Sample Business Contracts

Option Agreement - Sloan-Kettering Institute for Cancer Research and Celsion Corp.

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                                OPTION AGREEMENT

        Effective on February 26,1999 (hereinafter the "Effective Date")

     SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH, a not-for-profit corporation
organized  and  existing  under the laws of the State of New York,  and having a
place of  business  located  at 1275  York  Avenue,  New  York,  New York  10021
(hereinafter "SKI") and

     CELSION CORPORATION, a corporation organized under the laws of the State of
Maryland,  and having a place of business  located at 10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705 ("CELSION"). .

WHEREAS, SKI possesses certain PATENT RIGHTS (defined herein below), relating to
heat sensitive gene therapy,  uses of DNA-PK to enhance  sensitization of tumors
to conventional treatments;

WHEREAS,  SKI  wishes  to have  the  PATENT  RIGHTS  evaluated  and  applied  to
commercial  purposes  as quickly as possible  in order that  products  resulting
therefrom may be available for public use and benefit;

WHEREAS,  CELSION is focused on hyperthermic  treatment of cancer and would like
to have an option to obtain an exclusive  license to use said PATENT  RIGHTS for
such use in the treatment of cancer; and

WHEREAS,  SKI is willing to grant an OPTION to CELSION  for a license to use the
PATENT RIGHTS on the terms and conditions hereinafter set forth.

NOW,  THEREFORE,  in view of these premises and in  consideration  of the mutual
covenants herein contained, the Parties hereto agree as follows;

                                    ARTICLE 1

                             ARTICLE I - DEFINITIONS

For the purpose of this  Agreement,  the following  words and phrases shall have
the following meanings:


     1.1 "CELSION"  shall  include its  Affiliates,  that is, any person,  firm,
corporation or other entity controlling,  controlled by, or under common control
with a party hereto.  The term "control" wherever used throughout this Agreement
shall mean  ownership,  directly or  indirectly,  of more than 50% of the equity
capital. With regard to SKI, "Affiliate" shall mean the Memorial Sloan-Kettering
Cancer Center and the Memorial Hospital for Cancer and Allied Diseases.

     1.2  "Patent  Rights"  shall  mean all of the  following  SKI  intellectual

          (a)  The United States patent application entitled,  "Uses of DNA-PK",
               filed on July 1, 1998;

          (b)  United States and foreign  patents issued from such  application,
               and from divisionals and continuations of this application;

          (c)  claims of U.S. and foreign continuation-in-part applications, and
               of the resulting  patents,  which are directed to subject  matter
               specifically described in such United States patent application;

          (d)  any reissues or re-examinations of patents described in (a), (b),
               or (c), above.

     1.3 "Field of Use" shall mean the use of the PATENT  RIGHTS in the field of
cancer therapy.

                                    ARTICLE 2

     2.1 SKI hereby grants to CELSION for six (6) months from the Effective Date
an  exclusive  option to an  exclusive,  world-wide  license,  with the right to
sublicense for the PATENT RIGHTS in the FIELD, to be negotiated in good faith on
reasonable  terms  and  conditions,   including  license  issue  fee,  milestone
payments, and royalties. If CELSION decides to exercise this option, it shall so
notify  SKI in  writing  within  the term of this  agreement.  In the  event the
parties,  acting in good faith,  fail to reach a mutually  acceptable  agreement
within three (3) months after commencing negotiations,  SKI shall be entitled to
negotiate a license with a third party for PATENT RIGHTS.

     2.2  Notwithstanding  any other provisions of this Agreement,  it is agreed
that SKI and its  Affiliates  shall  retain the right to practice  the  licensed
PATENT RIGHTS for its own teaching,  research and patient care  activities.  All
rights  reserved  to the  United  States  Government  and  others  under  35 USC,  as amended, shall remain and shall in no way be affected by this


                                    ARTICLE 3

     3.1 Upon signing this  Agreement,  CELSION shall pay to SKI ($ Confidential
Treatment  Requested) U.S.  dollars  (Confidential  Treatment  Requested),  Such
payment  will not be credited  against  fees,  advances or  royalties  under any
license agreement later negotiated.

                                    ARTICLE 4
                               PATENT PROSECUTION

     4.1 Upon signing this  Agreement,  CELSION shall pay to SKI ($ Confidential
Treatment Requested) as reimbursement for past patent expenses.

     4.2 CELSION shall be responsible  for and pay all  reasonable  patent costs
and expenses incurred by SKI for the preparation, filing, prosecution, issuance,
and maintenance of the PATENT RIGHTS during the term of this Agreement. CELSION.
shall pay to SKI all such costs and expenses  within thirty (30) days of receipt
of an invoice of such costs and expenses.

     4.3 SKI shall  diligently  prosecute  and maintain the PATENT RIGHTS in the
United  States and in such  countries as are  determined by SKI and agreed to by
CELSION,  using  counsel of its  choice.  If CELSION  does not agree to bear the
expense of filing  patent  applications  in any foreign  countries  in which SKI
wishes  to  obtain  patent  protection,  then SKI may file  and  prosecute  such
applications  at its own expense and any rights granted  hereunder shall exclude
such countries.

     4.4 SKI shall provide CELSION with copies of all relevant  documentation so
that  CELSION may be informed  and to give  CELSION  reasonable  opportunity  to
advise  SKI of the  continuing  prosecution,  and  CELSION  agrees  to keep this
documentation confidential.

                                    ARTICLE 5

     5.1 Any payment,  notice or other communication  pursuant to this Agreement
shall be  sufficiently  made or given when  delivered  by courier or other means
providing  proof of delivery  to such party at its address  below or as it shall
designate by written notice given to the other party:


In the case of SKI:

Sloan-Kettering Institute for Cancer Research
1275 York Avenue
New York, New York 10021
      Attention: James S. Quirk
                 Senior Vice President
                 Research Resources Management

In the case of LICENSEE:

Celsion Corporation
10220-1 Old Columbia Road
Columbia, MD 21046-1705
    Attention:   Augustine Y. Cheung, Ph.D.

                                    ARTICLE 6
                                NON-USE OF NAMES

     6.1 CELSION  shall not use the names of SKI or its  Affiliates,  nor any of
their employees, nor any adaptation thereof, in any advertising,  promotional or
sales literature without prior written consent obtained from SKI in each case.

                                    ARTICLE 7

     7.1 This Agreement  shall terminate six (6) months after the Effective Date
or three (3) months after CELSION  exercises its option granted under Article 2,
whichever is longer, unless terminated sooner as provided in this Article 7.

     7.2 CELSION  shall be entitled to terminate  this  Agreement for any reason
upon thirty (30) days advance written notice to SKI.

     7.3 Upon any material  breach of this Agreement by CELSION,  SKI shall have
the right to terminate  this  Agreement and the rights,  privileges  and license
granted hereunder by thirty (30) days' notice to CELSION. Such termination shall
become  effective  unless  CELSION shall have cured any such breach prior to the
expiration of the thirty (30) day period.


     7.4 SKI may terminate  this  Agreement if CELSION  becomes  insolvent or, a
petition in bankruptcy is filed against CELSION and is consented to,  acquiesced
in or remains  undismissed  for thirty (30) days; or makes a general  assignment
for the  benefit of  creditors,  or a receiver is  appointed  for  CELSION,  and
CELSION does not return to solvency  before the  expiration of a thirty (30) day

     7.5 Upon  termination  of this  Agreement,  for any reason,  nothing herein
shall be construed  to release  either  party from any  obligation  that matured
prior to the effective date of such termination,

                                    ARTICLE 8
                            MISCELLANEOUS PROVISIONS

     8.1 This  Agreement  shall be governed by and construed in accordance  with
the laws of the State of New York.

     8.2 This  Agreement  shall be binding  upon and inure to the benefit of the
parties  hereto  and their  respective  legal  representatives,  successors  and
permitted assigns.

     8.3 Except as otherwise expressly set forth in this Agreement, SKI MAKES NO

     8.4 Paragraph  headings are inserted  herein for  convenience  of reference
only and do not form a part of this Agreement,  and no construction or inference
shall be derived therefrom.

     8.5 This  Agreement and the  instruments,  documents  and other  agreements
referred to herein or signed  concurrently  set forth the entire  agreement  and
understanding of the parties regarding the subject matter.

     8.6 This Agreement may be executed in any number of  counterparts  and each
of such  counterparts  shall  for  all  purposes  be an  original  and all  such
counterparts shall together constitute but one and the same agreement.

     8.7 This Agreement may be amended,  modified,  superseded or canceled,  and
any of the terms hereof may be waived,  only by a written instrument executed by
each party hereto or, in the case of waiver,  by the party  waiving  compliance.
The delay or failure of any party at any time or times to require performance of
any  provision  hereof  shall in no manner  affect the rights at a later time to
enforce the same. No waiver by any party of any condition or of the breach of


any term contained in this  Agreement,  whether by conduct or otherwise,  in any
one or more  instances,  shall be deemed to be, or  construed  as, a further  or
continuing  waiver of any such  condition  or of the  breach of such term or any
other term of this Agreement.

     8.8 No person not a party to this Agreement,  including any employee of any
party to this  Agreement,  shall  have or  acquire  any rights by reason of this
Agreement,  nor shall any party hereto have any  obligations  or  liabilities to
such  other  Person by  reason  of this  Agreement.  Nothing  contained  in this
Agreement shall be deemed to constitute the parties  partners with each other or
any Person.

     8.9 This  Agreement  may not be assigned by CELSION  without  prior written
consent from SKI,  except that CELSION may,  without SKI's consent,  assign this
Agreement to any entity that it may merge into,  consolidate  with,  or transfer
substantially all of its assets  ("substantially"  being EIGHTY PERCENT (80%) or
more thereof) as an entirety,  so long as the successor surviving corporation in
any such merger,  consolidation,  transfer or reorganization  assumes in writing
the obligations of this Agreement.

     8.10 The provisions of this Agreement are severable,  and in the event that
any  provisions  of  this  Agreement  shall  be  determined  to  be  invalid  or
unenforceable  under  any  controlling  body  of the  law,  such  invalidity  or
unenforceability  shall not in any way affect the validity or  enforceability of
the remaining provisions hereof.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their duly authorized representatives as of the date
first written above,

Signed by /s/G.J.Bernhardt                Signed by /s/Augustine Y. Cheung
          ----------------                         ----------------------
          James S. Quirk                            Augustine Y. Cheung, Ph.D.
          Senior Vice President                     Chairman
          Research Resouces Management

Date": 3/16/99                            Date:   3/11/99
       -------                                    -------


                              Senior Vice President
                          Research Resources Management

                                 March 16, 1999


     In my absence,  Mr.  Gustave J.  Bernhardt,  Director,  Research  Resources
Management,  will  sign as an  institutional  official  for the  Sloan-Kettering
Institute for Cancer Research.

                               /s/ James S. Quirk
                                   James S. Quirk
                                   Senior Vice President


                     Memorial Sloan-Kettering Cancer Center
                   1275 York Avenue, New York, New York l0021
                   NCI-designated Comprehensive Cancer Center