notices sent by facsimile shall be deemed received on the date indicated on the
sender's confirmation report. Notice shall be given, mailed or sent to the other
party at the following addresses or at such other address as may be given by
proper notice:
If to Licensor: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇ Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Licensee: CNS, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Either party hereto may designate any other address for notices given
hereunder by written notice to the other party given at least ten (10) days
prior to the effective date of such change.
9.5 Entire Agreement. This Agreement represents the entire agreement
between the parties with respect to the subject matter hereof; there are no oral
promises, representations or warranties. No modification of this Agreement or
waiver of any of its terms shall be binding upon the parties unless said
modification or waiver is in writing, signed by both parties, and states that it
is an amendment to this Agreement.
9.6 Parties in Interest. This Agreement shall inure to the benefit of,
be binding upon, and be enforceable against the parties hereto, their respective
heirs, successors and assigns.
9.7 Governing Law. This Agreement shall be governed by, construed and
enforced under the internal laws (and not the laws of conflicts) of the State of
Minnesota.
9.8 Severability. If any portion of this Agreement is held invalid by
the final judgment of any court of competent jurisdiction, such portion shall be
deemed revised or "blue lined" so that it is enforceable to the fullest extent
possible under applicable law and the remaining provisions shall remain in full
force and effect as if such invalid provision had not been included herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CNS, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Its: President
LIST OF EXHIBITS
Number Description
1.3 Licensed Patents
4.2 Stock Option Agreement
8.5 Consulting Agreement
EXHIBIT 1.3
LICENSED PATENTS
1. U.S. Patent No. 4,521,427 (for the product currently known as
"WILL-POWER").
2. U.S. Patent No. 5,336,680 (for the product currently known as
"QUIT'M").
EXHIBIT 4.2
CNS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the ____ day of January, 1996,
between CNS, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, a non-employee consultant/advisor to the Company (the "Advisor").
Advisor will assist the Company in the development and marketing of the
products currently known as "WILL-POWER" and "QUIT'M" (the "Products"). The
Company desires to afford Advisor an opportunity to purchase shares of its
common stock, of the par value of One Cent ($.01) per share (the "Common
Stock"), as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. Grant of Option. The Company hereby grants to the Advisor the right
and option (the "Option") to purchase from the Company all or any part of an
aggregate amount of 100,000 shares of the Common Stock of the Company on the
terms and conditions herein set forth.
2. Purchase Price. The purchase price of the shares of the Common Stock
covered by this Option shall be $____ per share.
3. Term of Option. The term of the Option shall be for a period of five
(5) years from the date set forth above, subject to earlier termination as
hereinafter provided.
4. Termination of License or Consulting Agreements. If the License
Agreement dated the date hereof by and between the parties hereto (the "License
Agreement") or the Consulting Agreement dated the date hereof between the
parties hereto (the "Consulting Agreement") is terminated for any reason, the
Option may be exercised (to the extent that Advisor shall have been entitled to
exercise the Option under Paragraph 5 of this Agreement prior to the date of the
termination of the License Agreement or Consulting Agreement) by the Advisor for
a period of 12 months.
5. Exercise of Option. The Option may be exercised by the Advisor as
set forth below:
a. 50,000 shares upon the successful completion of a preliminary
clinical study to confirm the efficacy for smoking cessation.
The study will be deemed to be "successful" if (i) the
Company, in its sole discretion, determines that the study is
sufficient and (ii) the study satisfies the requirements of
the Food and Drug Association (the "FDA") for such study,
based upon the Company's Pre-IND meeting with the FDA.
b. 25,000 shares upon the Company's marketing of or receipt of
all necessary regulatory approvals to market either of the
Products as a smoking alternative/suppression/cessation aid.
c. 25,000 shares upon the Company's marketing of or receipt of
all necessary regulatory approvals to market either of the
Products as a dietary aid.
Notwithstanding the foregoing, the Option shall be exercisable in full,
without regard to any installment exercise provisions, for a period of sixty
(60) days prior to or subsequent to the occurrence of any of the following
events: (i) dissolution or liquidation of the Company other than in conjunction
with a bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 70% or more of the outstanding
Common Stock of the Company.
6. Non-Transferability. The Option shall be transferable only by will
or the laws of descent and distribution, and the Option may be exercised, during
the lifetime of the Advisor, only by the Advisor.
7. Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by written notice to the
Secretary of the Company at the principal office of the Company. Such notice
shall (i) state the election to exercise the Option and the number of shares in
respect of which it is being exercised, (ii) be signed by the person so
exercising the Option, and (iii) be accompanied by payment of the full purchase
price of such shares. The purchase price shall be payable in cash or by check or
bank draft payable to the Company. In the event the Option shall be exercised by
any person other than the Advisor, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the Option. All shares
that shall be purchased upon the exercise of the Option as provided herein shall
be fully paid and nonassessable.
8. General. The Company shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Option Agreement, shall pay
all original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and laws and regulations which, in the
opinion of counsel for the Company, shall be applicable thereto. Upon Advisor's
exercise of the Option, the Company shall cause the Company's stock transfer
agent to promptly issue to the Advisor certificates evidencing shares purchased
by Advisor from time to time pursuant to this Option Agreement.
9. Status. Neither the Advisor nor the Advisor's executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect of the shares transferable upon exercise
of the Option granted hereunder, unless and until certificates representing such
shares shall be endorsed, transferred, and delivered and the transferee has
caused the Advisor's name to be entered as the shareholder of record on the
books of the Company.
10. Company Authority. The existence of the Option herein granted shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure of its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock of the Company or
the rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
11. Disputes. As a condition of the granting of the Option herein
granted, the Advisor agrees, for the Advisor and the Advisor's personal
representatives and successors, that any dispute or disagreement which may arise
under or as a result of or pursuant to this Agreement shall be determined by the
Compensation Committee of the Board of Directors of the Company, in its sole
discretion and acting in good faith, and that any interpretation by said
Committee of the terms of this Agreement shall be final, binding and conclusive.
12. Taxes. Advisor shall, no later than the date as of which any part
of the value of the Option first becomes includible as compensation in his gross
income for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to the award. The
obligations of the Company shall be conditional on such payment or arrangements
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the participant.
13. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successor of the parties hereto.
IN WITNESS WHEREOF, the Company and the Advisor have executed this
Agreement as of the day and year first above written.
CNS, INC.
By:_____________________________
Its:__________________________
ADVISOR:
_____________________________
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EXHIBIT 8.5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into as of
this ____ day of January, 1996 by and between CNS, Inc., a Delaware corporation
("CNS"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("Consultant").
R E C I T A L S:
A. Consultant has developed certain products containing
2-Acetylpyridine to be used as a dietary aid and a smoking
alternative/suppression/cessation aid (the "Products").
B. CNS is acquiring, as of the effective date of this Agreement, a
license to manufacture and sell the Products pursuant to a License Agreement
between the parties hereto (the "License Agreement").
C. CNS and Consultant mutually desire to enter into an agreement
whereby Consultant shall render consulting services as provided herein to CNS
and CNS shall pay Consultant as provided herein.
AGREEMENT
In consideration of the foregoing and of the covenants and agreements
hereinafter contained, CNS and Consultant agree as follows:
i. CONSULTATION PERIOD.
CNS hereby retains Consultant for the period commencing on the date
hereof and terminating upon the termination of the License Agreement. Consultant
accepts such consultancy upon the terms and conditions hereinafter set forth.
ii. DUTIES OF CONSULTANT.
Upon reasonable notice (not less than 21 days), Consultant will, at
such times and places as requested by CNS, advise, consult with and render
services and assistance to CNS in connection with the design, testing,
manufacture, regulatory approval, marketing and sale of the Products, and the
development of improvements and enhancements of the Products, all as further
specified by CNS from time to time. At CNS's request, during any calendar year,
Consultant shall devote up to thirty days to fulfilling his duties and
responsibilities under this Agreement and shall arrange his schedule to be
reasonably available to CNS upon reasonable notice during normal business hours
during the term of this Agreement.
iii. COMPENSATION.
3.1 As compensation for services rendered and performed and
Consultant's other obligations hereunder, CNS shall grant Consultant an option
to purchase 100,000 shares of the Common Stock of CNS at an option price equal
to the closing price of CNS's stock on the Nasdaq National Market on the date
hereof.
3.2 In addition, CNS shall pay Consultant $1,500 for the first day of
services and $500 for each day of services thereafter as compensation for
services rendered and performed by Consultant on assignments that require
Consultant to travel outside of Tierra Verde, Florida or Lockport, Illinois.
Such fees shall be payable within 30 days of receipt of Consultant's invoice for
services rendered.
3.3 Consultant shall be responsible for all travel and other expenses
incurred by Consultant in the performance of his services hereunder.
iv. INDEPENDENT CONTRACTOR.
It is understood and agreed by the parties that the consulting service
hereunder shall be provided by Consultant as an independent contractor and not
as an employee or agent of Partnership.
v. CONFIDENTIALITY.
5.1 Consultant acknowledges that CNS holds as confidential certain
information and knowledge respecting the intimate and confidential affairs of
CNS in the various phases of its business, including, but not limited to, trade
secrets, processes, formulae, data and know-how, improvements, inventions,
techniques, marketing plans, strategy, forecasts and customer lists as it
relates to the Products and its other products ("Proprietary Information").
Consultant acknowledges that CNS may disclose certain Proprietary Information to
Consultant during the term of this Agreement to enable Consultant to perform
Consultant's duties hereunder. To assure that CNS will disclose to Consultant
all of the Proprietary Information necessary for Consultant to perform his
duties hereunder, Consultant hereby agrees not to disclose to any person other
than an employee of CNS, or use in other than CNS's business, any Proprietary
Information or material relating to the business of CNS, such as, but not
limited to, trade secrets, mailing lists, customer lists, pricing information,
manufacturing processes, distribution systems, computer systems or programs,
algorithms, etc., either during or after the termination of this Consulting
Agreement, except with the express written permission of CNS which will detail
the confidential information or material so authorized. Consultant also
understands that information and materials received in confidence by Consultant
from third parties either within or outside of CNS with regard to CNS or its
business is included within the meaning of this paragraph. Upon termination,
Consultant agrees not to disclose such confidential information or to make
copies of such written confidential information or material and Consultant
agrees to return all written confidential information to CNS.
5.2 Consultant represents that his performance of all of the terms of
this Agreement as a Consultant to CNS does not and will not breach any agreement
to keep in confidence Proprietary Information acquired by him in confidence or
in trust prior to his engagement as a consultant by CNS. Consultant has not
entered into, and agrees that he will not enter into, any agreement either
written or oral in conflict herewith.
6. GENERAL PROVISIONS.
6.1 Waiver. The failure to enforce any provision of this Agreement
shall not be construed as a waiver of any such provision nor prevent a party
thereafter from enforcing that provision or any other provision of this
Agreement. The rights granted the parties are cumulative, and the election of
one shall not constitute a waiver of such party's right to assert all other
legal and equitable remedies available under the circumstances.
6.2 Notices. All notices, requests, demands and other communications
hereunder shall be in writing, and shall be deemed to have been duly given on
the date of service if served personally on the party to whom notice is given or
within seventy-two (72) hours after mailing if mailed, certified mail, first
class, postage prepaid, as follows:
TO CNS: CNS, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
TO CONSULTANT: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇ Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
6.3 Assignment. No rights or obligations under this Agreement shall be
assignable or delegable by Consultant. The rights and duties under this
Agreement may be assignable by CNS to its successor. Except as provided in the
immediately preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the respective successors and assigns of the parties
hereof.
6.4 Severability. The provisions of this Agreement are severable. If
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions or
enforceable parts hereof shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
6.5 Prior Agreements - Modifications. This Agreement supersedes all
prior agreements and understandings between the parties, oral or written with
respect to the subject matter hereof. No modification, termination or attempted
waiver shall be valid unless in writing and signed by the party against whom
such modification, termination or waiver is sought to be enforced.
6.6 Counterparts. This Agreement may be executed simultaneously 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.
6.7 Attorneys' Fees. If any party to this Agreement shall bring any
action for any relief against the other, declaratory or otherwise, arising out
of this Agreement, the losing party shall pay to the prevailing party a
reasonable sum for attorney fees incurred in bringing such suit and/or enforcing
any judgment granted therein, all of which shall be deemed to have accrued upon
the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney fees and
costs incurred in enforcing such judgment. For the purpose of this section,
attorney fees shall include, without limitation, fees incurred in the following:
(1) postjudgment motions; (2) contempt proceedings; (3) garnishment, levy, and
debtor and third party examinations; (4) discovery; and (5) bankruptcy
litigation.
6.8 Termination. CNS may terminate this Agreement in the event of death
or disability of Consultant, or in the event Consultant breaches any provision
of this Agreement and such breach remains uncured thirty (30) days after written
notice from CNS explaining the nature of such breach.
6.9 Governing Law. This Agreement shall be construed and enforced in
accordance with the substantive laws of the State of Minnesota, excluding its
choice of law provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
CNS, INC.
By:_____________________________
Its:__________________________
_____________________________
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