License Agreement - StemCells Inc., Neurospheres Ltd. and Neurospheres Holdings Ltd.
LICENSE AGREEMENT
This license agreement is between STEMCELLS, INC. ("SCI"), a Delaware
corporation and NEUROSPHERES LTD., ("NS"), an Alberta corporation, and
NEUROSPHERES HOLDINGS LTD., ("NHL"), an Alberta corporation and is dated
effective as of October 30 2000.
RECITALS:
A. SCI (formerly known at that time and subsequently until May 23, 2000 as
CytoTherapeutics, Inc. ("CTI")) and Dr. Samuel Weiss ("Dr. Weiss") and
Dr. Brent A. Reynolds ("Dr. Reynolds") entered into an evaluation &
option agreement dated July 6, 1992 relating to the evaluation of certain
cells and a consulting agreement. Drs. Weiss and Reynolds subsequently
transferred all of their rights under these agreements to NS. These
agreements were terminated on execution of the Contract Research and
License Agreement.
B. On March 14, 1994 NS and NHL entered into an assignment agreement under
which NS transferred intellectual property rights to NHL (the "Assignment
Agreement") and a simultaneous license agreement from NHL to NS providing
the exclusive rights to use such assigned intellectual property rights
(the "NS/NHL License").
C. SCI and NS entered into a certain Contract Research and License Agreement
(the "1994 License Agreement") and SCI and NHL entered into a backup
license agreement on substantially the same terms as the License
Agreement (the "BackUp License") both dated March 15, 1994.
D. SCI and NS and NHL disagreed on the scope of the 1994 License Agreement
and the manner in which they would collaborate and on other matters and,
in order to clarify the rights and obligations of the parties, they
entered into a 1997 License Agreement dated as of April 1, 1997 (the
"1997 License Agreement") pursuant to which, among other things, NS
licensed the Existing Patent Rights and rights to the Existing Cell
Technology to SCI (as those terms are defined herein)..
E. The parties now desire to enter into a new agreement, to expand the scope
of the rights licensed by NS to SCI, on the terms set forth herein, in
addition to the rights granted to SCI and the obligations of SCI in the
1997 License Agreement, but except as expressly provided herein, NOT to
supercede or replace the 1997 License Agreement, which shall remain in
full force and effect.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
The following capitalized terms used in this Agreement shall have the meanings
given below unless the context clearly requires otherwise.
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1.01 "Affiliate" shall mean any corporation, company, partnership, joint
venture and/or firm which controls, is controlled by, or is under common
control with a party. For purposes of this definition, "control" shall
mean (a) in the case of corporate entities, direct or indirect ownership
of more than 50% of the stock or shares entitled to vote for the election
of directors; and (b) in the case of non-corporate entities, direct or
indirect ownership of more than 50% of the equity interest with the power
to direct the management and policies of such non-corporate entities.
1.02 "Agent" shall mean ***** .
1.03 "Cells" shall mean ***** ; and
An EGF-responsive neuronal stem cell includes:
***** .
1.04 "Cell Replacement Therapy" shall mean ***** .
1.05 "Cell Technology" shall mean ***** .
1.06 "Confidential Information" shall mean any and all information of or about
a Person including all information relating to any technology, product,
process, business information or other intellectual property of such
Person (including, but not limited to, owned or license intellectual
property rights, data, know-how, samples, technical and non-technical
materials and specifications, as well as any business plan or other
confidential commercial information of or about such Person).
Notwithstanding the foregoing, information shall not be considered
"Confidential Information" with respect to such Person to the extent that
any other Person possessing such information can demonstrate by written
record or other suitable physical evidence that:
(a) such specific information was lawfully in such other Person's
possession or control prior to the time such information was
disclosed to such other Person by the Person to whom the information
relates;
(b) such specific information was developed by one or more employees of
such other Person without such employee having access to the
Confidential Information;
(c) such specific information was lawfully obtained by such other Person
from a third party under no obligation of confidentiality to the
Person to whom such information relates; or
(d) such specific information was at the time it was disclosed or
obtained by such other Person, or thereafter became, publicly known
otherwise than through a breach by such other Person of such other
Person's obligations to the Person to whom such information relates.
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1.07 "SCI Sublicensee" or "Sublicensee" shall mean any Person, including an
Affiliate of SCI, to whom SCI shall have licensed any or all of its
rights under this Agreement.
1.08 "Dollar(s)" (including the symbol "$") shall mean United States
dollar(s).
1.09 "Effective Date" shall mean October 30, 2000.
1.10 "E.g." shall mean, for example, but not in limitation.
1.11 "Existing Cell Technology" shall mean the entire portion of Cell
Technology that existed and was provided to CTI as of April 1, 1997.
1.12 "Existing Patent Rights" shall mean those Patent Rights described in the
1997 License Agreement, including the patents and patent applications
listed on Exhibit A in the 1997 License Agreement and any inventions made
by NS or NHL as of April 1, 1997, to the extent they applied to the
making, use or sale of Products or performance of Services in the
Existing Field.
1.13 "Existing Field" shall mean ***** .
The Existing Field does not include:
***** .
The foregoing exclusions from the Existing Field define exclusions from
the Existing Field, and shall have no other meaning (e.g., they are not a
contractual prohibition against SCI from engaging in any activity it
would be otherwise entitled to engage in).
1.14 "New Field" shall mean ***** .
1.15 "Gross Revenues" shall mean ***** .
1.16 "Improvement" shall mean any enhancement of, improvement to, or
technology related to, the intellectual property licensed to SCI
hereunder that is made after the Effective Date.
1.17 "Net Sales" means ***** .
1.18 "New Cell Technology" shall mean all Cell Technology, exclusive of and
not including Existing Cell Technology.
1.19 "New Patent Rights" shall mean any and all Patent Rights, including those
listed on Ex. B, that are exclusive of and not included in Existing
Patent Rights.
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1.20 "Patent Rights" shall mean (i) any patents and patent applications
throughout the world that NS or NHL owns or has rights to as of the
Effective Date of this Agreement (which shall include, without
limitation, patent and patent applications as set forth on Exhibit A),
which without the license to SCI hereunder would be infringed by the
making, using or selling of Products or performing of Services, (ii) all
foreign counterparts of such patents and patent applications, (iii) all
substitutions, extensions (including patent term extensions), reissues,
renewals, divisions, continuations, and continuations-in-part in respect
of the foregoing; (iv) any inventions conceived or reduced to practice
that NS or NHL owns or has rights to. Patent Rights shall include,
without limitation, Existing Patent Rights and New Patent Rights as
listed in Exhibits A and B.
1.21 "Person" shall mean any individual, corporation, governmental body or
other legal entity.
1.22 "Phase I Clinical Trial" shall mean a human clinical trial in any country
that is intended to evaluate the safety and/or pharmacological effect of
a product in subjects, or that would otherwise satisfy the requirements
of 21 CFR 312.21(a), or its foreign equivalent.
1.23 "Phase II Clinical Trial" shall mean a human clinical trial in any
country that is intended to evaluate the effectiveness of a product for a
particular indication or indications in patients with the disease or
indication under study, or that would otherwise satisfy the requirements
of 21 CFR 312.21(b), or its foreign equivalent.
1.24 "Phase III Clinical Trial" shall mean a pivotal human clinical trial in
any country the results of which could be used to establish safety and
efficacy of a product as a basis for a marketing approval application
submitted to FDA, or that would otherwise satisfy the requirements of 21
CFR 312.21(c), or its foreign equivalent.
1.25 "Product" shall mean any product or method utilizing Cells or Cell
Technology and the manufacture, use, or sale of which, but for the
license granted to SCI hereunder, would infringe any valid claim of the
Patent Rights or of any Cell Technology.
1.26 "Progenitor Cell" shall mean an undifferentiated Cell capable of limited
proliferation and the production of differentiated functional progeny.
1.27 "Sale" or "Sell" shall mean any sale, lease or other commercial
disposition of the Product in an arms-length transaction with an
unaffiliated third party.
1.28 "Services" shall mean any use of Cells or Cell Technology to perform a
service for a third party for compensation, where such use would, but for
the license granted to SCI hereunder, infringe any valid claim of the
Patent Rights.
1.29 "Stem Cell" shall mean an undifferentiated Cell capable of proliferation,
self maintenance and the production of a large number of differentiated
functional progeny.
1.30 "Transplantation" shall mean ***** .
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1.31 "NL Licensed Technology" shall mean ***** .
2. LICENSE AGREEMENT
2.01 EXCLUSIVE LICENSE
NS hereby grants to SCI ***** .
2.02 NOTICE OF SUBLICENSEE
SCI shall notify NS in writing within thirty (30) days of the grant by
SCI to a SCI Sublicensee of any of its rights hereunder. Such notice
shall include a summary of the terms of the sublicense and verbatim
copies of all clauses necessary for NS to determine and enforce SCI's
financial obligations to NS pursuant to Section 3.12 hereof with respect
to such grant of rights. If a serious question should arise as to the
accuracy or adequacy of such notice, a full copy of such grant shall be
provided by SCI to counsel for NS, PROVIDED, HOWEVER, that (1) only
counsel, and not any individuals otherwise associated with NS, shall have
access to the copy so provided unless necessary for NS to enforce the
obligations of SCI in relation to such sublicense; (2) any text
disclosing the confidential information of the grantee shall first have
been deleted; and (3) the copy shall not be further reproduced, except as
may be required by law, and shall be destroyed after the question has
been resolved. All disclosures pursuant to this Section, unless otherwise
publicly disclosed by SCI, shall be Confidential Information.
2.03 RIGHTS LIMITED TO THOSE EXPRESSED
The rights granted to SCI and NS hereunder shall be limited to the rights
expressly stated to be granted hereunder and no additional rights or
licenses are implied. For greater certainty, the Parties agree that any
payments contemplated under this Agreement (such as, for example,
Royalties, milestone payments, sublicensing fees, etc.) shall be paid by
SCI to NS on any uses of the New Patent Rights or New Cell Technology on
the basis provided in this Agreement.
3. PAYMENTS
3.01 ROYALTIES
(a) SCI shall pay to NS a ***** royalty on any and all Net Sales made,
directly or indirectly, by any of SCI and/or any SCI Affiliates,
regardless of where the Sales are made, and regardless of the number
of valid claims, if any, within Patent Rights that are applicable to
the NL Licensed Technology. Any Affiliate shall be obligated to make
royalty payments to NS to the extent SCI does not do so; SCI,
however, remains primarily liable to NS for the payment of all
royalties including royalties which may be paid by any Affiliate or
Sublicensee hereunder. SCI
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shall pay to NS a royalty on any and all Net Sales made, directly or
indirectly, by any of SCI Sublicensees, regardless of where the
Sales are made, and regardless of the number of valid claims
(provided there is at least one valid issued claim) within Patent
Rights that are applicable to the NL Licensed Technology for the
term, on a country by country basis, as set out in Section 10.02.
The form of royalties payable by any Sublicensee is set out in
Section 3.12.
(b) SCI shall also pay to NS a ***** royalty on any and all Net Sales
made, directly or indirectly, by SCI or StemCells California, Inc.,
an SCI subsidiary, on any product (a "Screening Product") owned or
controlled by SCI or StemCells California, Inc., and which is
discovered or validated by SCI or StemCells California, Inc.
directly through the use of in house Drug Screening Services, or of
any amounts received by SCI or StemCells California from a third
party on account of such a Screening Product. For purposes of this
Section 3.01(b) only, Screening Products are hereby deemed to be
Products solely for purposes of calculating the royalty due
hereunder.
All royalties payable under this Section 3.01 are hereinafter referred to
collectively as "Royalties".
3.02 COMBINATION PRODUCTS
In the event a royalty under Section 3.01 is due on Sales of a Product
which is in the form of a combination product containing one or more
active ingredients that are not themselves Products (a "Combination
Product"), the Net Sales of the Combination Product shall be adjusted by
multiplying the Net Sales of the Combination Product calculated in
accordance with Section 1.16 hereof by a fraction A/(A+B) where A is the
fair market value of the Combination Product without the other active
ingredients, and B is the fair market value of a product containing only
the other active ingredients. The Net Sales as so adjusted shall be the
basis for calculating any Royalty payable on a Combination Product,
provided that the effect of such an adjustment to Net Sales shall be
limited such that it cannot reduce the Royalty rate on a Combination
Product to less than ***** of Net Sales of such Combination Product.
If a Product or Service is based, in part, on rights licensed under the
1997 License Agreement, and, in part, under rights licensed under this
Agreement, then the royalty on such Product or Service shall be ***** on
any and all Net Sales of such Product or Service made, directly or
indirectly, by any of SCI, any SCI Affiliates and/or by any SCI
Sublicensee and the provisions of the above paragraph shall not apply.
3.03 REPORTS AND PAYMENTS
Beginning with the calendar quarter commencing on the Effective Date, SCI
shall deliver to NS within sixty (60) days after the end of each such
calendar quarter, a written report showing all Royalties due under this
Agreement. Each report shall include the rates of
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exchange used to convert such Royalties to U.S. Dollars from the currency
in which Net Sales were made. Each report shall also identify the amount
of Royalties attributable to Sales or the performance of Services. For
the purposes hereof, the rates of exchange to be used for converting
Royalties hereunder to U.S. Dollars shall be those in effect for the
purchase of U.S. dollars at New York, New York at the exchange rate
quoted in the Wall Street Journal on the day five (5) business days prior
to the date on which payment in U.S. Dollars of all Royalties shown to be
due thereon, except as provided in Section 3.04. Royalties on Net Sales
earned by SCI, its Affiliates or SCI Sublicensees in Canadian dollars in
Canada may be paid to NS in Canadian dollars without requirement of first
converting to U.S. Dollars.
In addition, where the royalties for a specific Product or Service is
based on in situ modification and manipulation of CNS stem cells as
claimed in under any of the following patent applications then SCI shall
specifically advise NS in writing of the amount of royalties based on any
of these patent applications. The patent applications to which this
paragraph applies are ***** .
3.04 FOREIGN ROYALTIES
Where Royalties are due hereunder for Net Sales completed in a country
where, by reason of currency regulations or taxes of any kind, it is
illegal for the paying party to transfer Royalty payments out of such
country for Net Sales in that country, such Royalties shall be deposited
in a currency that is permitted for the Person not able to make the
transfer for the benefit or credit of the party entitled to receive such
payments.
3.05 WITHHOLDING TAXES
If a party is required to withhold tax on Royalties payable to the other
party hereunder, such taxes shall be deducted, provided that the
receiving party shall be furnished at the time of deduction with suitable
documentation for obtaining credits to which the receiving party may be
entitled as a result of such withholding on the income taxes of the
receiving party.
3.06 RECORDS
Each party shall keep, and shall require all Affiliates and its
Sublicensee(s) to keep, full, true and accurate books of accounts and
other records containing all information and data which may be necessary
to ascertain and verify all Royalties payable hereunder. During the term
of this Agreement and for a period of ***** following its termination,
the receiving party shall have the right from time to time (not to exceed
twice during each calendar year), to have an accountant or other
nonaffiliated (with the receiving party) representative inspect, at the
receiving party's expense, on a confidential basis, the books, records
and supporting data of the paying party. If such inspection shall reveal
that the paying party has not accurately reported and paid Royalties due
to the receiving party, then the paying party shall pay to the receiving
party any shortfall in royalties payable plus interest thereon at the
prime rate of the Royal Bank of Canada Calgary Branch in
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effect in the last day of the calendar year for which such royalties were
due, plus *****, or if the paying party has overpaid royalties, the
receiving party shall promptly refund the excess. If a shortfall greater
than ***** of the royalties payable in any year should be found to be
due, SCI shall pay the reasonable costs of the audit or inspection.
Unless challenged within ***** after a statement is rendered, Royalties
calculated for the calendar quarter covered by such statement shall be
conclusively presumed to be correct. Upon request by the receiving party
no more than once each calendar year, the paying party shall cause to be
performed an audit of the books, records and supporting data of each
Affiliate or its Sublicensee(s), unless the paying party shall have had
an audit of such Affiliate or its Sublicensee(s) performed within the
preceding 3 month period, in which case the paying party shall share the
relevant results of such audit with the receiving party without charge to
the receiving party. The reasonable costs of such requested audit shall
be borne by the receiving party unless such audit reveals that the paying
party, its Affiliate or its Sublicensee(s) has under reported Net Sales
by more than 10%.
3.07 NO MULTIPLE ROYALTIES
No multiple Royalties shall be payable because any Product, its
manufacture, use or sale or any Service are or shall be covered by more
than one patent or invention or otherwise licensed to SCI hereunder.
3.08 ANNUAL PAYMENTS
SCI shall make annual payments to NS ***** during the term hereof (the
"Annual Payments"), beginning with the first of the following years: (i)
the first full year of commercial sales of any licensed Product are made,
and (ii) the year 2004. Each Annual Payment due hereunder shall be
payable on or before the last day of the year for which it is due. The
Annual Payment in this section 3.08 shall be fully creditable on an
accumulated basis against any royalty income due to NS under section 3.01
or 3.02. Annual Payments are not refundable.
3.09 SCREENING SERVICES FEE
It is hereby acknowledged that under the license granted in Section 2.01,
SCI and StemCells California, Inc. have the right to perform, amongst
other services, in house drug-screening services (i.e., screening of drug
candidates whether proteins or small molecules) for third parties using
one or more techniques which are claimed in Patent Rights ("Drug
Screening Services"). SCI shall be obligated to pay an annual fee to NS
***** for any year or portion thereof during the term hereof in which
either SCI or StemCells California, Inc. performs directly or indirectly
Drug Screening Services for third parties (the "Screening Payment"). Each
Screening Payment due hereunder shall be payable on or before the last
day of the year for which it is due. The Screening Payment is creditable
against Royalties payable under Section 3.01(b) of this Agreement and is
otherwise not refundable.
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3.10 UPFRONT PAYMENTS
(a) SCI shall, within ninety (90) days of the date hereof, pay to NS
***** as a non-creditable, non-refundable fee.
(b) SCI shall, on the execution date of this Agreement, issue to NS
***** shares (the "Shares") of SCI's common stock, $.01 par value
per share (the "Common Stock"). Upon issuance, the Shares shall be
duly authorized, validly issued, fully-paid and non-assessable.
Within forty-five (45) days of the execution date of this Agreement,
SCI shall file a registration statement with the Securities and
Exchange Commission in respect of the resale of the Shares, provided
that, SCI shall include the Shares in any registration statement
pertaining to the sale of shares of the Common Stock of SCI filed by
SCI before the expiration of such forty-five (45) day period. SCI
agrees that it shall keep current and effective any registration
statement which relates to the sale of Shares until such time as all
of the Shares have been sold by NS or two years from the date
hereof, whichever is earlier. If SCI is filing another registration
statement after this two year period then, at the option of NS, it
shall add the NS Shares, if any, in such statement. NS shall advise
SCI in writing when NS no longer holds any of the Shares.
The Upfront payments in this section 3.10 shall be non-cancelable,
non-refundable and non-creditable against earned royalties.
3.11 MILESTONE PAYMENTS
Within thirty (30) days following the achievement of each of the
following milestones with respect to each Product developed by SCI or an
Affiliate on a Product by Product basis, SCI shall give written notice
thereof to NS and shall pay to NS the corresponding milestone payments
described below. All amounts are in U.S. Dollars.
***** upon the discovery or identification of a Product candidate,
provided that each such Product candidate enters pre-clinical
development for a specified disease target in a non-rodent
model;
***** upon acceptance of an Investigational New Drug Application or
substantial equivalent application as may exist from time to
time with the US Food and Drug Administration ("FDA") or its
successor organization of a Product candidate and the
commencement of clinical trials in human patients;
***** upon successful completion of Phase II Clinical Trials (i.e.,
statistically significant demonstration of clinical efficacy
such that it is commercially reasonable to proceed to Phase
III) of a Product candidate;
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***** upon successful completion of Phase III Clinical Trials
(i.e., statistically significant demonstration of efficacy
for the primary efficacy variable(s) of the study and
demonstration of product safety such that it is commercially
reasonable to proceed to market) of a Product candidate;
***** for the first approval to market each Product granted in any
country by that country's applicable government authority
that regulates marketing of Products in that country.
3.12 SUBLICENSING FEE
SCI shall pay to NS ***** and ***** of any securities of a third party,
including upfront, milestone and royalty cash payments, that SCI shall
receive in respect of its issuance of sublicenses of rights in the New
Patent Rights and/or the New Cell Technology. Notwithstanding the
foregoing, SCI shall have no obligation to make any payment to NS based
on its receipt of funds for equity investments in SCI, loans to SCI,
including without limitation loans which are convertible into equity in
SCI, or research and development or sponsored research funding, whether
or not paid to SCI in connection with such a sublicense, including any
product candidate utilizing New Patent Rights and/or the New Cell
Technology. For the purposes of this Section 3.12 reference to any cash
payment shall, to the extent consistent with the preceding sentence
hereof, include any cheque, money order or other negotiable instrument
that may be provided in lieu of cash.
4. IMPROVEMENTS
4.01 IMPROVEMENTS
If after the date this Agreement is signed SCI makes or acquires any
Improvement to the Patent Rights or Cell Technology SCI shall own such
Improvement for its own account and NS shall have no rights therein. The
rights granted hereunder shall be limited to the rights expressly stated
to be granted hereunder and no additional rights or licenses are implied.
5. CONFIDENTIAL INFORMATION
5.01 DISCLOSURE OF CONFIDENTIAL INFORMATION
The following provisions apply to such confidential information either
party has passed to the other party prior to the Effective Date,
information provided pursuant to Section 2.02 to the extent it has not
been made public by SCI, information provided pursuant to Section 6
hereof, and any other Confidential Information that one party may agree,
in writing, to receive from the other party after the Effective Date.
Information on patents, as provided in Section 6, shall be considered
Confidential Information.
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5.02 TREATMENT OF CONFIDENTIAL INFORMATION
Each party hereto shall maintain the Confidential Information of the
other party in confidence, and shall not disclose, divulge or otherwise
communicate such Confidential Information to any third party, or use it
for any purpose, except pursuant to, and in order to carry out, the terms
and objectives of this Agreement, and hereby agrees to exercise every
reasonable precaution to prevent and restrain the unauthorized disclosure
of such Confidential Information by any of its directors, officers,
employees, consultants, subcontractors, sublicensees or agents.
5.03 RELEASE FROM RESTRICTIONS
The provisions of Section 5.02 shall not apply to any Confidential
Information disclosed hereunder which is: required to be disclosed by the
receiving party to comply with applicable laws, or to comply with
governmental regulations (including without limitation to drug testing,
marketing regulations and rules of NASD), in each case only to the extent
required to carry out the work contemplated by this Agreement provided
that the receiving party provides prior written notice of such disclosure
to the other party and takes reasonable and lawful actions to avoid
and/or minimize the degree of such disclosure; or by a party, its
Affiliates and its Sublicensee reasonably necessary for the marketing of
a Product or Service.
5.04 CONFIDENTIAL AGREEMENTS
Each party has employment agreements with its respective employees and
representatives having confidentiality and nonuse commitments consistent
with their obligations hereunder and will require all of their
sublicensees, consultants, agents or others who have access to any of
such information to execute confidentiality agreements covering all
Confidential Information subject to Article 5 and will exercise its
reasonable best efforts to obtain compliance therewith.
6. PRODUCT DEVELOPMENT EFFORTS
6.01 PRODUCT DEVELOPMENT PLANNING AND REPORTING
SCI shall develop annual plans for the development of Products which will
contain such descriptions of Product development efforts to be undertaken
and what resources shall be brought to bear in those efforts, including
human resources and whether such efforts shall be conducted by SCI alone
or through collaborations or partnerships (the "R&D Plans"). On each
anniversary date of this agreement during its term, SCI shall provide to
NS an executive summary report of its R&D Plans for the following year,
and additionally, on the same date, SCI shall also provide to NS an
executive summary report of its Product development efforts during that
preceding year (the R&D Reports"). The R&D Reports shall each include a
description of the expenditures that SCI believes should be included
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in determining whether SCI has spent the Research Baseline Amount, as
defined below, for that preceding year.
6.02 PRODUCT DEVELOPMENT EFFORTS
During the term of this agreement, SCI, its Affiliates, partners,
collaborators, Sublicensees, and others whose expenditures benefit SCI's
Product development efforts, shall, in total, spend no less than *****
per calendar year in direct and indirect costs to develop Products (such
amount is hereinafter the "Research Baseline Amount") in a timely manner
until commercialization. Appropriate expenses falling within the Research
Baseline Amount include all direct and indirect costs of the research
personnel allocated to develop Products, including but not limited to the
costs of all raw materials, labor, outsourcing, clinical trials, and any
overhead amounts allocable to such research group, such as, e.g.,
appropriately amortized equipment costs. In the event that the
expenditure of the Research Baseline Amount is not met, absent reasons of
the kind mentioned in section 12.06 hereof, NS shall give SCI a sixty
(60) day period to correct any deficiency in such expenditure. Following
such sixty (60) day period, in the event the parties agree that SCI has
not met its obligation to spend the Research Baseline Amount, then NS
shall have the right to terminate this Agreement, and the license to SCI
shall revert to the 1997 License Agreement (including all rights to
Existing Patents and Existing Cell Technology) and any rights in New
Patent Rights and the New Cell Technology shall revert to NS. In the
event of such a termination, SCI shall and does hereby grant a
non-exclusive worldwide royalty bearing right and license to NS under the
Existing Patent Rights and the Existing Cell Technology to the extent
required to allow NS to practice the Existing Patent Rights and the
Existing Cell Technology outside of the Existing Field and the New Patent
Rights and the New Cell Technology outside of the Existing Field,
including a right to grant sublicenses of such right, and such license
shall survive such termination. For illustrative purposes, in the event
of such a license NS would be able to use any Existing Patent Rights and
Existing Cell Technology which may be necessary and incidental to
properly exercise the New Patent Rights or New Cell Technology rights
outside the Existing Field but not in the Existing Field. The royalty
rate payable by NS to SCI in the event of exercise of any Existing Patent
Rights and Existing Cell Technology under the license granted to NS under
this Section 6.02 would be ***** of Net Sales and ***** of sublicense
revenue as set forth in Section 3.01 and 3.12 hereof respectively. In the
event the parties cannot agree as to whether SCI met its obligation to
expend the Research Baseline Amount, then the issue shall be resolved in
accordance with the section hereof entitled "Resolution of Disputes." The
parties acknowledge that the license rights provided to NS under this
Section 6.02 would survive any termination of this Agreement.
7. FILING OF PATENTS: PROSECUTION OF INFRINGERS
7.01 FILING, PROSECUTION, AND MAINTENANCE OF PATENTS
SCI shall be responsible for filing, prosecution, maintenance and
enforcement of all patents or patent applications which are part of the
Patent Rights. NHL shall be and
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remain the owner of all Patent Rights, including any New Patent Rights.
SCI shall be entitled to engage its own patent counsel and in all
respects control the prosecution of Patent Rights (with opportunity for
reasonable input from NS), at SCI's cost, and NS and/or NHL shall
transfer or authorize transfer of all files related to Patent Rights to
SCI's counsel, at SCI's cost, within fifteen (15) days from the Effective
Date of this Agreement. SCI shall conduct all dealings with the Patent
Rights in good faith and with the objective of seeking to extend the
scope and duration of the Patent Rights to the extent commercially
reasonable. SCI shall reimburse NS for reasonable out-of-pocket costs and
expenses previously paid to outside counsel and/or outside patent agents
in respect of preparation, filing, prosecution and maintenance of all
such patents and patent applications that are part of Patent Rights
*****.
7.02 DOCUMENTS TO BE PROVIDED.
NS shall promptly provide SCI with copies of all material papers,
specifications, amendments, replies, official actions, and other
documents relating to the filing, prosecution, and maintenance of patent
applications and patents which form part of the Patent Rights. SCI shall
promptly provide NS with copies of all material papers, specifications,
amendments, replies, official actions, and other documents relating to
the filing, prosecution, and maintenance of patent applications and
patents which form part of the Patent Rights in a timely manner and
provide NS with a reasonable period of time in which to provide input and
suggestions to SCI in respect of actions to be taken in relation to the
filing, prosecution, and maintenance of patent applications and patents
which form part of the Patent Rights. SCI shall act reasonably and shall
consider and use such input in any such actions. NS shall be responsible
for the costs of providing its input to SCI.
7.03 INFRINGEMENT OF PATENTS BY THIRD PARTIES.
(a) NOTICE OF INFRINGEMENT.
Each party shall notify the other of any infringement of Patents Rights
by third parties of which it becomes aware.
(b) PROSECUTION OF INFRINGERS.
SCI shall have the sole right to pursue actions against infringers. SCI
may, at its option, pursue action against infringers of the Patent Rights
to an extent and degree as it deems appropriate provided that if SCI
chooses not to pursue any case or cases of infringement then it shall
compensate NS as provided in this Section 7.03 (b), below. NS will
co-operate in the prosecution of such infringers and allow SCI to use its
name in any such suit, sue in NS' name or join NS if legally required
provided that SCI will indemnify and hold harmless NS from any costs,
damage or expenses incurred by NS in respect of any such acts or
co-operation. Any damages or settlement amounts recovered in any such
infringement action shall be considered Net Sales for the purposes of
royalty calculations under this Agreement provided that SCI shall be
permitted to first deduct from such amount the reasonable legal fees and
disbursement incurred in bringing the infringement
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action. The parties recognize and agree that there may be instances where
SCI has compelling reasons for not bringing suit, that in some such cases
SCI may derive a direct or indirect economic benefit, and that in some
such cases SCI may not derive a direct or indirect economic benefit.
Regardless of the reason for not pursuing the case or cases of
infringement SCI shall compensate NS for the losses, if any, attributable
to not bringing the action. In the event the parties cannot agree on the
amount of compensation to NS, then the issue shall be resolved in
accordance with the section hereof entitled "Resolution of Disputes.
Should it become necessary for the initiation or maintenance of an SCI
action against an infringer, NHL hereby agrees to assign to SCI a limited
right and undivided fractional interest under the Patent Rights to take
such actions against infringers. As consideration for such assignment SCI
shall not exercise any such rights for any purpose other than to permit
SCI to take said action and SCI specifically shall not use any rights
other than those expressly provided to SCI under this Agreement
(excluding this Section 7.03). Nothing in this Section shall relieve SCI
or any Affiliate or Sublicensee(s) from any obligations hereunder,
including, without limitation, any obligation to make Royalty or other
payments under this Agreement. SCI shall hold any such right in trust for
the benefit of NHL and shall reassign any such right and interest (and
does so hereby) in the event of a termination of this Agreement or the
license granted hereunder to SCI or upon settlement, discontinuance or
the conclusion of such action.
8. REPRESENTATIONS AND WARRANTIES
8.01 CORPORATE REPRESENTATIONS.
Each party represents and warrants to the other that:
(a) it has all requisite right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated
hereby, and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement; and
(b) the entering into of this Agreement and the performance of its
obligations hereunder does not contravene any agreements to which
such party is a party or its charter documents; and
(c) when executed and delivered by it, this Agreement will constitute
the legal, valid and binding obligation of it.
8.02 INTELLECTUAL PROPERTY REPRESENTATIONS.
NS and NHL represents and warrants as follows:
(a) to NS' and NHL's current knowledge, the patents/patent applications
listed in Ex. A and B are subsisting and no challenge has been taken
to them;
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(b) NS and/or NHL has full right, power and authority to grant the
license in the intellectual property herein granted to the extent of
NS/NHL patent position;
(c) As of the Effective Date, neither NS nor NHL is conducting or
sponsoring any scientific research, development or investigation,
alone, with or through any Affiliate or agent that relates in any
way to Cells or Cell Technology (including Existing Cell Technology
or New Cell Technology);
(d) The Existing Patent Rights listed in Exhibit A and the New Patent
Rights listed in Exhibit B is a complete and accurate list of all
patents, patent applications and inventions conceived or reduced to
practice that NS or NHL owns or has rights to, as of the Effective
Date, and that as of the Effective Date hereof, neither NHL nor NS
has granted any right to another Person inconsistent with the rights
to be exercised by the parties hereunder, and further NHL and NS
represent and warrant that there has been no violation of section
9.04 of the 1997 License Agreement.
Except as otherwise expressly set forth in Sections 8.01 and 8.02, NS,
NHL, their directors, officers, Affiliates, employees and agents make no
representations and extend no warranties of any kind in relation to the
matters addressed under this Agreement. NS, NHL, their directors,
officers, Affiliates, employees and agents expressly disclaim any
representations and extend no warranties of any kind in relation to
whether or not the practice, as licensed under this Agreement, of the NS
Licensed Technology, will violate the rights of any third party. Neither
NS nor NHL has conducted any infringement analysis on potential Products
or Services that may be developed under the NS Licensed Technology. THE
REPRESENTATIONS AND WARRANTIES IN SECTION 8.01 AND 8.02 ARE IN LIEU OF
ALL OTHER REPRESENTATIONS, WARRANTIES AND CONDITIONS, EXPRESS OR IMPLIED
OR ARISING UNDER ANY LEGAL THEORY, CONCERNING THE NS LICENSED TECHNOLOGY,
PATENT RIGHTS OR CELL TECHNOLOGY, OR ANY OF IT, INCLUDING BUT NOT LIMITED
TO THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8.03 INDEMNITY
SCI and NS acknowledge that NS has no involvement in the design,
manufacture, sale or distribution of Products or Services. As a result
SCI agrees that it will defend, indemnify, and hold harmless NS, at SCI's
own expense, from and against all claims, actions, causes of action,
liabilities, claims, suits, judgments, liens, awards, and damages of any
kind and nature whatsoever (hereinafter called "Claims") and expenses,
costs of litigation and attorney's fees related thereto, or incident to
establishing the right to indemnification, to the extent such Claims
arise out of the design, manufacture, sale or distribution of Products or
Services by SCI, any Affiliate or any Sublicensee or on any of there
behalf; provided, however, that NS gives SCI prompt notice in writing of
the Claim and/or institution of such Claim. SCI shall have control of the
defense of any such suit, including appeals, negotiations, and the right
to effect a settlement or compromise
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thereof. NS shall cooperate with SCI (at SCI's expense) in defense of or
settlement of any such Claim.
9. ASSIGNMENT
9.01 LIMITED RIGHT TO ASSIGN.
Either party shall have the right, in connection with its merger or
consolidation or with the sale of substantially all of its assets
utilized in the business to which this Agreement relates, to assign all
of the rights and licenses herein granted, but only to a party who
expressly assumes and agrees to perform all of the obligations of the
assigning party. Such assigning party shall remain liable to the other
party for the due performance of all of its obligations under this
Agreement. Except as set forth in the preceding sentence, neither party
may assign this Agreement or any rights hereunder without the consent of
the other, which consent shall not be unreasonably withheld. In the event
of the assignment hereof, the assigning party shall notify the other
party at least thirty (30) days prior to such transfer.
9.02 PERFORMANCE BY SUBCONTRACTORS
SCI may perform its obligations hereunder through its Affiliates,
consultants or subcontractors, but shall be responsible to NS for the
performance of any such party.
10. TERM AND TERMINATION
10.01 TERM OF LICENSE.
This Agreement shall continue, unless earlier terminated in accordance
with this Section, until the expiration of all Patent Rights which are or
may be licensed to SCI and the becoming public of all material Cell
Technology (without such publication arising from a breach of the
provisions of Article 5).
10.02 TERM OF ROYALTIES.
The obligation of SCI to pay royalties on Net Sales in any country *****
. Royalties shall begin to accrue if and when a patent under the Patent
Rights which covers any part of a Product or Service shall issue in such
country. Notwithstanding the foregoing, if SCI has made Sales or provides
Services in a country before any patent under the Patent Rights which
covers any part of a Product or Service shall issue in that country and
if such patent shall subsequently then issue in that country, SCI shall,
in addition to its obligation to make ongoing Royalty payments under this
Agreement, make an adjusting Royalty payment to NS for all such Sales and
provision of Services during the period from the date of such first Sales
or provision of Services until the said patent issued in that country,
provided that in the event of significant competitive sales of Products
by third parties in that country using any of the NL Licensed Technology
prior to the issue of the applicable Patent Rights the adjusting Royalty
payment will be modified to reflect
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the actual and reasonable impact of those competitive sales in that
country prior to the issue of Patent Rights. In the event the parties
cannot agree on the amount that any adjusting Royalty payment should be
modified to reflect such prior competitive sales, then the issue shall be
resolved in accordance with the section hereof entitled "Resolution of
Disputes."
10.03 DEFAULTS.
If either party shall fail to perform any of its material obligations
hereunder, the other party may notify the defaulting party in writing of
such default, stating in such written notice the obligation which the
defaulting party shall have failed to perform, and, if the defaulting
party shall not have cured such default within sixty (60) days after the
giving of such notice then the other party may, at its option and in
addition to its other remedies under law, terminate this Agreement by
giving the defaulting party written notice of such termination.
10.04 BANKRUPTCY.
Either party may terminate this Agreement if, at any time, the other
party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the party or of its assets, or if
the other party proposes a written agreement of composition or extension
of its debts, or if the other party shall be served with an involuntary
petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed or stayed within sixty (60) days after
the filing thereof, or if the other party shall propose or be a party to
any dissolution or liquidation, or if the other party shall make an
assignment for the benefit of creditors.
Until such time as the restrictions on NHL may be removed under the
BackUp License, NS shall:
(a) abide by the terms of, and fulfill all of its obligations under,
each of the NS/NHL License and Assignment Agreement, and take all
action necessary to maintain each such agreement in full force and
effect; and
(b) NS shall pay in full when due any and all expenses, payables and
other liabilities of NHL, whether such expenses, payables, or
liabilities arise in the ordinary course of business or otherwise.
(c) NS will not create or incur or suffer to be created or incurred or
to exist any encumbrance, pledge, lien, charge (floating or fixed)
or other security interest of any kind (each a "lien") upon the
license rights granted to NS pursuant to the NS/NHL License, the
Cell Technology and the Patent Rights, provided, NS shall be
permitted to grant a lien on its intellectual property, including
the Cell Technology and Patent Rights, to a third party (the "Other
Lien Holder") if (i) NHL is amalgamated with and into NS (in an
amalgamation the surviving
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corporation of which is NS) or substantially all of the assets of
NHL (including all of NHL's intellectual property rights) are
acquired by NS, (ii) NS grants a first priority security interest
(the "Security Interest") in the Cell Technology and Patent Rights
and essentially all other intellectual property of NS licensed to a
third party (including all patent and patent applications claiming
any such intellectual property) (collectively, the "Collateral") to
a person or entity (the "Collateral Agent") for the benefit of all
licensees of NS' intellectual property including, without
limitation, SCI (the "Licensees") to secure each Licensee's license
rights in the Collateral, and (iii) the Other Lien Holder agrees to
subordinate its security interest in such intellectual property
(including an agreement not to foreclose on such intellectual
property) to the Security Interest upon terms reasonably
satisfactory to the Licensees. The Collateral Agent shall be
selected by the Licensees (with the approval of NS, which approval
shall not be unreasonably withheld) and the Security Interest shall
be granted pursuant to a Security Agreement among NS, the Collateral
Agent, and the Licensees in a form thereof to be negotiated among
SCI, NS and the other Licensees, and shall provide, among other
things, upon the occurrence of an Event of Default (as defined
below) that the Collateral Agent shall, subject to the rights of the
Licensees to continue to exercise their license rights in the
Collateral, have all the rights of a holder of a first fixed charge
and secured party under the Personal Property Security Act, and any
other law or statute governing the rights of holder's of first fixed
charges or security interests. The Security Agreement shall also
provide for the filing of all financing statements, assignments and
other instruments and documents the Collateral Agent deems
reasonably necessary to perfect the Security Interest. For purposes
of the Security Agreement, each of the following shall constitute an
Event of Default: (a) the termination or limitation of the license
granted to SCI pursuant to Section 2 of this Agreement (other than a
termination of such license by NS, in accordance with the terms
hereof, as a result of a breach of this Agreement by SCI); (b) if NS
passes a resolution or institutes proceedings for its winding-up,
liquidation, or dissolution or consents to the filing of any
petition with respect thereto or files a petition or answer or
consent seeking readjustment, arrangements, composition or similar
relief under any Canadian or other applicable law or consents to the
filing of any such petition or to the appointment of a receiver,
liquidator, trustee or similar officer of itself or any part of its
property or makes an assignment for the benefit of creditors or if
NS takes any action pursuant to the Winding-Up Act (Canada) or the
Bankruptcy and Insolvency Act (Canada); (c) any application is made
with respect to NS under the Companies Creditors Arrangement Act
(Canada), Bankruptcy and Insolvency Act (Canada) or similar
legislation seeking readjustment, arrangement, composition or
similar relief for NS under any Canadian or other applicable law, or
if a proceeding is instituted for the winding up, liquidation or
dissolution of NS or seeking an order adjudging NS insolvent or the
appointment of any receiver, liquidator, trustee or similar officer
of NS or over all or any part of its property or a petition in
bankruptcy is presented against NS under a bankruptcy or similar
statute and if in any such case such application, proceeding or
petition is not dismissed, stayed or withdrawn within 45 days after
the making of such
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application, institution of such proceeding or filing of such
petition (provided that if in any such proceeding, NS is adjudged
bankrupt or insolvent by a court of competent jurisdiction or any
receiver, liquidator or trustee is appointed for NS or any
substantial portion of NS assets, an Event of Default shall be
deemed to have occurred); (d) the breach by NS of any of its
material obligations under the said license agreement, which breach
is not cured within the time allotted under the terms hereof to cure
such breach; and (e) such other Events of Default to which NS and
the Licensees reasonably agree. Upon receipt of a notice (the
"Notice") from NS that it intends to exercise its rights under this
Section 9.04 (c), which notice shall set forth the identity and
address of each Licensee and the proposed Other Lien Holder, (x) the
Licensees shall select a Collateral Agent and negotiate the terms of
the Collateral Agent's appointment and the voting mechanism
governing the Collateral Agent's actions (the "Collateral Agent
Agreement"), (y) the Licensees, NS and the Collateral Agent shall
negotiate the terms of a Security Agreement consistent with the
terms set forth in this Section 9.04(c), and (z), upon agreement on
the terms of the Security Agreement, the Licensees and the Other
Lien Holder shall negotiate the terms of an agreement (the
"Subordination Agreement") pursuant to which the Other Lien Holder
agrees to subordinate its security interest in the Collateral to the
Security Interest consistent with the terms set forth above. If
after 30 days from the receipt of the Notice by the last of the
Licensees to receive the Notice, the Licensees are unable to agree
on a Collateral Agent or the terms of the Collateral Agent
Agreement, any Licensee may submit the matter to binding arbitration
in accordance with the procedures set forth below, which arbitration
shall be binding upon all of the Licensees. If after 60 days from
receipt of the Notice by the last of the Licensees to receive the
Notice, the Licensees, the Collateral Agent and NS are unable to
agree on the terms of a Security Agreement, any Licensee or NS may
submit the matter to binding arbitration in accordance with the
procedures set forth below. If after 90 days from receipt of the
Notice by the last of the Licensees to receive the Notice, the
Licensees and the Other Lien Holder are unable to agree upon the
terms of a Subordination Agreement, any Licensee or the Other Lien
Holder (if the Other Lien Holder chooses) may submit the matter to
binding arbitration in accordance with the procedures set forth
below. Each such arbitration shall be conducted in accordance with
the rules of, and under the auspices of the International Chamber of
Commerce and the location of the arbitration shall be San Francisco,
California. The person requesting such arbitration shall send notice
to all parties of its intention. A single arbitrator shall preside
and shall be appointed by the International Chamber of Commerce and
shall not be an employee, consultant, officer, director, shareholder
of or otherwise associated with any party or an Affiliate of any
party. Each party shall consent to the consolidation of a single
arbitration to decide all issues in dispute.
Within 15 days after the designation of the arbitrator, the
arbitrator and the parties shall meet at which time each party shall
be required to set forth in writing the issues which need to be
resolved and a proposed ruling on each such issue. The arbitrator
shall set a date for a hearing, which shall be no later than 15 days
after
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the submission of written proposals, to discuss each of the issues
identified by the parties. Each party shall have the right to be
represented by counsel. The arbitrator shall have sole discretion
with regard to the admissibility of any evidence. The arbitrator
shall use his or her best efforts to rule on each disputed issue
within 10 days after the completion of such hearings. The
arbitrator's ruling shall be, in the absence of fraud or manifest
error, binding and conclusive upon the parties and may be enforced
in a court of competent jurisdiction. The arbitrator may not award
punitive, consequential or exemplary damages.
Each party shall bear its own expenses, including legal expenses, in
connection with the legislation, drafting and execution of any
transaction or agreement contemplated above or in connection with
any arbitration. The filing fees associated with the perfection of
the Security Interest shall be split evenly among each Licensee and
NS.
The parties acknowledge that it will be impossible to measure the
damages that would be suffered by SCI if NS fails to comply with the
covenants in this Section 10.04 and that in the event of such
failure, SCI will not have an adequate remedy at law. SCI shall,
therefore, be entitled in addition to any other rights and remedies
to obtain specific performance of NS' obligations hereunder and to
obtain injunctive relief without having to post a bond. NS shall not
urge, as a defense to any proceeding for such specific performance
or injunctive relief, that SCI has an adequate remedy at law.
NS may, at its sole option, terminate the Back Up License, remove
the corporate restrictions on NHL's ability to do business and
amalgamate with NHL (or with NHL and another entity), on giving
written notice to SCI provided that (a) the amalgamated entity is
the owner of all of the NL Licensed Technology, and (b) NHL either
ceases to exist or has no further rights to any NL Licensed
Technology, and (c) the amalgamated entity confirm to SCI in writing
that it continues to be bound under the 1997 License Agreement and
under this Agreement. In such a case the terms of this Section
10.04, apart from the first paragraph and this paragraph, shall be
of no further force or effect. For greater certainty the 1997
License Agreement is amended by inserting this and the following
paragraph in the section entitled "Bankruptcy".
Upon such an amalgamation, SCI may, at its option, require
registration of a security interest in favor of SCI against the NL
Licensed Technology for the purpose of protection of SCI's interest
as a licensee under this and the 1997 License Agreement, in a form
acceptable to NS and SCI.
10.05 EFFECT OF TERMINATION: SURVIVAL
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. SCI and any SCI
Sublicensee may, however, after the effective date of such
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termination, sell Products in the process of manufacture at the time of
such termination, provided that SCI shall pay to NS the royalties thereon
as required of this Agreement and shall submit the reports required by
Section 3 hereof on the Sales of such Products or provision of Services.
The provisions of Sections 5, 10 and 11 of this Agreement shall survive
termination or expiration of this Agreement for any reason.
Notwithstanding any termination of this Agreement under this, or any
other, section of this Agreement, the 1997 License Agreement shall remain
in full force and effect.
10.06 EFFECT OF TERMINATION
The termination of this Agreement for any reason shall result in the
immediate termination of any license granted hereunder, subject to
Sections 6.02 and 10.05 above. SCI shall immediately cease and desist
from practicing the New Patents and the New Cell Technology or performing
or authorizing any act which infringes any Patent Right or right to any
Cell Technology. No termination of this Agreement shall preclude SCI from
practicing Existing Patents or Existing Cell Technology under the 1997
Agreement. In the event of a termination, any existing sublicensee shall
have the same rights and license directly from NS as it was granted by
SCI, provided that such sublicensee shall confirm in writing to NS that
NS may enforce the terms and conditions of the sublicense against such
sublicensee.
11. RESOLUTION OF DISPUTES
11.01 GENERAL
In the event that any dispute should arise between the parties with
respect to any matter relating to this Agreement, the Parties shall
resolve such dispute in accordance with the procedures set forth in this
Section 11.
11.02 DISPUTE RESOLUTION PROCESS
(a) Mediation
In the event of any dispute between the parties with respect to any
matter relating to this Agreement, the Parties shall first use their best
efforts to resolve such dispute among themselves. Prior to seeking any
third party to resolve a dispute, the Chief Executive Officers of SCI and
NS shall meet in private meeting for at least one-half (1/2) of a day to
attempt to resolve the dispute. If the parties are unable to resolve the
dispute within 30 days after the Chief Executive Officers have met, the
parties will then seek the assistance of one or more unaffiliated third
parties to assist in mediating the dispute.
(b) SELECTION OF ARBITRATORS
In the event that the parties are unable to resolve a dispute within 30
days after the commencement of mediation efforts under Section 11.02 (a),
either party may submit the matter to binding arbitration in accordance
with the procedures set forth in this Section
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11.02. If a party intends to commence arbitration to resolve a dispute,
such party shall provide written notice to the other party of such
intention, and shall designate one arbitrator. Within 10 days of receipt
of such notice, the other party shall designate in writing a second
arbitrator. The two arbitrators so designated shall, within 10 days
thereafter, designate a third arbitrator. The arbitrators so designated
shall not be employees, consultants, officers, directors or shareholders
of or otherwise associated with either party or an Affiliate of either
party. The arbitration shall be conducted in accordance with the rules
of, and under the auspices of, the International Chamber of Commerce and
the location of the arbitration shall be San Francisco, California.
(c) WRITTEN PROPOSALS
Within 15 days after the designation of the third arbitrator, the
arbitrators and the parties shall meet at which time each party shall be
required to set forth in writing the issues which need to be resolved and
a proposed ruling on each such issue. Each party shall provide such
written summary of issues to the arbitrator and the other party no later
than 5 business days prior to the first arbitration meeting.
(d) HEARING
The arbitrators shall set a date for a hearing, which shall be no later
than 30 days after the submission of written proposals, to discuss each
of the issues identified to the parties. Each party shall have the right
to be represented by counsel. The arbitrators shall have sole discretion
with regard to the admissibility of any evidence.
(e) Ruling
The arbitrators shall use their best efforts to rule on each disputed
issues within 30 days after the completion of the hearings described in
subsection (d) above. The arbitrators' ruling shall be, in the absence of
fraud or manifest error, binding and conclusive upon both parties and may
be enforced in a court of competent jurisdiction. The arbitrators may not
award punitive or exemplary damages.
12. MISCELLANEOUS
12.01 PUBLICITY.
Neither party may originate any publicity, news release or other public
announcement, written or oral, relating to this Agreement or the
existence of an arrangement between the parties, without the prior
written approval of the other party except as otherwise required by law
or the rules of stock exchanges and similar organizations.
Neither party will communicate, comment or originate any publicity, news
release or other public announcement, written or oral, relating to the
dispute between the parties or the allegations made by either party in
respect of that dispute, without the prior written
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approval of the other party except as otherwise required by law or the
rules of stock exchanges and similar organizations.
12.02 GOVERNING LAW.
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of Alberta.
12.03 FORCE MAJEURE.
In the event that either party is prevented from performing or is unable
to perform any of its obligations under this Agreement due to any act of
God; fire; casualty; flood; war; strike; lockout; failure of public
utilities; injunction or any act, exercise, assertion or requirement of
governmental authority, including any governmental law, order or
regulation permanently or temporarily prohibiting or reducing the level
of research development or production work hereunder or the manufacture,
use or sale of Products; epidemic; destruction or production facilities;
riots; insurrection; inability to procure or use materials, labor,
equipment, transportation or energy sufficient to meet experimentation or
manufacturing needs; or any other cause beyond the reasonable control of
the party invoking this Section if such party shall have used its
reasonable best efforts to avoid such occurrence, such party shall give
notice to the other party in writing promptly, and thereupon the affected
party's performance shall be excused, and the time for performance shall
be extended for the period of delay or inability to perform due to such
occurrence. At the end of such period, the party whose performance is
excused shall give prompt notice to the other party.
12.04 WAIVER.
The waiver by either party of a breach or a default of any provision of
this Agreement by the other party shall not be construed as a waiver of
any succeeding breach of the same or any other provision, nor shall any
delay or omission on the part of either party to exercise or avail itself
of any right, power or privilege that it has or may have hereunder
operate as a waiver of any right, power or privilege by such party.
12.05 NOTICES.
Any notice or other communication in connection with this Agreement must
be in writing and delivered either personally by facsimile or by
certified mail, return receipt requested, and shall be effective when
delivered to the addressee at the address listed below or such other
address as the addressee shall have specified in a notice actually
received by the addressor.
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If to NS or NHL:
(Addressed to NS or NHL, as applicable)
C/o University Technologies International Inc.
Suite 130, 3553 - 31 St. N.W.
Calgary Technology Centre
Calgary, Alberta
T2L 2K7
Canada
Attention: Oleh S. Hnatiuk
Fax: 403 270 2384
With a contemporaneous copy to:
Bennett Jones LLP
4500,855-2nd Street S.W.
Calgary, Alberta
T2P 4K7
Canada
Attention: Martin P.J. Kratz
Fax: 403 265 7219
If to SCI:
StemCells, Inc.
525 Del Ray Avenue
Suite C
Sunnyvale, CA 94085
USA
Attention: Iris Brest, Esq.
Fax: 408.731.8674
With a copy to:
Mintz Levin Cohn Ferris Glovsy & Popeo, P.C.
One Financial Center
Boston, MA 02111
USA
Attn.: Ivor Elrifi
Fax; 617.542.2241
12.06 NO AGENCY.
Nothing herein shall be deemed to constitute either party as the agent or
representative of the other party, or both parties as joint venturers or
partners for any purpose. Each party shall be an independent contractor,
not an employee or partner of the other. Neither party
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shall be responsible for the acts or omission authority to speak for,
represent or obligate the other party in any way without prior written
authority from the other party.
12.07 ENTIRE AGREEMENT
This Agreement and the Exhibits and Schedules hereto (which Exhibits and
Schedules are deemed to be part of this Agreement for all purposes)
contain the full understanding of the parties with respect to the subject
matter hereof. Except as provided in Sections 6.02 or 10.04 herein,
nothing in this Agreement affects the terms, scope or operation of the
1997 License Agreement. No waiver, alteration or modification of any of
the provisions hereof shall be binding unless made in writing and signed
by the parties by their respective officers thereunto duly authorized.
12.08 HEADINGS.
The headings contained in this Agreement are for convenience of reference
only and shall not be considered in construing this Agreement.
12.09 SEVERABILITY.
In the event that any provision of this Agreement is to be unenforceable
because it is invalid or any relevant jurisdiction, the validity of the
remaining provision obligations of the parties shall, in the
jurisdictions to be unenforceable, be construed and enforced particular
provisions held to be unenforceable.
12.10 USE OF NAME.
Neither party shall use the name of the other party in any advertising or
promotions without the consent of the other unless required by law bodies
regulating securities.
12.11 NO CONSEQUENTIAL DAMAGES.
No party shall be liable to the other hereunder for indirect
consequential, special, speculative, remote or similar such damages or
economic loss.
12.12 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns.
12.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts (which shall
include facsimile counterparts), each of which shall be deemed an
original but all of which taken together shall constitute one and the
same instrument.
*Confidential Treatment has been requested for the marked portion.
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12.14 RECORDATION.
SCI shall have the right, at its cost, at any time, to record, register,
or otherwise notify this Agreement in any applicable patent office or
other appropriate facility, and NS shall provide reasonable assistance to
SCI in effecting such recording.
12.15 JOINT DRAFTING.
This Agreement was jointly drafted and prepared by all parties hereto and
no presumption in favor of or against any party hereto shall be made with
respect to the interpretation of any provision of this Agreement.
12.16 Back Up License
For the purposes of this Agreement the BackUp License is hereby amended
as follows (all references are to Section numbers in the BackUp License):
(a) NHL grants to SCI a license, subject to section 2.3, upon the same
terms and conditions set forth in this Agreement, as such terms and
conditions would read if "NHL" were substituted for and in place of
"NS".
(b) Any reference in the BackUp License to "Research and License
Agreement" or the 1997 License Agreement shall be deemed to include
a reference also to this Agreement.
*Confidential Treatment has been requested for the marked portion.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names by their properly and duly authorized officers or representatives
as of the date first above written.
NEUROSPHERES LTD.
By:
----------------------------------
Title:
-------------------------------
NEUROSPHERES HOLDINGS LTD.
By:
----------------------------------
Title:
-------------------------------
STEMCELLS, INC.
By:
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Title:
-------------------------------
*Confidential Treatment has been requested for the marked portion.
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EXHIBIT "A"
*****
EXHIBIT "B"
*****
*Confidential Treatment has been requested for the marked portion.
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