1
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
COLLABORATIVE RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
between
CAMBRIDGE NEUROSCIENCE, INC.
and
VISION PHARMACEUTICALS L.P.
dated as of November 20, 1996
2
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS 1
1.1. "Active Compound" 2
1.2. "Affiliate" 2
1.3. "Allergan Compounds" 2
1.4. "Allergan Patents" 2
1.5. "Allergan Technology" 2
1.6. "Availability Period" 2
1.7. "CNSI Compounds" 2
1.8. "CNSI Patent Rights" 2
1.9. "CNSI Technology" 3
1.10. "Collaboration Compound" 3
1.11. "Development Compound" 3
1.12. "Development Phase" 3
1.13. "Effective Date" 3
1.14. "Excluded Compound" 3
1.15. "Europe" 3
1.16. "Field" 3
1.17. "First Commercial Sale" 3
1.18. "FDA" 4
1.19. "IND" 4
1.20. "Joint Inventions" 4
1.21. "Joint Patent Rights" 4
1.22. "Major Market Country" 4
1.23. "NDA" 4
1.24. "Net Sales" 4
1.25. "Other Countries" 5
1.26. "Party" 5
1.27. "Pivotal Trial" 5
1.28. "Product" 5
1.29. "Program" 5
1.30. "Research Management Committee" 5
1.31. "Research Phase" 5
1.32. "Research Plan" 5
1.33. "Research Program" 5
1.34. "Research Year" 5
1.35. "Third Party" 5
1.36. "Valid Patent Claim" 5
1.37. "Validated Target" 6
i
3
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION 6
2.1. General 6
2.2. Exclusivity. 6
2.3. Acknowledgement of BI Collaboration. 7
2.4. Acknowledgment of Allergan Activities 7
ARTICLE 3. THE RESEARCH PHASE 7
3.1. Scope of Research Program 7
3.2. Research Plan 7
3.3. Subcontracts 8
3.4. Data 8
3.5. Quarterly Reports to the Research Management Committee 8
ARTICLE 4. TARGET RESEARCH AND VALIDATION 8
4.1. Testing and Validation of Targets in Allergan Models 8
4.2. Transfer of CNSI Technology 9
4.3. Transfer of Allergan Technology 9
ARTICLE 5. COMPOUND SCREENING AND SELECTION 9
5.1. Screening to Identify Active Compounds 9
5.1.1. Compounds for Screening 9
5.1.2. Screening 10
5.1.3. Identification of Active Compounds 10
5.2. Further Investigation on Active Compounds 10
5.3. Selection of Leads for Preclinical Investigation 10
5.4. Selection of Development Compound 11
5.5. Substitution of Development Compound 11
5.6. Designation of Back-Up Compounds 12
5.7. Excluded Compounds 12
ARTICLE 6. THE XXXXXXXXXXX XXXXX 00
6.1. Conduct of the Development Program. 13
6.1.1. Commencement of the Xxxxxxxxxxx Xxxxx 00
6.2. Development of Development Compounds 13
6.3. Public Announcements 14
ARTICLE 7. MANAGEMENT OF THE RESEARCH PROGRAM 14
7.1. Research Management Committee. 14
7.1.1. Formation and Composition. 14
7.1.2. Research Management Committee Functions and Powers 14
7.1.3. Chair 15
7.1.4. Minutes and Reports 15
7.1.5. Information and Results 15
7.2. General Disagreements 15
7.3. Availability of Employees. 16
ii
4
7.4. Visit of Facilities. 16
ARTICLE 8. LICENSES; MANUFACTURING AND MARKETING RIGHTS 16
8.1. Licenses. 16
8.1.1. Grant of Research License 16
8.1.2. Grant of Commercial License 16
8.1.3. Grant of License by Allergan 16
8.2. Reservation of Rights. 17
8.3. Manufacturing Rights. 17
8.3.1. Allergan's Right to Manufacture 17
8.3.2. Reservation of Rights 17
8.4. Marketing and Distribution Rights 17
ARTICLE 9. PAYMENTS 18
9.1. Funding of the Research Program 18
9.1.1. Amount of Funding by Allergan 18
9.1.2. Records. 18
9.2. Funding of the Development Program. 18
9.3. Equity Investments 18
9.4. Milestones 19
9.4.1. Milestone Payments 19
9.4.2. Loan 20
9.5. Royalties on Net Sales. 20
9.5.1. Royalty Rate. 20
9.6. Royalty Reports, Exchange Rates. 20
9.7. Audits. 20
9.8. Royalty Payment Terms. 21
9.9. Withholding of Taxes 21
9.10. Exchange Controls. 21
9.11. Interest on Late Payments. 22
ARTICLE 10. INTELLECTUAL PROPERTY RIGHTS 22
10.1. Ownership. 22
10.1.1. Ownership of Inventions Within the Field. 22
10.1.2. Cooperation of Employees 22
10.2. Provisions Concerning the Filing, Prosecution and Maintenance of
Technology, Patent Rights and Joint Inventions 23
10.2.1. Priority Filings for Inventions 23
10.2.2. Foreign Filing Decisions for Inventions 23
10.2.3. Prosecution and Maintenance 23
10.2.4. Patent Costs 24
10.2.5. Failure to Pay for Joint Inventions 24
10.3. Notification of Patent Term Restoration. 24
10.4. No Other Technology Rights. 25
10.5. Enforcement of Patent Rights. 25
iii
5
10.6. Infringement of Third Party Patent Rights 25
10.6.1. Joint Strategy 25
10.6.2. Defense 26
10.6.3. Allergan Payment Credit 26
ARTICLE 11. CONFIDENTIALITY 26
11.1. Nondisclosure Obligations. 26
11.2. Samples. 27
11.3. Terms of this Agreement. 27
11.4. Publications. 27
ARTICLE 12. REPRESENTATIONS AND WARRANTIES 28
12.1. Authorization 28
12.2. CNSI Patent Representations and Warranties 28
12.2.1. Patent Rights 28
12.2.2. Litigation 29
12.2.3. Validity and Infringement 29
12.2.4. Covenant to Maintain Patents 29
12.3. CNSI License Representation and Warranties 29
12.3.1. License Agreements 29
12.3.2. Effectiveness, Maintenance 30
12.3.3. Exclusivity 30
ARTICLE 13. INDEMNITY 30
13.1. Allergan Indemnity Obligations. 30
13.2. CNSI Indemnity Obligations. 30
13.3. Procedure. 30
13.4. Insurance. 31
ARTICLE 14. TERM AND TERMINATION 31
14.1. The Research Phase 31
14.1.1. Expiration of the Research Phase 31
14.1.2. Termination of Research Xxxxx 00
14.1.3. Existing Obligations 31
14.2. Expiration or Termination of the Xxxxxxxxxxx Xxxxx 00
14.2.1. Termination of Xxxxxxxxxxx Xxxxx 00
14.2.2. Existing Obligations 32
14.2.3. Effect of Termination of Xxxxxxxxxxx Xxxxx 00
14.3. Expiration of This Agreement 32
14.4. Termination of This Agreement 32
14.4.1. Material Breach 32
14.4.2. Failure of Allergan to Pay 32
14.4.3. Bankruptcy 32
14.4.4. Failure to Select Development Compound 32
14.4.5. By Allergan in Part 32
iv
6
14.4.6. By Allergan in Whole 33
14.5. Effect of Expiration or Termination of This Agreement Generally 33
14.5.1. Existing Obligations 33
14.5.2. Survival 33
14.6. Effect of Termination by CNSI 33
14.6.1. Termination of Licenses 33
14.6.2. Disposition of Inventory of Products 33
14.6.3. Assignment of Trademark 33
14.6.4. Assignment of Regulatory Approvals; Clinical Data 33
14.7. Effect of Partial Termination 34
14.8. Effect of Termination in Full by Allergan 34
14.9. Remedies Other Than Termination 34
14.9.1. Allergan's Right to Offset Royalties and Other Payments 34
14.9.2. CNSI's Remedies for Allergan's Failure to Use Reasonable
Efforts 35
ARTICLE 15. MISCELLANEOUS 35
15.1. Force Majeure. 35
15.2. Assignment. 36
15.3. Severability. 36
15.4. Notices. 36
15.5. Applicable Law. 37
15.6. Arbitration. 37
15.7. Entire Agreement. 37
15.8. Headings. 38
15.9. Independent Contractors. 38
15.10. Agreement Not to Solicit Employees. 38
15.11. Waiver. 38
15.12. Counterparts. 38
Exhibits:
A - CNSI Patent Rights (Section 1.8)
B - Research Plan (Section 1.32)
C - BI Rights (Section 2.3)
D - Excluded Compounds (Section 5.7)
E - Credit Agreement (Section 9.4.2)
F - Countries for Patent Filings (Section 10.2.3)
G - Form of Press Release (Section 11.4)
H - Third Party Licenses (Section 12.3.1)
v
7
COLLABORATIVE RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
THIS COLLABORATIVE RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT dated as
of November 20, 1996 (the "Agreement") is made between CAMBRIDGE NEUROSCIENCE,
INC., a Delaware corporation having its principal place of business at Xxx
Xxxxxxx Xxxxxx, Xxxxxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 X.X.X. ("CNSI"),
and VISION PHARMACEUTICALS L.P., a Texas limited partnership having its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000
X.X.X.
("Allergan").
R E C I T A L S
A. CNSI possesses know-how, expertise and rights to issued United States
patents and patent applications with corresponding foreign filed patent
applications pertaining to discoveries relating to the identification and
development of neuroprotective compounds.
B. CNSI has research facilities and experienced scientists, research
associates and other personnel at its facilities in Cambridge, Massachusetts
which enable it to conduct research activities.
C. Allergan desires to sponsor research by CNSI to identify candidate
compounds for use in the Field (as defined below) and to collaborate with CNSI
on the worldwide development and commercialization of Products (as defined
below) for therapeutic purposes.
D. Allergan is engaged in the research, development, marketing,
manufacturing and distribution of products, particularly in the ophthalmic
field, and Allergan has developed certain know-how that may be useful in the
development of treatments for neurodegenerative conditions of the eye.
E. Allergan has research and development facilities and experienced
scientists, research associates and other personnel at its facilities in Irvine,
California which enable it to conduct research and development activities.
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
8
1.1 "Active Compound" shall mean a chemical compound provided by CNSI or
Allergan or obtained from a Third Party for screening pursuant to Section 5.1
that demonstrates the requisite activity levels for a Validated Target as
determined by the Research Management Committee pursuant to Section 5.1.3, but
excluding all Excluded Compounds.
1.2 "Affiliate" shall mean any corporation or other entity which controls,
is controlled by, or is under common control with a Party to this Agreement. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the corporation
or other entity or the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the corporation or other entity.
1.3 "Allergan Compounds" shall mean a chemical compound owned or
controlled by Allergan that is provided to CNSI in accordance with this
Agreement or the Research Plan.
1.4 "Allergan Patents" shall mean to the extent useful in the Program all
foreign and domestic: (a) patents issued or existing as of the Effective Date;
and (b) patents issuing from patent applications that are pending as of the
Effective Date (including provisionals, divisionals, continuations and
continuations-in-part of such applications); (c) patent applications filed after
the Effective Date and patents issuing therefrom (including originals,
provisionals, divisionals, continuations and continuations-in-part of such
applications); and (d) substitutions, extensions, reissues, renewals and
inventors certificates relating to the foregoing patents, which Allergan owns,
controls or to which Allergan has a license (with the right to sublicense).
1.5 "Allergan Technology" shall mean any and all technology owned or
licensed to Allergan that is necessary for the discovery and development of a
Development Compound including but not limited to assays used in accordance with
the Research Plan for the purpose of conducting assay development activities.
1.6 "Availability Period" shall mean the period during which a
Collaboration Compound is available for selection as a Development Compound as
described in Section 5.3.
1.7 "CNSI Compounds" shall mean all chemical compounds (excluding proteins
and peptides) owned or controlled by CNSI.
1.8 "CNSI Patent Rights" shall mean all rights useful in the Field that
have not been licensed to a Third Party as of the Effective Date under present
and future, foreign and domestic, patents, patent applications, patent
extensions, certificates of invention and applications for certificates of
invention, together with any originals, provisionals,
2
9
divisionals, continuations or continuations-in-part owned by, or licensed to
CNSI, with the right to sublicense. CNSI Patent Rights as of the Effective Date,
and all licenses relating to such CNSI Patent Rights are listed in Exhibit A
hereto. CNSI agrees to provide Allergan with updates to Exhibit A at least
semi-annually.
1.9 "CNSI Technology" shall mean all present and future inventions, trade
secrets, copyrights, data, regulatory submissions or other intellectual property
of any kind useful in the Field (including any proprietary biological materials,
compounds or reagents) and all confidential technical information in the
possession of CNSI as of the Effective Date and during the term of this
Agreement necessary or useful for the discovery, development, manufacture, use
or sale of a Development Compound or its corresponding Product but excluding (i)
any such technology licensed to Boehringer Ingelheim International GmbH ("BI")
pursuant to the License Agreement between CNSI and BI dated as of Xxxxx 00, 0000
(xxx "XX License"), as further described in Section 2.3 hereof and (ii) CNSI
Patent Rights.
1.10 "Collaboration Compound" shall mean an Active Compound selected by
Allergan pursuant to Section 5.3 for evaluation in Allergan and CNSI assays
under the supervision of the Research Management Committee.
1.11 "Development Compound" shall mean a Collaboration Compound designated
by Allergan as a Development Compound pursuant to Article 5 hereof.
1.12 "Development Phase" shall mean the phase of the Program during which
compounds designated by Allergan as Development Compounds are further developed
and prepared for commercialization. The Development Phase may commence during
the Research Phase. The Development Phase is more fully described in Article 6
hereof and the term of the Development Phase is set forth in Article 14 hereof.
1.13 "Effective Date" shall mean the date first set forth above.
1.14 "Excluded Compound" shall have the meaning set forth in Section 5.7
hereof.
1.15 "Europe" shall mean Austria, Belgium, Switzerland and Liechtenstein,
Germany, Denmark, Spain, France, the United Kingdom, Greece, Ireland, Italy,
Luxembourg, Monaco, Netherlands, Portugal, Sweden and any other State which is a
Contracting State of both the European Patent Convention and of the Patent
Cooperation Treaty.
1.16 "Field" shall mean research, development and commercialization
activities with respect to compounds which block one or more than one subclass
of the glutamate-activated ion channels, including NMDA channels, and/or one or
more than one subclass of sodium channels, for the treatment of ophthalmic
diseases and disorders.
1.17 "First Commercial Sale" of any Product shall mean the first sale for
use or consumption by the general public of such Product in a country after
required regulatory
3
10
marketing and pricing approval has been granted by the governing health
authority of such country.
1.18 "FDA" shall mean the United States Food and Drug Administration.
1.19 "IND" shall mean an investigational new drug application filed with
the FDA prior to beginning clinical trials in humans or any comparable
application filed with the regulatory authorities of a country other than the
United States prior to beginning clinical trials in humans in that country.
1.20 "Joint Inventions" shall have the meaning set forth in Section
10.1.1.
1.21 "Joint Patent Rights" shall mean all foreign and domestic patents,
patent applications, patent extensions, certificates of invention, together with
any divisions, continuations or continuations-in-part covering Joint Inventions.
1.22 "Major Market Country" shall mean any one or all of the United
States, the United Kingdom, Germany, France, Italy and Japan.
1.23 "NDA" shall mean a new drug application filed with the FDA after
completion of human clinical trials to obtain marketing approval for a Product
in the United States or any comparable application filed with the regulatory
authorities of a country other than the United States to obtain marketing
approval for a Product in that country.
1.24 "Net Sales" with respect to any Product shall mean the invoiced sales
of all such Product billed to independent customers by Allergan, its Affiliates
or its sublicensees, less the following items as applicable to such Product: (a)
credits or allowances granted upon returns, rejections or recalls; (b) freight,
shipping and insurance costs; (c) quantity and other trade discounts, credits or
allowances actually allowed and taken; (d) customs duties, taxes and surcharges
and other governmental charges incurred in connection with exportation or
importation; and (e) government mandated rebates. The transfer of any Product by
Allergan or one of its Affiliates to another Affiliate of Allergan shall not be
considered a sale; in such cases, Net Sales shall be determined based on the
invoiced sales price by the Affiliate to its customer, less the deductions
allowed under this Section.
In the event Allergan transfers Products for consideration, in whole
or in part, other than cash, the Net Sales price for such Products shall be
deemed to be the weighted average Net Sales cash price then being invoiced by
the seller in arms-length transactions with similar customers. In no event shall
Net Sales be deemed to occur in the case of transfers of reasonable quantities
of samples or clinical research supplies or similar transfers.
Allergan or its Affiliates shall be deemed to have sold a "Bundled
Product" if the Products are sold by Allergan or its Affiliates in combination
with other products or services for a single price. Net Sales of such Bundled
Product shall be calculated by multiplying the standard invoice price for the
Bundled Product by a fraction, the numerator of which shall be the product of
the number of units of the Products sold in the Bundled
4
11
Product multiplied by the standard invoice price per unit of the Products, and
the denominator of which shall be the sum, for all products (including Products)
or services included in the Bundled Product, of the products of the number of
units sold for each product or service in the Bundled Product multiplied by the
standard invoice price per unit for each such product or service.
1.25 "Other Countries" shall mean countries of the world other than the
Major Market Countries.
1.26 "Party" shall mean CNSI or Allergan.
1.27 "Pivotal Trial" shall mean the first Phase III clinical trial
designedto obtain evidence of efficacy necessary for approval by a regulatory
authority.
1.28 "Product" shall mean any therapeutic composition incorporating a
Development Compound or Back-Up Compound approved for marketing in the Field in
any country of the world.
1.29 "Program" shall mean the collaboration by CNSI and Allergan
contemplated by this Agreement.
1.30 "Research Management Committee" shall mean the joint committee
composed of representatives of CNSI and Allergan described in Article 7 hereof.
1.31 "Research Phase" shall mean the first stage of the Program commencing
on the Effective Date, during which targets will be identified and validated,
and candidates for Development Compounds will be identified and characterized.
The Research Phase is more fully described in Article 3 hereof and the term of
the Research Phase is set forth in Article 14 hereof.
1.32 "Research Plan" shall mean the plan for conducting the research under
the Program, as amended from time to time by the Research Management Committee,
which plan, including all amendments, shall be attached to this Agreement as
Exhibit B.
1.33 "Research Program" shall mean the research program described
generally in the Research Plan, as in effect from time to time, as revised from
time to time as provided in this Agreement.
1.34 "Research Year" shall mean each twelve-month period during the
Research Phase with the first Research Year beginning on the first day of the
month following the Effective Date.
1.35 "Third Party" shall mean any entity other than CNSI or Allergan and
their respective Affiliates.
5
12
1.36 "Valid Patent Claim" shall mean with respect to a Product either (a)
a claim of an issued and unexpired patent included within the CNSI Patent Rights
or Joint Patent Rights, which has not been held permanently revoked,
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise or (b) a claim of a pending patent
application included within the CNSI Patent Rights or Joint Patent Rights, which
claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application. For purposes
of clause (b) above, any application which has been filed for more than five (5)
years without issuance shall no longer be deemed pending.
1.37 "Validated Target" shall mean any one or more of the following: (i)
NMDA channels, (ii) sodium channels, and/or (iii) both NMDA and sodium channels,
if so designated by the Research Management Committee pursuant to Section 4.1,
or other glutamate-activated channels that the Research Management Committee
determines from time to time.
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION
2.1 General. CNSI and Allergan wish to establish a collaborative alliance
to discover, develop and market compounds for the treatment of ophthalmic
diseases. The collaboration will include a Research Phase, a Development Phase
and commercialization of Products. The Research Phase will have an initial term
of three years, unless terminated earlier pursuant to Section 14.1.2. Allergan
will make an equity investment in CNSI pursuant to a Stock Purchase Agreement
executed on even date herewith. Allergan will make research and drug discovery
funding payments to CNSI during the Research Phase and will be responsible for
worldwide development costs during the Development Phase. Allergan shall also
pay CNSI milestone payments and royalties. During the course of this
collaboration, CNSI and Allergan shall communicate regularly and shall assume
different rights and responsibilities for the discovery, development and
commercialization of Products based on the phase of development and
commercialization, all as described more specifically herein.
2.2 Exclusivity. During the term of this Agreement, CNSI agrees not to
engage in any activity in the Field, on its own behalf or for the benefit of any
Third Party, except as provided under this Agreement. CNSI also agrees not to
develop internally or with or through any Third Party or license to any Third
Party for use outside the Field any Collaboration Compound, Development Compound
or Back-Up Compound. Subject to the foregoing, Allergan acknowledges that CNSI
is free to engage in activities outside the Field on its own behalf and for the
benefit of Third Parties, and that Excluded Compounds may not be available for
designation as a Collaboration Compound, Development Compound or Back-Up
Compound under this Agreement. Allergan agrees that, except as set forth in
6
13
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
Section 2.4, it will not engage in any activities in the Field with or on behalf
of any Third Party during the Research Phase except as provided in this
Agreement.
2.3 Acknowledgement of BI Collaboration. Allergan understands that CNSI is
currently developing NMDA ion-channel blockers, including CERESTAT(R), aptiganel
hydrochloride, for the treatment of brain and spinal cord ischemia (including
but not limited to stroke and traumatic brain injury) as part of CNSI's
collaboration with BI. In connection with such collaboration and pursuant to the
BI License, CNSI has granted BI certain rights with respect to certain compounds
and intellectual property. Allergan hereby acknowledges that CNSI is not free
to, and will not, disclose to Allergan any confidential information (as such
term is defined under the BI License). CNSI represents and warrants to Allergan
that (i)
******************************************************************************
******************************************************************************
************************************************************, (ii) ************
******************************************************************************
*************** and (iii) ***************************************
******************************************************************************
*****************************************.
2.4 Acknowledgment of Allergan Activities. Notwithstanding Section 2.2
above, CNSI understands and acknowledges that Allergan is currently developing
*********** and ****************, brimonidine and other alpha-2 agonists, and
nitric oxide related compounds. Nothing in this Agreement shall (i) prohibit or
restrict Allergan from continuing research and development activities, and
commercializing, itself or with or through Third Parties, brimonidine and other
alpha-2 agonists, and *********** and ***************, or (ii) grant any rights
or interest to CNSI in brimonidine and other alpha-2 agonists or *********** and
****************. Moreover, in view of Allergan's prior development of
*********** and ****************, neither ***********, any ****************, or
brimonidine and other alpha-2 agonists shall in any event be considered an
Active Compound.
ARTICLE 3. THE RESEARCH PHASE
3.1 Scope of Research Program. The Parties hereby agree to establish and
conduct, during the Research Phase, a collaborative research program in the
Field. The initial Research Plan for conducting such research program is
attached hereto as Exhibit B. The Parties will collaborate in identifying and
validating targets, developing and using screens based on such targets to
identify, discover and/or synthesize Active Compounds, and performing such
preclinical studies as are necessary in order for Allergan to select
Collaboration Compounds for further testing and Development Compounds for
clinical development into pharmaceutical products. The Research Program shall be
conducted by CNSI and Allergan in good scientific manner, and in compliance with
all applicable good laboratory practices and applicable legal requirements.
7
14
3.2 Research Plan. The Research Program shall be conducted under the
Research Plan that describes the work to be pursued by CNSI and Allergan during
the Research Phase. The Research Plan will be updated and approved by the
Research Management Committee no later than sixty (60) days prior to the start
of each Research Year. The Research Plan in effect at any time may not be
amended except as agreed in writing by the Research Management Committee. If at
any time during the Research Year either Party determines that a change to the
Research Plan would benefit the Research Program, such Party shall prepare and
submit to the Research Management Committee a written proposal detailing its
proposed changes to the Research Plan. At its next meeting, the Research
Management Committee shall consider any such proposal. CNSI and Allergan will
perform the activities of the Research Program in accordance with the Research
Plan.
3.3 Subcontracts. Subject to the provisions of Section 11.1 hereof, each
of CNSI and Allergan may subcontract portions of the Research Program to be
performed by it in the normal course of its business to Third Parties without
the prior consent of the Research Management Committee; provided, however, that
CNSI or Allergan shall require such Third Parties to enter into appropriate
confidentiality agreements unless such subcontracting would not require the
transfer of confidential Information (as defined in Article 11 hereof) to the
Third Party.
3.4 Data. CNSI and Allergan shall maintain records in sufficient detail
and in good scientific manner appropriate for patent purposes and as will
properly reflect all work done and results achieved in the performance of the
Research Program (including all data in the form required to be maintained under
any applicable governmental regulations). Such records shall include books,
records, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
computer information storage means, samples of materials and other graphic or
written data generated in connection with the Research Program. Each Party shall
provide the other Party the right to inspect such records, and shall provide
copies of all requested records, to the extent reasonably required for the
performance of each Party's obligations under this Agreement; provided, however,
that each Party shall maintain such records and the information of the other
Party contained therein in confidence in accordance with Article 11 below and
shall not use such records or information of the other Party except to the
extent otherwise permitted by this Agreement.
3.5 Quarterly Reports to the Research Management Committee. Within thirty
(30) days following the end of each quarter of each Research Year, each Party
shall provide to the members of the Research Management Committee a written
report, in a format to be designed by the Research Management Committee, which
shall summarize in reasonable detail the work it has performed under the
Research Plan during the preceding quarter.
ARTICLE 4. TARGET RESEARCH AND VALIDATION
8
15
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
4.1 Testing and Validation of Targets in Allergan Models. Promptly after
the date hereof, CNSI shall provide to the Research Management Committee a list
of CNSI Compounds that represent lead structures with varying specificities for
blocking (i) NMDA channels, (ii) sodium channels, and (iii) both NMDA and sodium
channels. Such list shall provide the structures and properties of such CNSI
Compounds. In addition, CNSI will provide to the Research Management Committee
any results of CNSI's prior screening of such CNSI Compounds in CNSI's
neuroprotective assays. The Research Management Committee shall select a
reasonable number of such compounds in each category to test in CNSI's
neuroprotective assays and Allergan's **************** models. To the extent
it has not already done so, CNSI shall test such compounds in its
neuroprotective models. CNSI shall provide Allergan with at least
********************************** of each such selected compound based on
activity levels supporting dosing of **********************************
***********************************************, solely for the purpose of
testing hereunder. Allergan shall test such compounds in Allergan's ******
*************** models in accordance with the Research Plan, to evaluate such
compounds for both general neuroprotection and specific retinal and optic nerve
protection. CNSI and Allergan shall report the results of such research promptly
to the Research Management Committee. The Research Management Committee shall
determine whether compounds which block (i) NMDA channels, (ii) sodium channels,
and/or (iii) both NMDA and sodium channels can provide a therapeutic benefit in
slowing or preventing ocular neurodegeneration. If the Research Management
Committee so determines, such channel or channels shall be deemed a Validated
Target. From time to time, the Research Management Committee may designate
additional Validated Targets for use within the Field.
4.2 Transfer of CNSI Technology. Commencing promptly after the Effective
Date, and from time to time thereafter, CNSI will disclose to Allergan such of
the CNSI Patent Rights and CNSI Technology as is reasonably necessary to enable
Allergan to perform the research hereunder in accordance with the Research Plan.
During the term of the Agreement, CNSI will provide Allergan with reasonable
technical assistance relating to the use of such CNSI Technology and the
practice of such CNSI Patent Rights in the Field, solely to the extent permitted
under the licenses granted to Allergan herein.
4.3 Transfer of Allergan Technology. Commencing promptly after the
Effective Date, Allergan shall disclose to CNSI such of the Allergan Technology
and Allergan Patents as is reasonably necessary to enable CNSI to perform the
research hereunder in accordance with the Research Plan. During the Research
Phase, Allergan will provide CNSI with reasonable technical assistance relating
to the use of such Allergan Technology and the practice of the Allergan Patents
in the Field, solely to the extent permitted under the licenses granted to CNSI
herein.
ARTICLE 5. COMPOUND SCREENING AND SELECTION
5.1 Screening to Identify Active Compounds.
9
16
5.1.1 Compounds for Screening. During the Research Phase, CNSI will
make all CNSI Compounds (but excluding the Excluded Compounds) available for
screening as selected by the Research Management Committee, along with the
structures and properties of such CNSI Compounds. In addition, pursuant to the
Research Plan, CNSI will synthesize additional compounds with expected activity
for the Validated Target(s). The Research Management Committee may also select
for screening appropriate Allergan Compounds reasonably proposed for screening
by Allergan. In addition, the Research Management Committee may agree to obtain
from Third Parties rights to screen compounds owned or controlled by such Third
Parties; provided, however, that if there would be any amounts payable to any
such Third Party for screening such compounds or making, using or selling
products containing such compounds, no such Third Party compounds will be
screened without the consent of both Parties.
5.1.2 Screening. CNSI and Allergan shall use reasonable efforts to
conduct the screening in the appropriate assays of all compounds selected for
screening under Section 5.1.1, in accordance with the Research Plan. The primary
goal of the screening is to determine the activity of such selected compounds to
identify Active Compounds. If so directed by the Research Management Committee,
the Parties shall also use reasonable efforts to obtain additional data from
screening of compounds relating to toxicity and/or safety and target specificity
of compounds. In addition to the foregoing, CNSI has already screened numerous
compounds in its neuroprotective assays and identified certain CNSI Compounds as
active in such assays. CNSI will provide the Research Management Committee with
the results of such screening which have not previously been provided.
5.1.3 Identification of Active Compounds. Promptly after completing
the screening of a batch of compounds under this Section 5.1 in the appropriate
assays, the Parties will provide to the Research Management Committee the
results of such screening. The Research Management Committee will review such
results promptly after receipt and will determine which of the screened
compounds meet the requirements established by the Research Management Committee
for identification as Active Compounds. Upon identifying Active Compounds, the
Research Management Committee shall add such compounds to the list of all Active
Compounds, which shall be maintained by the Research Management Committee, and
shall forward the updated list to each Party.
5.2 Further Investigation on Active Compounds. From time to time as
appropriate during the Research Phase, with the goal of promptly identifying
certain Active Compounds for designation as Collaboration Compounds, the
Research Management Committee will select specific Active Compounds that appear
the most promising in the Field for testing in Allergan's ocular disease models
and/or in such other tests or investigations as the Research Management
Committee deems appropriate. Promptly after such selection, Allergan will
conduct such ocular disease model or other appropriate testing required by the
Research Management Committee on the selected Active Compounds. CNSI shall
assist the Research Management Committee in making such determination, at its
request, by performing further assays on selected Active Compounds, as provided
in the Research Plan. Allergan and CNSI
10
17
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
shall promptly provide to the Research Management Committee the results of all
work either Party performs pursuant to this Section 5.2.
5.3 Selection of Leads for Preclinical Investigation. For each Validated
Target, Allergan shall select and the Research Management Committee shall
approve and prioritize up to *********** Active Compounds with activity against
such Validated Target that are most promising for preclinical investigation by
Allergan. At the time of such approval of selected compounds, such compounds
shall be designated as "Collaboration Compounds," provided that such compounds
are not Excluded Compounds. From time to time thereafter Allergan may designate
additional Active Compounds as Collaboration Compounds, or remove such
designation from previously designated Active Compounds, so long as the total
number of such Collaboration Compounds with respect to a particular Validated
Target shall not exceed *********** at any time. At the request of the Research
Management Committee, pursuant to the Research Plan, CNSI shall conduct
medicinal chemistry to optimize lead compounds. Allergan shall use reasonable
efforts to conduct, at its expense, all preclinical testing and investigations
necessary for Allergan to select appropriate Collaboration Compounds as
Development Compounds for further development. Such further development may
include, at Allergan's reasonable discretion, GLP Tox studies, formulation and
process development, animal testing and other preclinical pharmaceutical
development necessary to prepare and file an IND. CNSI will be responsible for
providing the supply of all Active Compounds and Collaboration Compounds
necessary to screen such compounds for preclinical development under Sections
5.2 and 5.3, prior to designation as a Development Compound but not more than
*********. If more material is required, the Research Management Committee shall
determine the process to obtain such material and such additional material will
be obtained at Allergan's expense. Allergan shall provide promptly to the
Research Management Committee the results of all work it performs pursuant to
this Section 5.3. Allergan shall use reasonable efforts to conduct such
investigations in order to select a Development Compound as soon as practicable.
From the date upon which each Collaboration Compound is designated hereunder
until the date that is *********** months following such date of designation
(the "Availability Period"), CNSI will not grant any license or other rights to
a Third Party (including BI, except as set forth on Exhibit D) under its
interest in the Collaboration Compound. However, such Availability Period may be
extended with respect to a particular Collaboration Compound by an amount of
time equivalent to the amount of time in excess of one month that was required
by Allergan to obtain supply of such Collaboration Compound as necessary for
Allergan to conduct testing hereunder.
5.4 Selection of Development Compound. With respect to each Validated
Target, Allergan shall have the right to select, by written notice to CNSI and
the Research Management Committee, a Collaboration Compound or Active Compound
as a Development Compound for clinical development. Allergan shall also
designate the Back-Up Compounds with respect to such specified Development
Compound, as provided in Section 5.6. Allergan shall use commercially reasonable
efforts to select a Development Compound active with respect to each Validated
Target prior to the end of the Research Phase. Such commercial reasonableness
shall include consideration of all Program activities being conducted by
Allergan hereunder.
11
18
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
5.5 Substitution of Development Compound. In the event that, during the
term of the Agreement, Allergan determines, based on its good faith and
commercially reasonable judgment, that neither a Development Compound designated
under Section 5.4 nor any of its Back-Up Compounds can be demonstrated with
reasonable effort and expense to be safe and effective in the Field, then
Allergan may give CNSI written notice that it elects to relinquish all rights to
such Development Compound and Back-Up Compounds. Upon such notice, all such
compounds shall lose their designation as Development Compounds and Back-Up
Compounds. Promptly after such notice, but in any event prior to the end of the
term of the Agreement, Allergan may select from the Active Compounds or
Collaboration Compounds, by giving written notice to CNSI and the Research
Management Committee, a substitute Development Compound and Back-Up Compounds
for such Development Compound; provided, however, that Allergan may not select
as such Development Compound or Back-Up Compounds any Excluded Compound.
5.6 Designation of Back-Up Compounds. Promptly after Allergan designates a
Development Compound as provided in Section 5.4 or 5.5, Allergan shall designate
in writing to the Research Management Committee a set of up to ******** Active
Compounds (but excluding any Excluded Compound) that are isomers, analogs or
homologs of such Development Compound to be the designated back-up compounds
thereto ("Back-Up Compounds"). The Research Management Committee shall review
such designation to assure, using reasonable discretion, that such designated
compounds are isomers, analogs or homologs of the designated Development
Compound. From time to time during the term of the Agreement, Allergan may
substitute, for an existing Back-Up Compound within such set, a different Active
Compound (but excluding any Excluded Compounds) that is an isomer, analog or
homolog of the relevant Development Compound. Allergan may make ********* such
substitutions with respect to a particular set of Back-Up Compounds.
5.7 Excluded Compounds. An "Excluded Compound" shall be any CNSI Compound
that meets one of the following criteria:
(a) the compound is listed on Exhibit D attached hereto as of the
Effective Date;
(b) the compound is selected by a corporate partner of CNSI as a
lead candidate for preclinical and clinical development, prior to selection by
Allergan of such compound as a Collaboration Compound, Development Compound or
Back-Up Compound, and based on such selection the corporate partner makes, in
connection with such selection, a significant economic payment to CNSI and
commits to use diligence in such efforts, at least comparable to the economic
and diligence commitments of Allergan hereunder when Allergan selects a
Collaboration Compound, Development Compound or Back-Up Compound;
(c) the compound is a member of a set of up to ********* compounds
that are isomers, analogs or homologs of a compound that meets the criteria of
subsection (b)
12
19
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
above, which set of compounds are designated by the relevant corporate partner
as back-up compounds to such compound selected as provided in subsection (b);
(d) the compound is selected by CNSI or an Affiliate as a lead
candidate for preclinical and clinical development, prior to selection by
Allergan of such compound as a Collaboration Compound, Development Compound or
Back-Up Compound, and CNSI commits and continues to expend a significant amount
of resources on the diligent preclinical and clinical development and
commercialization of such compound; or
(e) the compound is a member of a set of up to ********* compounds
that are isomers, analogs or homologs of a compound that meets the criteria of
subsection (d) above, which set of compounds are designated by CNSI or its
Affiliate as back-up compounds to such compound selected by CNSI or its
Affiliate as provided under subsection (d).
For purposes of Section 5.7(b) above, "selection as a lead
candidate" by a corporate partner of CNSI shall be deemed to have occurred if
such corporate partner of CNSI designates or reserves a compound under
circumstances comparable to those for designating or reserving compounds as a
Collaboration Compound, Development Compound, or Back-Up Compound under this
Agreement.
CNSI shall provide notice to the Research Management Committee and
Allergan with respect to each Active Compound designated as an Excluded Compound
within five (5) business days of such designation. Such compound shall be
considered an Excluded Compound upon receipt of written notice by Allergan from
CNSI delivered in accordance with Section 15.4. Such notice shall include a (i)
description of such compound, (ii) whether such compound was selected by a Third
Party pursuant to subsection (b) or (c) above, or whether CNSI has selected such
compound pursuant to subsection (d) or (e) above, (iii) the length of time such
compound will be subject to restriction, and (iv) a representation by CNSI that
the economic and diligence commitments required of such Third Party, or CNSI,
pursuant to this Section 5.7 with respect to such compound have been fulfilled.
Allergan agrees that CNSI shall be free to disclose to Third Parties
who are potential or actual corporate partners of CNSI information concerning
Collaboration Compounds, Development Compounds and Back-Up Compounds comparable
to the information which CNSI is obligated to disclose to Allergan regarding
compounds selected by Third Party corporate partners of CNSI as set forth in the
immediately preceding paragraph of this Section 5.7.
ARTICLE 6. THE DEVELOPMENT PHASE
6.1 Conduct of the Development Program.
13
20
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
6.1.1 Commencement of the Development Phase. Allergan shall
designate Collaboration Compounds or Active Compounds as Development Compounds
in its sole discretion. The Development Phase for each compound shall begin
immediately upon the designation by Allergan of such compound as a Development
Compound.
6.2 Development of Development Compounds. Allergan shall have the sole
responsibility for conducting clinical development of Development Compounds
and/or BackUp Compounds, with the goal of obtaining approval of a Product
containing a Development Compound or Back-Up Compound. Allergan will use its
reasonable efforts to develop each Development Compound and its corresponding
Products for sale in the Major Market Countries. Once every *********** months,
Allergan shall provide CNSI a written report summarizing the results and
progress of Allergan's efforts on the Development Compounds and Back-Up
Compounds, including preclinical investigations and clinical trials. In
addition, at least every ******* months Allergan will meet with CNSI to discuss
such results and efforts, and shall give reasonable consideration to any
comments or suggestions from CNSI.
6.3 Public Announcements. Allergan will provide CNSI with twenty-four (24)
hours prior notice of any public announcement by Allergan regarding the
Development Program.
ARTICLE 7. MANAGEMENT OF THE RESEARCH PROGRAM
7.1 Research Management Committee.
7.1.1 Formation and Composition. A joint committee comprised of two
(2) named representatives of each of Allergan and of CNSI, (the "Research
Management Committee") shall be appointed promptly after the date hereof and
shall meet as needed, but not less than once each quarter during each Research
Year. Such meetings shall be at such times agreed to by CNSI and Allergan, at
such locations or in such other form (e.g. telephone or video conference) as the
members of the Research Management Committee shall agree.
7.1.2 Research Management Committee Functions and Powers. The
Research Management Committee shall be responsible for the management of the
Research Program. The principal functions of the Research Management Committee
will be to (i) determine and revise the specific goals for the Research Program,
(ii) discuss the Research Program and set priorities thereunder, (iii) prepare
and approve the Research Plan in accordance with Section 3.2, (iv) manage the
ongoing research and preclinical investigations conducted under the Research
Program, (v) monitor the progress and results of such investigations, (vi)
determine whether targets should be considered Validated Targets in accordance
with Section 4.1, (vii) consider and make any necessary or desirable amendments
to the Research Plan, (viii) determine which compounds should be profiled during
the next quarter of each Research Year, (ix) determine which screened compounds
meet the requirements for Active Compounds, (x) determine the availability of
Collaboration
14
21
Compounds, and (xi) maintain a list of Active Compounds, Excluded Compounds and
Collaboration Compounds. A Party may change one or more of its representatives
to the Research Management Committee at any time. Members of the Research
Management Committee may be represented at any meeting by another member of the
Research Management Committee, or by a deputy. Either Party may permit
additional employees and consultants to attend and participate (on a non-voting
basis) in the Research Management Committee meetings, subject to the
confidentiality provisions of Article 11. Any approval, determination or other
action agreed to by all of the members of the Research Management Committee or
their deputies present at the relevant Research Management Committee meeting
shall be the approval, determination or other action of the Research Management
Committee, provided that at least one representative of each Party is present at
such meeting.
7.1.3 Chair. The Research Management Committee shall initially be
chaired by an Allergan representative to the committee. The Allergan
representative shall serve as the Chair of the Research Management Committee
through the end of the first Research Year. CNSI shall then have the right to
appoint one of its representatives to serve as the Chair of the Research
Management Committee through the end of the second Research Year. An Allergan
representative shall serve as the Chair of the Research Management Committee
through the end of the third Research Year.
7.1.4 Minutes and Reports. The Research Management Committee shall
be responsible for keeping accurate minutes of its deliberations which record
all proposed decisions and all actions recommended or taken. The minutes of each
meeting will include a list of all Collaboration Compounds and the dates upon
which the Availability Period for each such compound expires. Within thirty (30)
days of each meeting, the Chair shall provide the Parties with minutes of such
meeting and a written report describing in reasonable detail, the status of the
Research Program, a summary of the work and progress to date, any issues
requiring resolution and any proposed decisions and actions taken to all members
of the Research Management Committee. All records of the Research Management
Committee shall be available to both Parties.
7.1.5 Information and Results. Except as otherwise provided, the
Parties will make available and disclose to one another all results of the work
conducted pursuant to the Research Program prior to and in preparation for
Research Management Committee meetings, in the form and format to be designated
by the Research Management Committee.
7.2 General Disagreements. All disagreements within the Research
Management Committee shall be subject to the following:
(a) The representatives to the Committee will negotiate in good
faith for a period of not more than sixty (60) days to attempt to resolve the
dispute;
(b) If the representatives of the Committee are unable to resolve
the dispute in accordance with subsection (a) above, then they shall promptly
present the disagreement to
15
22
the Corporate Vice President of Science and Technology of Allergan and the Chief
Scientific Officer of CNSI;
(c) Promptly thereafter, such executives shall discuss each Party's
view and explain the basis for such disagreement; and
(d) If such executives cannot promptly resolve such disagreement
within sixty (60) days after such issue has been referred to them, then such
disputes shall be referred to arbitration as described in Section 15.6.
7.3 Availability of Employees. Each Party agrees to make its employees and
nonemployee consultants reasonably available at their respective places of
employment to consult with the other Party on issues arising during the Research
Phase or the Development Phase and in connection with any request from any
regulatory agency, including regulatory, scientific, technical and clinical
testing issues.
7.4 Visit of Facilities. Representatives of each Party may, upon
reasonable notice and at times reasonably acceptable to the other Party, visit
the other Party's facilities where the Research Program is being conducted, and
consult informally, during such visits and by telephone, with the other Party's
personnel performing work on the Research Program.
ARTICLE 8. LICENSES; MANUFACTURING AND MARKETING RIGHTS
8.1 Licenses.
8.1.1 Grant of Research License. CNSI hereby agrees to grant to
Allergan the worldwide exclusive right and license in the Field under the CNSI
Patent Rights, CNSI Technology, CNSI Inventions and CNSI's interest in Joint
Patent Rights and Joint Inventions to the extent necessary or useful to carry
out Allergan's research and development responsibilities under the Program in
accordance with this Agreement, subject to Section 8.2 and Article 11 below.
With respect to each Collaboration Compound or Active Compound selected as a
Development Compound or Back-Up Compound by Allergan, the right and license
granted pursuant to this Section shall continue and be supplemented by the
license granted pursuant to Section 8.1.2 below for such compound.
8.1.2 Grant of Commercial License. Upon designation of any
Collaboration Compound or Active Compound as a Development Compound or Back-Up
Compound by Allergan and payment to CNSI of the milestone payment due, if any,
upon such designation under Section 9.4 below, CNSI hereby grants to Allergan,
under the CNSI Patent Rights, CNSI Technology, CNSI Inventions and CNSI's
interest in Joint Patent Rights and Joint Inventions, subject to Section 8.2
below, the worldwide exclusive right and license (with the right to sublicense)
in the Field to: (i) use each Development Compound and Back-Up Compound and its
corresponding Products; (ii) distribute for sale and sell each Development
Compound and Back-Up Compound and its corresponding Products; and (iii) subject
to
16
23
Section 8.3.2, make or have made each Development Compound and Back-Up Compound
for use in Products. Allergan shall notify CNSI of any sublicense of the rights
granted herein to a non-Affiliate of Allergan within thirty (30) days of
entering into such sublicense.
8.1.3 Grant of License by Allergan. Allergan hereby grants CNSI the
non-exclusive, royalty-free right and license to use Allergan Compounds,
Allergan Technology, and Allergan's interest in Joint Patent Rights and Joint
Inventions solely for research purposes in accordance with this Agreement and
the Research Plan, subject to Article 11 hereof.
8.2 Reservation of Rights. Notwithstanding the grant of any licenses
pursuant to Section 8.1 above, CNSI at all times reserves the rights under the
CNSI Patent Rights, CNSI Technology, CNSI Inventions and CNSI's interest in
Joint Patent Rights and Joint Inventions to (i) use each Collaboration Compound,
Development Compound and Back-Up Compound and its corresponding Products for
CNSI's research uses only in accordance with this Agreement, and (ii) to make
and have made each Collaboration Compound, Development Compound and Back-Up
Compound and its corresponding Products in accordance with Section 8.3 below.
Notwithstanding the foregoing, CNSI shall not perform research activities on
Development Compounds, Back-Up Compounds, or Products without prior written
approval by Allergan, such approval not to be unreasonably withheld. CNSI shall
promptly provide Allergan with copies of all data and information resulting from
CNSI's research activities on Collaboration Compounds, Development Compounds,
Back-Up Compounds and Products.
8.3 Manufacturing Rights.
8.3.1 Allergan's Right to Manufacture. Except as set forth in
Sections 4.1 and 5.3, Allergan shall be responsible for the manufacture of each
Development Compound or Back-Up Compound and its corresponding Products at the
required quality and in quantities sufficient to conduct the Research Program,
the Development Program and for commercial sale. Allergan shall also be
responsible for providing all documentation regarding the manufacture of such
Development Compound and Back-Up Compound and such Products for commercial sale
needed to register the Products and arranging for preapproval inspections.
8.3.2 Reservation of Rights. Notwithstanding the rights granted to
Allergan under Section 8.3, CNSI at all times reserves the right under the CNSI
Patent Rights, CNSI Technology, CNSI Inventions and CNSI's interest in Joint
Patent Rights and Joint Inventions to make and use reasonable quantities of each
Collaboration Compound, Development Compound and Back-Up Compound and its
corresponding Products for its own research purposes only in accordance with the
Research Plan and subject to the approval and reporting requirements set forth
in Section 8.2.
8.4 Marketing and Distribution Rights. Except as otherwise set forth
herein, upon the grant of a license pursuant to Section 8.1.2 hereof, Allergan
shall have the exclusive
17
24
right to market and distribute for sale and sell the relevant Development
Compound or BackUp Compound and its corresponding Products worldwide. Allergan
agrees, at its own expense, to use reasonable efforts to market the Products in
all the Major Market Countries and those Other Countries in which Allergan
markets other Allergan products with similar commercial potential.
ARTICLE 9. PAYMENTS
9.1 Funding of the Research Program.
9.1.1 Amount of Funding by Allergan. In consideration of CNSI's
performance of its obligations under the Research Program, Allergan will pay
CNSI One Million Dollars ($1,000,000) in the first Research Year and in no event
less than One Million Dollars ($1,000,000) for each Research Year thereafter, as
supported by a Research Plan and budget. The amounts payable for each Research
Year shall be paid by certified or bank check or wire transfer in United States
dollars in four equal payments paid quarterly by the tenth (10th) business day
of each calendar quarter, pro-rated as necessary for the first and last quarter
(each such payment referred to as a "Research Funding Payment"). The first
Research Funding Payment shall be paid within ten (10) days of the Effective
Date. Research Funding Payments shall not be credited against equity, milestone
or royalty payments due CNSI under Sections 9.3 through 9.5 below.
9.1.2 Records. CNSI shall keep complete and accurate records of its
expenditures of Research Funding Payments received by it, which records CNSI
shall retain for two (2) years after the end of the Research Year in which the
Research Funding Payment was made. Allergan shall have the right at its own
expense during the term of this Agreement and during the subsequent two-year
period to appoint an independent certified public accountant reasonably
acceptable to CNSI to inspect said records, which acceptance shall not be
unreasonably withheld or delayed. Upon reasonable written notice from Allergan,
CNSI shall make its records available during normal business hours for
inspection by the independent certified public accountant at the place or places
where such records are customarily kept, to the extent reasonably necessary to
verify the accuracy of the expenditures. The right of inspection shall not be
exercised more than once in any calendar year and not more than once with
respect to records covering any specific period of time. Allergan agrees to hold
in strict confidence all information concerning such expenditures and all
information learned in the course of any audit or inspection, except to the
extent necessary for Allergan to enforce any rights it may have pursuant to this
Agreement or if disclosure is required by law. The failure of Allergan to
request verification of any expenditures during the two (2) year period CNSI is
required to retain the records for any Research Year shall be considered
acceptance of the accuracy of CNSI's reports concerning such expenditures.
18
25
9.2 Funding of the Development Program. Except as otherwise agreed by the
Parties, Allergan shall bear all of the costs incurred in connection with the
Development Program.
9.3 Equity Investments. Upon the execution of this Agreement, Allergan
shall make an investment in CNSI's Common Stock in the aggregate amount of Three
Million Dollars ($3,000,000) on the terms and subject to the conditions set
forth in the Stock Purchase Agreement dated as of the date hereof between the
Parties (the "Stock Purchase Agreement"). Payments made to CNSI pursuant to this
Section 9.3 shall not be refundable
19
26
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
in the event of any early termination of the Research Phase and will not be
credited against milestone or royalty payments due CNSI under Sections 9.4 and
9.5.
9.4. Milestones.
9.4.1. Milestone Payments. In consideration of CNSI's work on the
Research Program and the licenses granted to Allergan hereunder, Allergan shall
pay the following amounts to CNSI upon the achievement (prior to the expiration
or termination of this Agreement pursuant to Article 14 hereof) of each of the
applicable milestones:
==============================================================================
Milestone Payment
------------------------------------------------------------------------------
1. *********************************** $***********
------------------------------------------------------------------------------
2. ********************************************** $***********
*******
------------------------------------------------------------------------------
3. *********************************************** $***********
************************************
*********
------------------------------------------------------------------------------
4. ********************************************** $**********
**************
==============================================================================
The above milestone payments shall apply to the ************************** (or
its *****************) to achieve any milestone event for a ****************,
including but not limited to: (i) *************, (ii) *************** and (iii)
****************** **************. In no event shall any of the above milestone
payments be paid ************** per ****************. Notwithstanding the above,
if Allergan pursues development of a ******************** for any
**************** subsequent to paying ************** or *** for the any
****************, then Allergan will pay ******************* of each milestone
payment for ********************* for such subsequent **************** upon
achievement of such milestones and the remaining ***** ************* of each
such milestone payment upon achievement of ************* for such subsequent
****************, if it occurs, together with payment in full for
********* ***.
All payments to be made by Allergan to CNSI pursuant to this
Section 9.4 shall be made in United States dollars. Allergan shall promptly
notify CNSI in writing of the occurrence of the milestones set forth above.
Within ten (10) business days after the date of such notice, Allergan shall pay
to CNSI by certified or bank check, wire transfer or other means acceptable to
CNSI, the milestone payments set forth above. Payments made to CNSI pursuant to
this Section 9.4 will not be credited against Research Funding Payments payable
under Section 9.1 or equity or royalty payments due CNSI under Sections 9.3 and
9.5.
20
27
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
9.4.2. Loan. Allergan agrees to loan CNSI Two Million Dollars
($2,000,000) pursuant to the terms of the Credit Agreement attached hereto as
Exhibit E, and the promissory note and the security agreement in the forms
attached as Exhibit A and Exhibit B to the Credit Agreement.
9.5. Royalties on Net Sales.
9.5.1. Royalty Rate. In consideration of the licenses granted to
Allergan pursuant to Section 8.1 hereof, Allergan shall pay CNSI a royalty at
the rate of ************* **** of Net Sales; provided, however, for Net Sales in
a country in which no Valid Patent Claim under CNSI's Patent Rights and CNSI's
interest in Joint Patent Rights licensed hereunder covering the Product sold in
such country exists, the payments due to CNSI under this Section 9.5.1 with
respect to the Net Sales in such country at such time shall be
******************************. In the event Valid Patent Claims covering the
Product are established or reestablished in such country, the payments due to
CNSI with respect to Net Sales after such date under this Section 9.5.1 shall
***************************** set forth above.
9.6. Royalty Reports, Exchange Rates. During the term of this Agreement,
following the First Commercial Sale of a Product in any country by Allergan,
Allergan shall furnish to CNSI a written quarterly report showing, on a country
by country basis: (i) the gross sales of all Products sold by Allergan and its
Affiliates and its sublicensees during the reporting period and the calculation
of Net Sales from such gross sales; (ii) the royalties and other payments
payable in United States dollars which shall have accrued hereunder in respect
of such sales; (iii) withholding taxes, if any, required by law to be deducted
in respect of such sales, as applicable; (iv) the dates of the First Commercial
Sales of any Products in any country by Allergan and its Affiliates and its
sublicensees during the reporting period; and (v) the exchange rates used in
determining the amount of United States dollars. All amounts payable will first
be calculated in the currency of sale and then converted into United States
dollars using as a rate of exchange the average exchange rate reported in the
Wall Street Journal during the calendar quarter to which the payment relates.
Reports together with the royalty payable for the periods to which the reports
relate shall be due on the sixtieth (60th) day following the close of each
calendar quarter. If no royalty is due for any royalty period hereunder,
Allergan shall so report. Allergan shall keep complete and accurate records in
sufficient detail to properly reflect all gross sales and Net Sales and to
enable the royalties payable hereunder to be determined.
9.7. Audits. Upon the written request of CNSI, Allergan shall permit an
independent public accountant selected by CNSI and acceptable to Allergan, which
acceptance shall not be unreasonably withheld or delayed, to have access during
normal business hours to such of the records of Allergan as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder in respect of
any fiscal year ending not more than twenty-four (24) months prior to the date
of such request. All such verifications shall be conducted at the expense of
CNSI and not more than once in each calendar year.
21
28
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
In the event such accountant concludes that additional royalties
were owed during such period, the additional royalty shall be paid within thirty
(30) days of the date CNSI delivers to Allergan such accountant's written report
so concluding. The fees charged by such accountant shall be paid by CNSI unless
the audit discloses that the royalties payable by Allergan for the audited
period are more ****** (***) of the royalties actually paid for such period, in
which case Allergan shall pay the reasonable fees and expenses charged by the
accountant.
Allergan shall include in each sublicense granted by it pursuant to
this Agreement a provision requiring the sublicensee to make reports to
Allergan, to keep and maintain records of sales made pursuant to such sublicense
and to grant access to such records by CNSI's independent accountant to the same
extent required of Allergan under this Agreement. Upon the expiration of
twenty-four (24) months following the end of any calendar year, the calculation
of royalties payable with respect to such year shall be binding and conclusive
upon CNSI; and Allergan and its sublicensees shall be released from any
liability or accountability with respect to royalties for such year.
CNSI agrees that all information subject to review under this
Section 9.7 or under any sublicense agreement is confidential and that it shall
cause its accountant to retain all such information in confidence.
9.8. Royalty Payment Terms. Royalties shown to have accrued by each
royalty report provided for under this Agreement shall be due and payable on
the date such royalty report is due. Payment of royalties in whole or in part
may be made in advance of such due date. Royalties determined to be owing, and
any overpayments to be credited, with respect to any prior quarter shall be
added, or credited, as the case may be, together with interest thereon accruing
under this Agreement from the date of the report for the quarter for which such
amounts are owing, to the next quarterly payment hereunder.
9.9. Withholding of Taxes. Any withholding of taxes levied by tax
authorities outside the United States on the payments hereunder shall be borne
by CNSI and deducted by Allergan from the sums otherwise payable by it hereunder
for payment to the proper tax authorities on behalf of CNSI. Allergan agrees to
cooperate with CNSI in the event CNSI claims exemption from such withholding or
seeks deductions under any double taxation or other similar treaty or agreement
from time to time in force, such cooperation to consist of providing receipts of
payment of such withheld tax or other documents reasonably available to
Allergan. As of the Effective Date, the Parties believe that no such withholding
tax will apply based on Allergan's present organizational structure. In the
event that any such withholding tax becomes applicable to any payments due to
CNSI hereunder as a result of an Allergan organizational change, and CNSI is
unable to use such withheld tax as a credit against its tax obligations in any
country, Allergan agrees, at the request of CNSI, to negotiate in good
22
29
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
9.10. Exchange Controls. Except as hereinafter provided in this Section ,
all payments to be made pursuant to this Article 9 shall be paid in United
States dollars. If at any time legal restrictions prevent the prompt remittance
of part or all royalties with respect to any country where the Product is sold,
payment shall be made through such lawful means or methods as Allergan may
determine. When in any country the law or regulations prohibit both the
transmittal and deposit of royalties on sales in such a country, royalty
payments shall be suspended for as long as such prohibition is in effect, and
as soon as such prohibition ceases to be in effect, all royalties that Allergan
or its sublicensees would have been obligated to transmit or deposit, but for
the prohibition, shall forthwith be deposited or transmitted promptly to the
extent allowable, as the case may be. If the royalty rate specified in this
Agreement should exceed the permissible rate established in any country, the
royalty rate for sales in such country shall be adjusted to the highest legally
permissible or government-approved rate.
9.11. Interest on Late Payments. Any payments by Allergan that are not
paid, or overpaid, on or before the date such payments are due under this
Agreement shall bear interest, to the extent permitted by applicable law, at
*************************** the LIBOR rate calculated on the number of days
payment is delinquent. LIBOR rate means the interest rate per annum as
determined by Bank of America NT&SA, at which deposits in U.S. dollars are
generally available in the London interbank market with maturities of thirty
(30) days.
ARTICLE 10. INTELLECTUAL PROPERTY RIGHTS
10.1. Ownership.
10.1.1. Ownership of Inventions Within the Field. Inventorship with
respect to inventions made pursuant to work carried out under the Program shall
be determined in accordance with United States rules of inventorship. All right,
title and interest in all writings, inventions, discoveries, improvements and
other technology which is found to be useful in the Field and is directed to the
development, manufacture or use of a Development Compound or Back-Up Compound or
a Product, or constituting a Development Compound or Back-Up Compound or a
Product, whether or not patentable or copyrightable, and any patent
applications, patents or copyrights based thereon (collectively, the
"Inventions") that are conceived and/or reduced to practice during and as a
result of the Program solely by employees of CNSI or others acting on behalf of
CNSI ("CNSI Inventions") shall be owned by CNSI. All right, title and interest
in all Inventions that are conceived and/or reduced to practice during and as a
result of the Program solely by employees of Allergan or others acting on behalf
of Allergan ("Allergan Inventions") shall be owned by Allergan. All right, title
and interest in all Inventions that are conceived and/or reduced to practice
during and as a result of the Program jointly by employees of CNSI and Allergan
(the "Joint Inventions") shall be owned jointly by Allergan and CNSI.
23
30
10.1.2. Cooperation of Employees. Each Party represents and agrees
that all employees or others acting on its behalf in performing its obligations
under this Agreement shall be obligated under a binding written agreement to
assign to such Party, or as such Party shall direct, all Inventions made or
conceived by such employee or other person, or in the case of non-employees
working for other companies or institutions on behalf of CNSI or Allergan.
10.2. Provisions Concerning the Filing, Prosecution and Maintenance of
Technology, Patent Rights and Joint Inventions.
10.2.1. Priority Filings for Inventions. When an Invention has been
made which may reasonably be considered to be patentable or when a
determination is made that CNSI Technology or Allergan Technology used in the
Program may reasonably be considered to be patentable, a priority patent
application shall be filed as soon as reasonably possible. If CNSI Technology,
CNSI Patents Rights, or a CNSI Invention or a Joint Invention or Joint Patent
Right which has application outside the Field is involved, such application
shall be filed by CNSI in such countries as reasonably designated by CNSI after
consultation with Allergan. If Allergan Technology, Allergan Patent Rights, or
an Allergan Invention or a Joint Invention or Joint Patent Right which has
application only in the Field is involved, such application shall be filed by
Allergan in such countries as reasonably designated by Allergan, after
consultation with CNSI.
10.2.2. Foreign Filing Decisions for Inventions. No later than nine
(9) months following the filing date of a priority patent application filed
according to Section 10.2.1, the Parties shall consult together as to whether
such priority application should be abandoned without replacement; abandoned
and refiled; proceeded with in the country of filing only; or used as the basis
for a claim of priority under the Paris Convention for corresponding
applications in other countries.
10.2.3. Prosecution and Maintenance. CNSI shall be responsible for
filing, prosecution and maintenance of patent applications covering all CNSI
Technology, CNSI Patent Rights and CNSI Inventions, and Joint Inventions and
Joint Patent Rights which have application outside the Field, in all designated
countries. For so long as any of the license grants set forth in Article 8
remain in effect, CNSI agrees to file such patent applications in all countries
in which Allergan customarily files for products of similar commercial
potential. Exhibit F attached hereto sets forth those countries in which
Allergan customarily files patent applications for products of similar
commercial potential. Allergan may, from time to time, by written notice to
CNSI, amend Exhibit F. CNSI shall consult with Allergan as to the preparation
and filing (if time permits), prosecution and maintenance of such patent
applications and patents, and shall furnish to Allergan copies of documents
relevant to such preparation, filing, prosecution or maintenance sufficiently
prior to filing such document or making any payment due thereunder to allow for
review and comment by Allergan, and CNSI shall seriously consider all such
comments. In the event that CNSI does not file, prosecute and maintain any such
patent application or patent as set forth above, it shall give Allergan
forty-five (45) days' notice before any relevant deadline and transmit all
information
24
31
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
reasonable and appropriate relating to such patent application or patent, and
Allergan shall have the right to pursue, ******************, filing, prosecution
and maintenance thereof, in which event CNSI shall assign all of its rights
therein to Allergan. In such event, in the case of CNSI Patent Rights, Allergan
********************************************** and ****************** CNSI
hereunder, and in the case of Joint Patent Rights, Allergan may
************************************************************* and ***** ********
due CNSI hereunder.
10.2.4. Patent Costs. **** shall bear the expense of filing,
prosecuting and maintaining patent applications covering ****************** and
***************. ******** shall bear the expense of filing, prosecuting and
maintaining patent applications covering ********************** and
*******************. The Parties shall ******* ***************** of filing,
prosecuting and maintaining patent applications for ***** *************
covering ****************.
10.2.5. Failure to Pay for Joint Inventions.
(a) If at any time either Party shall elect not to continue
to reimburse the other for its allocated expenses of filing, prosecuting or
maintaining in any country any patent application or patent included in the
Joint Inventions or Joint Patent Rights, it shall so notify the other Party
within thirty (30) days of such determination and thereafter such Party shall
surrender to the other Party its rights and licenses under such patent or patent
application in such country.
(b) In the event either Party makes an election pursuant to
subsection (a) above, it shall remain obligated to pay for or to reimburse the
other Party for any costs incurred with respect to such patent application or
patent prior to such election.
(c) Each Party agrees that it will not abandon the
prosecution of any patent applications included within the Joint Inventions or
Joint Patent Rights for which it is responsible nor shall it fail to make any
payment or fail to take any other action necessary to maintain a patent under
the Joint Inventions or Joint Patent Rights unless it has notified the other
Party in sufficient time for such other Party to assume such prosecution or make
such payment.
10.3. Notification of Patent Term Restoration. CNSI shall notify
Allergan of (i) the issuance of each patent included within the CNSI Patent
Rights, CNSI Inventions and/or Joint Inventions or Joint Patent Rights for
which CNSI is responsible, giving the date of issue and patent number for each
such patent, and (ii) each notice pertaining to any patent included within the
CNSI Patent Rights, CNSI Inventions and/or Joint Inventions or Joint Patent
Rights for which CNSI is responsible which it receives as patent owner pursuant
to the Drug Price Competition and Patent Term Restoration Act of 1984
(hereinafter called the "Act"), or other similar laws now or hereinafter in
effect, including notices pursuant to Sections 101 and 103 of the Act from
persons who have filed an abbreviated NDA ("ANDA"), or pursuant to comparable
laws or regulations in other countries. The Parties shall cooperate
25
32
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
with each other in applying for patent term extensions (including Supplementary
Protection Certificates in European Community Countries) where applicable. Such
notices shall be given promptly, but in any event within ten (10) business days
of each such patent's date of issue or receipt of each such notice pursuant to
the Act or comparable laws or regulations in the countries, whichever is
applicable. CNSI shall notify Allergan of each filing for patent term
restoration under the Act, any allegations of failure to show due diligence and
all awards of patent term restoration (extensions) with respect to the CNSI
Patent Rights, CNSI Inventions, Joint Inventions and Joint Patent Rights for
which CNSI is responsible. Likewise, Allergan will inform CNSI of patent
extensions and periods of data exclusivity in the rest of the world regarding
any Product.
10.4. No Other Technology Rights. Except as otherwise expressly provided
in this Agreement, under no circumstances shall a Party hereto, as a result of
this Agreement, obtain any ownership interest in or other right to any
technology, know-how, patents, pending patent applications, products, or
biological materials of the other Party, including items owned, controlled or
developed by the other party, or transferred by the other Party to said Party
at any time pursuant to this Agreement. It is understood and agreed that this
Agreement does not grant (i) Allergan any license or other right in the CNSI
Patent Rights, CNSI Technology or CNSI Inventions, or CNSI's interest in Joint
Inventions and Joint Patent Rights outside the Field, and (ii) CNSI any license
or other right in the Allergan Patent Rights, Allergan Technology or Allergan
Inventions, or Allergan's interest in Joint Inventions and Joint Patent Rights,
except to the extent specifically set forth in Section 8.1.3.
10.5. Enforcement of Patent Rights. CNSI and Allergan shall each promptly
notify the other in writing of any alleged or threatened infringement of
patents or patents applications included in the CNSI Patent Rights, CNSI
Inventions, Joint Inventions or Joint Patents licensed hereunder of which they
become aware. CNSI and Allergan shall then confer and may agree jointly to
prosecute any such infringement. If the Parties do not agree on whether or how
to proceed with enforcement activity within (i) ninety (90) days following the
notice of alleged infringement or (ii) ten (10) business days before the time
limit, if any, set forth in the appropriate laws and regulations for the filing
of such actions, whichever comes first, then ***** may commence litigation with
respect to the alleged or threatened infringement ******************. In the
event that ***** does not commence litigation, ***** may do so and
******************************************* *****, with respect to Net Sales in
the country or countries in which such litigation is undertaken,
***********************************************
************************************. In the event a Party brings an
infringement action, the other Party shall cooperate fully, including, if
required to bring such action, the furnishing of a power of attorney. Neither
Party shall have the right to settle any patent infringement litigation under
this Section in a manner that diminishes the rights or interests of the other
Party without the express written consent of such other Party.
Except as otherwise agreed to by the Parties as part of a cost
sharing arrangement, any recovery realized as a result of such litigation shall
be first allocated to the Party or Parties *******************************
(taking into account any **********
26
33
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
********************* as permitted above) and then shall be
************************ ************** received by **************************
in connection with ******** ******** in such country has to the
********************** in connection with the
********************************.
10.6. Infringement of Third Party Patent Rights.
10.6.1. Joint Strategy. In the event that the manufacture, use or
sale of a Product licensed hereunder becomes the subject of a claim of
infringement of a patent, copyright or other proprietary right anywhere in the
world, and without regard to which Party is charged with said infringement, and
the venue of such claim, the Parties shall promptly confer to discuss the
claim.
10.6.2. Defense. Unless the Parties otherwise agree, ****** shall
have the first right but not the obligation to assume the primary
responsibility at its expense for the conduct of the defense of any such claim.
****** shall have the right, but not the obligation, to participate in any such
suit at its sole option and ******. Each Party shall reasonably cooperate with
the Party conducting the defense of the claim. Neither Party shall enter into
any settlement that affects the other Party's rights or interests without such
other Party's written consent, not to be unreasonably withheld. If ****** in
its good faith, reasonable judgment determines that payment must be made to a
Third Party (the "Third Party Payment") in order to avoid infringement of such
Third Party's patent, ****** shall make such payment.
10.6.3. Allergan Payment Credit. Allergan may credit against
royalties otherwise due CNSI under Section 9.5 of this Agreement an amount
equal to the sum of the following payments made or expenses incurred by
Allergan pursuant to Section 10.6.2: (i) ******************* of Third Party
Payments, (ii) ******************* of payments resulting from a final court
order or settlement agreement entered into in good faith in connection with the
disposition of a Third Party claim of infringement, and (iii) **** costs and
expenses actually incurred in defending against a Third Party infringement
claim. Any amounts which Allergan is entitled to credit against royalties under
this Section 10.6.3 shall be carried forward until all such amount have been
credited. In no event shall the royalties payable to CNSI in any quarter as a
result of the foregoing be reduced by more than ***** *************.
ARTICLE 11. CONFIDENTIALITY
11.1. Nondisclosure Obligations. Except as otherwise provided in this
Article 9, during the term of this Agreement and for a period of ten (10) years
thereafter, both Parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement information and data received from
the other Party during the Program ("Information").
27
34
To the extent it is reasonably necessary or appropriate to fulfil
its obligations or exercise its rights under this Agreement, a Party may
disclose Information it is otherwise obligated under this Section not to
disclose to its Affiliates, sublicensees, consultants, outside contractors and
clinical investigators, on a need-to-know basis on condition that such entities
or persons agree to keep the Information confidential for the same time periods
and to the same extent as such Party is required to keep the Information
confidential; and a Party or its sublicensees may disclose such Information to
government or other regulatory authorities to the extent that such disclosure is
reasonably necessary to obtain patents or authorizations to conduct clinical
trials with and to commercially market any Product. The obligation not to
disclose Information shall not apply to any part of such Information that (i) is
or becomes patented, published or otherwise part of the public domain other than
by acts of the Party obligated not to disclose such Information or its
Affiliates or sublicensees in contravention of this Agreement; (ii) is disclosed
to the receiving Party or its Affiliates or sublicensees by a Third Party,
provided such Information was not obtained by such Third Party directly or
indirectly from the other Party under this Agreement; (iii) prior to disclosure
under this Agreement, was already in the possession of the receiving Party or
its Affiliates or sublicensees, provided such Information was not obtained
directly or indirectly from the other Party under this Agreement; or (iv) can be
shown by written documents to have been independently developed by the receiving
Party or its Affiliates or sublicensees without breach of any of the provisions
of this Agreement.
Allergan acknowledges that CNSI is not free to, and shall not,
disclose to Allergan any confidential information received by CNSI from BI
pursuant to the BI License or any other confidential information (as that term
is used in the BI License).
11.2. Samples. Samples of compounds synthesized, purified or developed in
the course of the Research Program shall not be supplied or sent by either
Party to any Third Party unless protected by an appropriate materials transfer
agreement that includes provisions consistent with the requirements of this
Article 11. Samples of compounds other than those described above provided by
one Party (the "Supplying Party") to the other Party (the "Receiving Party") in
the course of the Research Program shall not be supplied or sent by the
Receiving Party to any Third Party without the written consent of the Supplying
Party.
11.3. Terms of this Agreement. CNSI and Allergan each agrees not to
disclose any terms or conditions of this Agreement to any Third Party without
the prior consent of the other Party, except as required by applicable law or
to persons with whom Allergan or CNSI has entered into or proposes to enter
into a business relationship provided that such persons are subject to
appropriate confidentiality agreements. Notwithstanding the foregoing, prior to
execution of this Agreement, Allergan and CNSI shall agree upon the substance
of information that can be used to describe the terms of this transaction, and
Allergan and CNSI may disclose such information, as modified by mutual
agreement from time to time, without the other Party's consent.
11.4. Publications. During the Research Phase, CNSI and Allergan each
acknowledge the other Party's interest in publishing certain of its results to
obtain recognition
28
35
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
within the scientific community and to advance the state of scientific
knowledge. Each Party also recognizes the mutual interest in obtaining valid
patent protection. Consequently, either Party, its employees or consultants
wishing to make a publication (including any oral disclosure made without
obligation of confidentiality) relating to work performed by such Party as part
of the Research Program (the "Publishing Party") shall transmit to the Research
Management Committee and the other Party (the "Reviewing Party") a copy of the
proposed written publication at least ***** days prior to submission for
publication, or an abstract of such oral disclosure at least ***** days prior to
submission of the abstract or the oral disclosure, whichever is earlier. The
Research Management Committee and/or the Reviewing Party shall have the right
(a) to propose modifications to the publication for patent reasons, (b) to
request a delay in publication or presentation in order to protect patentable
information or maintain trade secrets.
If the Research Management Committee or the Reviewing Party requests
such a delay, the Publishing Party shall delay submission or presentation of the
publication for a period determined by the Research Management Committee to
enable patent applications protecting each Party's rights in such information to
be filed or to protect trade secrets. Upon the expiration of ***** days, in the
case of proposed written disclosures, or ***** days, in the case of an abstract
of proposed oral disclosures, from transmission of such proposed disclosures to
the Research Management Committee and the Reviewing Party, the Publishing Party
shall be free to proceed with the written publication or the oral presentation,
respectively, unless the Research Management Committee or the Reviewing Party
has requested the delay described above.
Notwithstanding the foregoing, either Party may issue press releases
in the ordinary course of business with respect to the Program provided that the
Publishing Party shall transmit to the Reviewing Party a copy of the proposed
written press release at least three (3) business days prior to dissemination
and the Reviewing Party shall have the right (a) to propose modifications to the
publication or (b) to request a reasonable delay in dissemination, which
proposals or requests the Publishing Party shall take into consideration. The
Parties agree that they will use reasonable efforts to coordinate the initial
announcement or press release relating to the existence of this Agreement in the
form attached as Exhibit G, so that such initial announcement or press release
by each is made contemporaneously.
ARTICLE 12. REPRESENTATIONS AND WARRANTIES
12.1. Authorization. Each Party represents and warrants to the other that
it has the legal right and power to enter into this Agreement, to extend the
rights and licenses granted or to be granted to the other in this Agreement, and
to fully perform its obligations hereunder, and that it has not made nor will it
make any commitments to others in conflict with or in derogation of such rights
or this Agreement. Except as otherwise disclosed, each Party further represents
to the other that it is not aware of any legal obstacles, including, patent
rights of others, which could prevent it from carrying out its obligations under
this Agreement.
29
36
12.2 CNSI Patent Representations and Warranties.
12.2.1 Patent Rights. CNSI represents and warrants that it is the
sole and exclusive owner or exclusive licensee of the entire right, title and
interest in and to the CNSI Patent Rights and the CNSI Technology and that it
has the right to license the same to Allergan under this Agreement. CNSI
represents and warrants that, as of the Effective Date, except as set forth in
Section 2.3, the CNSI Patent Rights and the CNSI Technology are free of any
encumbrances, including, without limitation, liens, licenses, judgments and/or
security interests in the Field, and that all patents and patent applications
included in the CNSI Patent Rights are in full force and effect as of the date
hereof of this Agreement and that none of the CNSI Patent Rights are the current
subject of any interference or opposition proceeding.
12.2.2 Litigation. CNSI represents and warrants that as of the
Effective Date there is no pending, or to its knowledge threatened, litigation
that would or might adversely affect its right and ability to perform its
obligations under this Agreement.
12.2.3 Validity and Infringement. CNSI makes no representation or
warranty as to the validity of any of its patents and applications which are
included in the CNSI Patent Rights, or as to the non-infringement of any Third
Party patent(s) by the manufacture, use or sale of compounds or products or the
practice of any processes or methods covered by the CNSI Patent Rights by CNSI,
its Affiliates or licensees. However, CNSI does represent and warrant that as of
the date hereof: (i) it is unaware of any publications or activities-including,
without limitation, patents, articles, and public uses or sales, by it or
others, which would or might invalidate any claim(s) of any patent or patent
application included in the CNSI Patent Rights, (ii) it has not conducted, or
has not commissioned the conducting of, any formal or informal infringement or
validity studies regarding any patent or patent application included in the CNSI
Patent Rights that it has not fully disclosed in writing to Allergan prior to
the date hereof; (iii) it has disclosed to Allergan any Third Party patent(s) of
which it is aware that might be infringed by the manufacture, use or sale of any
compounds or products or the practice of any methods or processes covered by the
CNSI Patent Rights by Allergan, its Affiliates or sublicensees, (iv) it does not
have any outstanding and unresolved claim or accusation that any compounds or
products manufactured, used or sold by CNSI or any methods or process practiced
by CNSI which are included in the rights granted to Allergan in this Agreement
or will be used by CNSI on carrying out its obligations under this Agreement
infringes or may infringe any Third Party patent(s), and (v) it does not own or
license any patents or patent applications not included in the CNSI Patent
Rights which would be infringed by the manufacture, use or sale of any compounds
or products or the practice of any methods or processes covered by the CNSI
Patent Rights or included in the CNSI Technology by Allergan, its Affiliates or
sublicensees.
12.2.4 Covenant to Maintain Patents. CNSI covenants that it will
take all necessary steps to prevent the abandonment of any patent or patent
application included in the CNSI Patent Rights and that during the term of the
Agreement it will cooperate fully with Allergan to prevent the abandonment of
any patent or patent application included in the CNSI Patent Rights and Joint
Patent Rights.
30
37
12.3 CNSI License Representation and Warranties.
12.3.1 License Agreements. CNSI represents and warrants that as of
the Effective Date all licenses with Third Parties for CNSI Patent Rights or
CNSI Technology are set forth on Exhibit H ("Third Party Licenses"), and that
copies of such Third Party Licenses have been provided to Allergan.
12.3.2 Effectiveness, Maintenance. As of the Effective Date, all
such Third Party Licenses are in full force and effect and neither CNSI, or to
CNSI's knowledge, the other party, is in breach thereof. CNSI shall maintain all
such Third Party Licenses in full force and effect during the term of this
Agreement as is necessary to provide Allergan the rights initially granted and
to be granted hereunder.
12.3.3 Exclusivity. All such Third Party Licenses identified on
Exhibit I as exclusive are exclusive to CNSI as is necessary to provide Allergan
the exclusive licenses provide herein and, pursuant to the terms thereof, no
such Third Party licensor of CNSI has the right to grant licenses in the Field
of patents or technology contained in the CNSI Patent Rights and CNSI Technology
or in the Joint Inventions and Joint Patent Rights.
ARTICLE 13. INDEMNITY
13.1 Allergan Indemnity Obligations. In the absence of CNSI's negligence,
a breach of warranty by CNSI or willful or tortious acts or omissions of CNSI,
Allergan agrees to defend, indemnify and hold CNSI, its Affiliates and their
respective employees and agents harmless from all claims, losses, damages or
expenses arising as a result of: (a) actual or asserted violations of any
applicable law or regulation by Allergan, its Affiliates or sublicensees by
virtue of which Products manufactured, distributed or sold by Allergan, its
Affiliates or sublicensees shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in compliance with any applicable law or
regulation; (b) claims for bodily injury, death or property damage attributable
to the development, manufacture, distribution, sale or use of Products by
Allergan, its Affiliates or sublicensees; (c) a recall of Products manufactured,
distributed or sold by Allergan, its Affiliates or sublicensees ordered by a
governmental agency or required by a confirmed Product failure as reasonably
determined by Allergan; (d) the negligent, willful or tortious acts or omissions
of Allergan, its Affiliates and sublicensees and their respective employees and
agents; or (e) any breach of Allergan's representations and warranties herein.
13.2 CNSI Indemnity Obligations. CNSI agrees to defend, indemnify and hold
Allergan, its Affiliates and their respective employees and agents harmless from
all claims, losses, damages or expenses arising as a result of: (a) the
negligent, willful or tortious acts or omissions of CNSI, its Affiliates and
their respective employees and agents; or (b) any breach of CNSI's
representations and warranties herein.
13.3 Procedure. A Party or any of its Affiliates or their respective
employees or agents (the "Indemnitee") that intends to claim indemnification
under this Article 13 shall
31
38
promptly notify the other Party (the "Indemnitor") of any loss, claim, damage,
liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall assume the defense thereof with
counsel mutually satisfactory to the Parties; provided, however, that an
Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential conflicting interests between such Indemnitee and any other Party
represented by such counsel in such proceedings. The indemnity agreement in this
Article 13 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Indemnitor, which consent shall not be withheld unreasonably. The failure
to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 13, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 13. The Indemnitee under this
Article 13, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification. In the event that either Party claims
indemnity from the other and one Party is finally held liable to indemnify the
other, the Indemnitor shall additionally be liable to pay the reasonable legal
costs and attorneys' fees incurred by the Indemnitee in establishing its claim
for indemnity.
13.4 Insurance. Allergan shall maintain product liability insurance with
respect to development, manufacture and sales of Products by Allergan in such
amount as Allergan customarily maintains with respect to sales of its other
products. Allergan shall maintain such insurance for so long as it continues to
manufacture or sell any Products, and thereafter for so long as Allergan
maintains insurance for itself covering such manufacture or sales. Allergan
shall provide CNSI with written evidence of such insurance upon request by CNSI.
ARTICLE 14. TERM AND TERMINATION
14.1 The Research Phase.
14.1.1 Expiration of the Research Phase. Unless this Agreement is
sooner terminated in accordance with the provisions of this Article 14, the term
of the Research Phase shall expire upon the completion of three (3) Research
Years.
14.1.2 Termination of Research Phase. The Research Phase may be
terminated by Allergan at any time after eighteen (18) months from the Effective
Date in the event the Research Management Committee determines that there is no
reasonable scientific basis for the commercialization of Products.
14.1.3 Existing Obligations. The expiration or termination of the
Research Phase shall not relieve the Parties of any obligation that accrued
prior to such expiration.
32
39
14.2 Expiration or Termination of the Development Phase.
14.2.1 Termination of Development Phase. The Development Phase with
respect to a particular Development Compound or Back-Up Compound may be
terminated by Allergan, in its discretion, at any time upon delivery by Allergan
to CNSI of thirty (30) days prior notice thereof.
14.2.2 Existing Obligations. The expiration or termination of the
Development Phase with respect to a Development Compound or Back-Up Compound for
any reason shall not relieve the Parties of any obligation that accrued prior to
such expiration or termination.
14.2.3 Effect of Termination of Development Phase. In the event that
Allergan delivers notice to CNSI pursuant to Section 14.2.1, then (i) CNSI shall
be free to grant a license to a Third Party for the use, manufacture,
distribution for sale and sale of such Development Compound or Back-Up Compound
outside the Field, and (ii) the effects of termination set forth under Section
14.6 hereof shall apply to such Development Compound or Back-Up Compound.
14.3 Expiration of This Agreement. Unless terminated earlier pursuant to
Section 14.4, this Agreement shall expire and the licenses granted by CNSI to
Allergan shall become fully paid and exclusive, on a country-by-country basis
upon the later of (i) ten (10) years after the First Commercial Sale of the
Products in such country or (ii) the last to expire of any Valid Patent Claim in
such country.
14.4 Termination of This Agreement. This Agreement may be terminated in
the following circumstances:
14.4.1 Material Breach. By one Party upon written notice by reason
of a material breach by the other Party not described in Section 14.4.2 that the
breaching Party fails to remedy within ninety (90) days after written notice
thereof by the non-breaching Party, or in the case that such breach cannot be
cured within such period, the breaching Party continues to use diligent efforts
to cure such breach until actually cured;
14.4.2 Failure of Allergan to Pay. By CNSI, if Allergan fails to
make (i) any payment under Sections 9.1, 9.3 or 9.4 within twenty (20) days
after such payment becomes payable or (ii) any royalty payment under Section 9.6
within thirty (30) days after such payment becomes payable, and, in any such
case, such failure is not remedied within thirty (30) days after notice thereof
from CNSI; and
14.4.3 Bankruptcy. By either Party upon bankruptcy, insolvency,
dissolution or winding up of the other.
33
40
14.4.4 Failure to Select Development Compound. By either Party, if
Allergan has failed to select a Development Compound pursuant to Section 5.4 by
the fourth (4th) anniversary of the Effective Date.
14.4.5 By Allergan in Part. By Allergan, in its discretion, at any
time after the expiration of the Research Phase, with respect to a Development
Compound or Product on a country-by-country basis, upon delivery by Allergan to
CNSI of six (6) months prior notice thereof.
14.4.6 By Allergan in Whole. By Allergan, in its discretion, at any
time after the expiration of the Research Phase, in its entirety, upon delivery
by Allergan to CNSI of six (6) months prior notice thereof.
14.5 Effect of Expiration or Termination of This Agreement Generally.
14.5.1 Existing Obligations. Expiration pursuant to Section 14.3 or
termination pursuant to Section 14.4 of this Agreement for any reason shall not
relieve the Parties of any obligation that accrued prior to such expiration or
termination.
14.5.2 Survival. The provisions of Article 9 (with respect only to
payments and royalties accrued at the time of expiration or termination but not
yet paid), Section 10.1, Section 10.2, Article 11, Article 12, Article 13 and
this Section 14.5 shall survive the expiration pursuant to Section 14.3 or
termination pursuant to Section 14.4 of this Agreement.
14.6 Effect of Termination by CNSI. In the event that this Agreement is
terminated by CNSI pursuant to Section 14.4.1, Section 14.4.2, Section 14.4.3 or
Section 14.4.4:
14.6.1 Termination of Licenses. All licenses and rights granted to
Allergan hereunder shall terminate and, except as provided in Section 14.6.2
below, Allergan will immediately cease to manufacture and sell each Development
Compound and/or its corresponding Products;
14.6.2 Disposition of Inventory of Products. (a) Allergan may
dispose of its inventory of Products on hand as of the effective date of
termination, and may fill any orders for Products accepted prior to the
effective date of termination, for a period of twelve (12) months after the
effective date of termination and (b) within thirty (30) days after disposition
of such inventory and fulfillment of such orders (and in any event within seven
(7) months after termination) Allergan will forward to CNSI a final report
containing the details required by Section 9.6 hereof and pay CNSI all royalties
due for Net Sales in such period;
14.6.3 Assignment of Trademark. Allergan shall take all action
reasonably necessary to assign all of its right, title and interest in any and
all trademarks under which Allergan shall have marketed the Products, if any,
together with the goodwill associated
34
41
therewith, to CNSI, subject to the receipt of reasonable consideration to be
negotiated in good faith between the Parties.
14.6.4 Assignment of Regulatory Approvals; Clinical Data. Allergan
shall, (a) to the extent legally permissible, take all additional action
reasonably necessary to assign all of its right, title and interest in and
transfer possession and control to CNSI of the regulatory filings prepared by
Allergan, and regulatory approvals received by Allergan, to the extent that such
filings and approvals relate to the Development Compounds and/or the Products
("Regulatory Filings"), and (b) deliver to CNSI any and all data relating to
preclinical studies or clinical trials of the Development Compounds and/or the
Product not previously delivered by Allergan to CNSI pursuant hereto
("Development Information"). All such Regulatory Filings and Development
Information shall be transferred to CNSI without warranty and Allergan shall
have no liability for the accuracy or suitability thereof and shall have no
liability to CNSI for any damages, claims or expenses that CNSI may incur with
respect to the use thereof.
14.7 Effect of Partial Termination. In the event Allergan terminates this
Agreement with respect to a certain Development Compounds or Products in certain
countries pursuant to Section 14.4.5, and the Parties determine that CNSI could
market such Product (or a Product containing such Development Compound) in such
country without interfering with Allergan's regional marketing plans, Allergan
shall (a) to the extent legally permissible, take all additional action
reasonably necessary to assign all of its right, title and interest in and
transfer possession and control to CNSI of the Regulatory Filings only in such
country, and (b) deliver to CNSI the Development Information, with respect to
such Product only in such country. All such Regulatory Filings and Development
Information shall be transferred to CNSI without warranty and Allergan shall
have no liability for the accuracy or suitability thereof and shall have no
liability to CNSI for any damages, claims or expenses that CNSI may incur with
respect to the use thereof.
14.8 Effect of Termination in Full by Allergan. In the event that Allergan
is entitled to terminate this Agreement pursuant to Sections 14.4.1 and 14.4.3,
Allergan may elect to either (i) terminate this Agreement, in which case all
licenses and rights granted to Allergan shall terminate and Allergan will
immediately cease to manufacture and sell each Development Compound and/or its
corresponding Products except as provided in this Section 14.8 and Allergan
shall be entitled to claim from CNSI all damages which would otherwise be due to
Allergan under law and equity or (ii) select the remedy set forth in Section
14.9.1. If Allergan elects to terminate this Agreement pursuant to clause (i)
above, then (a) Allergan may dispose of its inventory of Products on hand as of
the effective date of termination, and may fill any orders for Products accepted
prior to the effective date of termination, for a period of twelve (12) months
after the effective date of termination and (b) within thirty (30) days after
disposition of such inventory and fulfillment of such orders (and in any event
within seven (7) months after termination) Allergan will forward to CNSI a final
report containing the details required by Section 9.6 hereof and pay CNSI all
royalties due for Net Sales in such period.
35
42
14.9 Remedies Other Than Termination.
14.9.1 Allergan's Right to Offset Royalties and Other Payments. In
the event of (i) the bankruptcy of CNSI or (ii) a breach by CNSI of any of its
representations, warranties or obligations hereunder (including a material
breach by CNSI which would entitle Allergan to terminate this Agreement pursuant
to Section 14.4.1) and CNSI fails to remedy or take reasonable action to
initiate a remedy of such default within ninety (90) days after notice thereof
by Allergan, Allergan shall have the right and option, in addition to all other
remedies at law or under this Agreement, to offset the amount of such damages
and/or costs against any amounts otherwise due to CNSI under Article 9.
14.9.2 CNSI's Remedies for Allergan's Failure to Use Reasonable
Efforts. In the event of Allergan's breach due to Allergan's failure to use
reasonable efforts to (i) develop Products in accordance with Article 6 or (ii)
market the Products in accordance with Section 8.4 in any country, and Allergan
fails to remedy or take reasonable action to initiate a remedy of such default
within ninety (90) days after notice thereof by CNSI, CNSI shall have the right
to terminate the licenses and rights of Allergan under Section 8.1 in such
country, but CNSI shall not have the right to terminate this Agreement in its
entirety. If CNSI exercises the said right,
(a) CNSI may continue development of the Product for
distribution, marketing or sale in such country either itself or with a Third
Party,
(b) Allergan shall grant CNSI a perpetual, non-exclusive,
fully-paid and royalty-free right and license to use in the manufacture of the
Products any Allergan Inventions and any other technology or know-how developed
by Allergan or its Third Party manufacturer (to the extent Allergan is able to
do so), if any, that is necessary in the manufacture of the Products for sale
only in such country and only to the extent that sale of Products in such
country are deemed by the Parties not to interfere with Allergan's regional
marketing of such Product,
(c) If the Parties determine that CNSI could market such
Product in such country without interfering with Allergan's regional marketing
plans for such Product, to the extent legally permissible, Allergan shall take
all additional action reasonably necessary to assign all of its right, title and
interest in and transfer possession and control to CNSI of the Regulatory
Filings, to the extent that such filings and approvals relate to such
Development Compound and/or its corresponding Products only in such country or
countries. All such Regulatory Filings shall be transferred to CNSI without
warranty and Allergan shall have no liability for the accuracy or suitability
thereof and shall have no liability to CNSI for any damages, claims or expenses
that CNSI may incur with respect to the use thereof, and
(d) Article 8 will be appropriately amended, but this
Agreement will otherwise remain in effect.
36
43
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
ARTICLE 15. MISCELLANEOUS
15.1 Force Majeure. Neither Party shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including but not limited to fire, floods,
embargoes, war, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or the
other Party; provided, however, that the Party so affected shall use reasonable
commercial efforts to avoid or remove such causes of nonperformance, and shall
continue to perform hereunder with reasonable dispatch whenever such causes are
removed. Either Party shall provide the other Party with prompt written notice
of any delay or failure to perform that occurs by reason of force majeure. The
Parties shall mutually seek a resolution of the delay or the failure to perform
as noted above.
15.2 Assignment. This Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that each of the Parties may, without such consent, assign this
Agreement and its rights and obligations hereunder to its Affiliates or in
connection with the transfer or sale of all or substantially all of its
business, or in the event of its merger or consolidation or change in control or
similar transaction (which shall be deemed an assignment) or in the case of CNSI
the creation of a special purpose corporation or research and development
limited partnership. Notwithstanding the foregoing, CNSI may not assign this
Agreement and its rights and obligations hereunder to *****
**************************************************, or their
successors-in-interest. Any purported assignment in violation of the preceding
sentences shall be void and shall be deemed a material breach of this Agreement.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement in writing.
15.3 Severability. Each Party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the Parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the Parties would not have entered into this Agreement
without the invalid provisions.
15.4 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing,
37
44
delivered personally or by facsimile (and promptly confirmed by personal
delivery or courier) or courier, postage prepaid (where applicable), addressed
to such other Party at its address indicated below, or to such other address as
the addressee shall have last furnished in writing to the addressor and shall be
effective upon receipt by the addressee.
If to CNSI: Cambridge NeuroScience, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to: Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: F. Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to Allergan: Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Executive Vice President,
Research and Development
Fax: (000) 000-0000
with a copy to: Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Allergan General Counsel
Fax: (000) 000-0000
15.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
15.6 Arbitration. Any disputes arising between the Parties relating to,
arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement, shall be
promptly presented to the Chief Executive Officers of CNSI and Allergan for
resolution and if the Chief Executive Officers cannot promptly resolve such
disputes, then such dispute shall be finally resolved by binding arbitration.
Whenever a Party shall decide to institute arbitration proceedings, it shall
give written notice to that effect to the other Party. The Party giving such
notice shall refrain from instituting the arbitration proceedings for a period
of sixty (60) days following such notice. Any arbitration hereunder shall be
conducted under the Commercial Arbitration Rules of the American Arbitration
Association. Each such arbitration shall be conducted by a panel of one or three
arbitrators
38
45
appointed in accordance with such Rules. Any such arbitration shall be held in
Boston, Massachusetts. The arbitrators shall have the authority to grant
specific performance, and to allocate between the Parties the costs of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award and an order of
enforcement, as the case may be.
15.7 Entire Agreement. This Agreement, together with the Exhibits hereto
and the Stock Purchase Agreement between the Parties, dated the date hereof,
contains the entire understanding of the Parties with respect to the subject
matter hereof. In the event of any conflict or inconsistency between any
provision of any Exhibit hereto and any provision of this Agreement, the
provisions of this Agreement shall prevail. All express or implied agreements
and understandings, either oral or written, heretofore made are expressly merged
in and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both Parties
hereto.
15.8 Headings. The captions to the several Articles and Sections hereof
and Exhibits hereto are not a part of this Agreement, but are merely guides or
labels to assist in locating and reading the several Articles and Sections
hereof.
15.9 Independent Contractors. It is expressly agreed that CNSI and
Allergan shall be independent contractors and that the relationship between the
two Parties shall not constitute a partnership, joint venture or agency. Neither
CNSI nor Allergan shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other Party to do so.
15.10 Agreement Not to Solicit Employees. During the term of this
Agreement and for a period of two (2) years following the termination of the
Research Phase, CNSI and Allergan agree not to seek to persuade or induce any
employee of the other company to discontinue his or her employment with that
company in order to become employed by or associated with any business,
enterprise or effort that is associated with its own business.
15.11 Waiver. The waiver by either Party hereto of any right hereunder or
the failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.
15.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
39
46
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
CAMBRIDGE NEUROSCIENCE, INC.
By:/s/ Xxxxx X. Xxxxx
----------------------------------
Title: President & CEO
------------------------------
VISION PHARMACEUTICALS, L.P., a Texas
limited partnership, dba Allergan, by Allergan
General, Inc., its general partner
By:/s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------------
Name:Xxxxxxx X. Xxxxxx, Xx.
--------------------------------
Title: Secretary
-------------------------------
40
47
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT A
CNSI PATENT RIGHTS
1. U.S. Patent No. 4,906,779; based on U.S.S.N. 07/237,367 (CNS Ref. No. NMDA-
101).
*****************************************
2. U.S. Patent No. 5,093,525; based on U.S.S.N. 07/487,033 (CNS Ref. No. NMDA-
101A).
Application also has been filed in the following foreign countries:
o *********
o ******
o ******
o *****
o ************
3. U.S. Patent No. 5,190,976; based on U.S.S.N. 07/844,498 (CNS Ref. No. NMDA-
101AA).
Application also has been filed in the following foreign countries:
o *********
o ******
o ******
o *****
o ******
o *************
o ***********
4. U.S. Patent No. 5,011,834; based on U.S.S.N. 07/337,858 (CNS Ref. No. NMDA-
102).
Application also has been filed in the following foreign countries:
o *********
o ******
o ******
o *****
o ************
5. U.S.S.N. 07/875,787; 08/450,155; and 08/451,726 (CNS Ref. No. NMDA-102AA);
continuations of U.S. Patent No. 5,011,834.
6. U.S. Patent Nos. 5,262,568; 5,336,689; and 5,559,154; based on U.S.S.N.
07/663,134 (CNS Ref. No. NMDA-103A).
41
48
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
2
Application also has been filed in the following foreign countries:
o ************
o ********
o *******
o **************************************
o *********
o ******
o ******
o *****
o ***********
o *********
7. U.S.S.N. 08/446,451; 08/446,451; 08/446,230; 08/446,229; 08/468,028; and
08/470,345 (CNS Ref No. NMDA-103AB); continuations of U.S.S.N. 07/663,134.
8. U.S.S.N. 08/458,506; 08/458,803, and 08/458,741 (CNS Ref. No. NMDA-105A).
Application also has been filed in the following foreign countries:
o *******
o ************
o *****
o ******
o ******
o *********
o ***********
o *****
o *********
9. U.S.S.N. 08/459,975; 08/459,974; and 08/458,809 (CNS Ref. No. NMDA-106A).
o ******
o ************
o *****
o ******
o ******
o *********
o ***********
10. U.S. Patent No. 5,298,657 (CNS Ref. No. NMDA-104); issued March 29, 1994,
based on U.S.S.N. 07/854,496.
Application also has been filed in the following foreign countries:
o *******
o ******
49
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
3
o *********
o ******
o *******
o ********
o ************
o ***********
o ***********
11. U.S.S.N. 08/192,990 (CNS Ref. No. NMDA-104B); continuation of U.S.S.N.
07/354,496.
12. U.S. Patent Nos. 5,403,861; based on U.S.S.N. 07/883,421 (CNS Ref. No. CAL-
101A).
Application also has been filed in the following foreign countries:
o ************
o ********
o *******
o ***********
o ******
o *********
o ******
o ******
o *****
o ***********
13. U.S.S.N. 08/343,829; 08/463,419; 08/463,420; 08/463,686; 08/464,312;
08/464,123; 08/462,834; 08/461,700; 08/468,813; 08/466,263; 08/466,031; and
08/485,566 (CNS Ref. No. CAL-101AB); continuations of U.S.S.N. 07/883,421.
14. U.S.S.N. 08/454,927 (CNS Ref. No. CAL-101AA).
Application also has been filed in the following foreign countries:
o ************
o ******
o *********
o *******
o *******
o *****
o ***********
15. U.S.S.N. 08/464,103; 08/462,013; and 08/482,984 (CNS Ref. No. CAL-102A)
Application also has been filed in the following foreign countries:
50
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT A
CNSI PATENT RIGHTS
4
o ************
o *********
o ******
o ******
o *****
o ***********
16. U.S.S.N. 08/601,992 (CNS Ref. No. NP-101).
17. U.S.S.N. 08/686,494 (CNS Ref. No. NP-102).
18. U.S.S.N. 08/694,906 (CNS Ref. No. NP-103).
51
EXHIBIT B
CONFIDENTIAL
ALLERGAN - CAMBRIDGE NEUROSCIENCE
RESEARCH COLLABORATION TO DISCOVER NOVEL DRUGS
TO TREAT VISION LOSS IN GLAUCOMA
OBJECTIVE OF THE COLLABORATION
To discover, develop and commercialize new ion-channel blocking compounds
which can prevent, or substantially limit, the loss of vision which is
associated with glaucoma.
EXECUTIVE SUMMARY
Allergan (AGN) and Cambridge NeuroScience (CNSI) intend to form a
collaboration to discover and develop novel drug therapies to treat vision loss
in glaucoma. The collaboration will focus on the use of ion-channel blockers to
protect retinal neurons and the optic nerve from the cell-destructive effects of
ischemia/exicitotoxicity and/or sustained elevated intraocular pressure. The
collaboration will combine AGN's expertise in the discovery and development of
products for ophthalmology with CNSI's expertise in the discovery and
development of neuroprotective drugs.
BACKGROUND
o Vision loss in glaucoma is a major medical, societal and economic problem
o Advances have been made in our understanding of the pathophysiological
mechanisms which lead to the damage of retinal neurons and the optic nerve
o Excessive activation of ion channel in the ischemic retina and optic nerve
leads to cellular calcium overload and neurodegeneration
o Two different classes of ion channels are primarily involved in the
neurodegenerative process:
- the NMDA subtype of glutamate-activated cation channels;
- voltage-activated sodium channels
o Drugs which can shut down the operation of these channels (ion-channel
blockers, ICB's) have been shown to prevent or limit the extent of
neurodegeneration in animal models of brain ischemia
52
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
CONFIDENTIAL
RATIONALE FOR THE COLLABORATION BETWEEN AGN AND CNSI
o AGN is a recognized leader in the discovery and development of products for
ophthalmology
o A vision-sparing therapy for glaucoma would be a revolutionary advance in
ophthalmology, with considerable commercial potential
o CNSI is a recognized leader in ion-channel-blocking approaches in
neurodegeneration and has an NMDA ion-channel blocker, CERESTAT(R), in
Phase III clinical trails for stroke and traumatic brain injury
o CNSI has well-established in vitro assays in in vivo models necessary for
the identification of ion-channel blockers as neuroprotective agents
o In addition to considerable expertise and a proprietary chemical library of
NMDA ion-channel blockers, CNSI has developed a parallel expertise and
proprietary chemical library of sodium channel blockers and mixed NMDA and
sodium channel blockers
o AGN has developed the assays and animal models to evaluate ion-channel
blockers as potential vision sparing therapies
o The collaboration between AGN and CNSI will bring together the drug
candidates and the definitive assays and will combine AGN's expertise in
ophthalmology with CNSI's expertise in neuroprotection
RESEARCH PLAN SUMMARY
OBJECTIVES:
[*****************************]
- 2 -
53
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
CONFIDENTIAL
Appendix A
[********************]
- 3 -
54
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
CONFIDENTIAL
Appendix B
Resource Summary
[*************************]
- 4 -
55
EXHIBIT C
Rights of BI Under the BI License
---------------------------------
(capitalized terms in italics are as defined in the BI License, except that the
"Field" as used in the BI License is referred to as the "BI Field")
1. BI RIGHTS TO CNSI COMPOUNDS OR CNSI INTELLECTUAL PROPERTY IN THE FIELD.
Under Section 3.1 of the BI License, BI has an exclusive worldwide license to
the Licensed Compound (Cerestat) and its corresponding Licensed Product for all
therapeutic applications.
2. BI RIGHTS TO ANY COLLABORATION COMPOUNDS, DEVELOPMENT COMPOUNDS OR
BACK-UP COMPOUNDS OUTSIDE THE FIELD.
(a) REPLACEMENT COMPOUND. Under Section 3.1.3 of the BI License, BI
has an exclusive worldwide license to the Replacement Compound and its
corresponding Licensed Product for all therapeutic applications. However,
under Section 4.1.2 any Replacement Compound must be an Additional Compound
(i.e. and NMDA ion-channel blocker described and claimed as such in a CNSI
patent or patent application), and its selection for any indication outside
the BI Field is subject to availability for that indication. Therefore, BI
would not have the right to use a Replacement Compound in the Field if that
compound had, prior to BI's selection of it as a Replacement Compound,
previously been selected by Allergan as a Collaboration Compound,
Development Compound or Back-Up Compound.
(b) ADDITIONAL COMPOUNDS. Under Section 3.1.2 of the BI License, BI
has an exclusive worldwide license to any Additional Compounds selected by
BI for use in the BI Field, the terms of which license are subject to an
agreement to be negotiated in good faith.
3. LIST OF ADDITIONAL COMPOUNDS. Listed on Schedule 1 to this Exhibit C are
all the CNSI Compounds which, as of the Effective Date, constitute Additional
Compounds within the meaning of the BI License.
56
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
Schedule I
to
Exhibit C
BI Rights
[*******************************]
57
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT D
EXCLUDED COMPOUNDS
[*********************************************]
44
58
EXHIBIT E
CREDIT AGREEMENT
Between
CAMBRIDGE NEUROSCIENCE, INC.,
A Delaware Corporation
and
VISION PHARMACEUTICALS L.P.,
A Texas Limited Partnership
45
59
TABLE OF CONTENTS
Page
----
1. Amount and Terms of Credit 1
1.1 The Loan 1
1.2 Note 1
2. Conditions Precedent 1
2.1 Execution of Note 1
2.2 No Default; Representations and Warranties 2
2.3 Corporate Documents; Proceedings 2
2.4 Security Agreement 2
3. Representations, Warranties and Agreements 2
3.1 Corporate Power and Authority 3
3.2 No Violation 3
3.3 Governmental Approvals 3
3.4 Priority 3
4. Affirmative Covenants 3
4.1 Financial Information 3
4.2 Performance of Obligations 4
5. Miscellaneous 4
5.1 Payment of Expenses, etc. 4
5.2 Notices 5
5.3 Benefit of Agreement 5
5.4 No Waiver; Remedies Cumulative 5
5.5 Governing Law, Severability 5
5.6 Counterparts 5
5.7 Effectiveness; Integration 6
5.8 Headings Descriptive 6
5.9 Amendment or Waiver 6
EXHIBITS
Exhibit A Form of Secured Convertible Note
Exhibit B Form of Security Agreement
i
60
CREDIT AGREEMENT
This Credit Agreement (the "Credit Agreement"), is made as of November 20,
1996 (the "Effective Date"), between Cambridge NeuroScience, Inc., a Delaware
corporation ("CNSI"), and Vision Pharmaceuticals L.P., a Texas limited
partnership ("VPLP").
R E C I T A L S :
1. CNSI and VPLP are parties to a Collaborative Research, Development and
Marketing Agreement dated as of November 20, 1996 (the "Collaboration
Agreement") and a Stock Purchase Agreement dated as of November 20, 1996 (the
"Stock Purchase Agreement"). All capitalized terms not defined herein shall have
the meanings set forth in the Collaboration Agreement.
2. Pursuant to the Collaboration Agreement, CNSI and VPLP have agreed to
jointly develop certain pharmaceutical products and pursuant to the Stock
Purchase Agreement CNSI has agreed to sell shares of Common Stock to VPLP.
3. CNSI desires to borrow from VPLP, and VPLP desires to lend to CNSI, Two
Million Dollars ($2,000,000) on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Amount and Terms of Credit.
1.1 The Loan. Subject to the terms herein, at any time prior to
eighteen (18) months from the date hereof, upon not less than fifteen (15) days
notice from CNSI to VPLP, VPLP agrees to loan to CNSI Two Million Dollars
($2,000,000) (the "Loan"). Only one such Loan shall be made hereunder
notwithstanding any prepayment of the Loan by CNSI.
1.2 Note. CNSI's obligation to pay the principal of, and interest
on, the Loan shall be evidenced by a secured convertible note duly executed and
delivered by CNSI in the form of Exhibit A (the "Note"). The Note shall be
entitled to the benefits of this Credit Agreement and be secured by the assets
of CNSI pursuant to a Security Agreement in the form attached as Exhibit B (the
"Security Agreement"). This Credit Agreement, the Note and the Security
Agreement are, collectively, the "Credit Documents."
2. Conditions Precedent. The obligation of VPLP to make the Loan is
subject to the satisfaction of the following conditions:
61
2.1 Execution of Note. CNSI shall have executed and delivered to VPLP
the Note.
2.2 No Default; Representations and Warranties. At the time of making
the Loan and also after giving effect thereto (i) there shall have occurred no
Event of Default (as defined in the Note), and (ii) all representations and
warranties contained herein, in the Stock Purchase Agreement, the Collaboration
Agreement, and the Note and Security Agreement shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of such date, with such changes in the
ordinary course of business as reasonably acceptable to VPLP.
2.3 Corporate Documents; Proceedings.
All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in the Credit
Documents shall be satisfactory in form and substance to VPLP, and VPLP shall
have received all information and copies of all documents and papers, including
records of corporate proceedings and governmental approvals, if any, which VPLP
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
2.4 Security Agreement. CNSI shall have duly authorized, executed and
delivered the Security Agreement covering all of CNSI's present and future
Collateral (as defined in the Security Agreement), together with:
(1) acknowledgement copies of proper Financing Statements
(Form UCC- 1) duly filed under the UCC of each jurisdiction as may be necessary
or, in the reasonable opinion of VPLP, desirable to perfect the security
interests purported to be created by the Security Agreement;
(2) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing the Financing Statements referred
to in clause (1) above and all other effective financing statements that name
CNSI as debtor and that are filed in the jurisdictions referred to in clause
(1), together with copies of such other financing statements (none of which
shall cover the Collateral except to the extent evidencing "Permitted
Encumbrances" as defined in the Security Agreement);
(3) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement, including in the Patent
and Trademark Office, as may be necessary or, in the opinion of VPLP, desirable
to perfect the security interests purported to be created by the Security
Agreement; and
(4) evidence that all other actions necessary or, in the
opinion of VPLP, desirable to perfect and protect the security interests
purported to be created by the Security Agreement have been taken.
2
62
3. Representations, Warranties and Agreements. In order to induce VPLP to
enter into this Agreement and to make the Loan, in addition to the
representations, warranties and agreements in the Stock Purchase Agreement and
the Collaboration Agreement, which are incorporated herein, CNSI makes the
following representations, warranties and agreements as of the Effective Date,
which shall survive the execution and delivery of this Agreement and the Note
and the making of the Loan.
3.1 Corporate Power and Authority. CNSI has the corporate power and
has taken all corporate proceedings necessary to execute and deliver, and
perform the terms and provisions of, each of the Credit Documents and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Credit Documents. CNSI has duly executed and
delivered each of the Credit Documents to which CNSI is party, and each of such
Credit Documents constitutes the legal, valid and binding obligation of CNSI
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting rights of creditors and general equitable principles.
3.2 No Violation. Neither the execution, delivery or performance by
CNSI of the Credit Documents, nor compliance by it with the terms and provisions
thereof, (i) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any levy, lien, encumbrance or security interest
("Lien"), except pursuant to the Security Agreement and the documents
contemplated thereby (collectively, the "Security Documents") upon any of the
property or assets of CNSI pursuant to the terms of, any indenture, mortgage,
deed of trust, credit agreement, loan agreement or any other material agreement,
contract or instrument to which CNSI is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws of CNSI.
3.3 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
3.4 Priority. The security interest granted pursuant to the
Security Agreement shall be prior and superior to all other security interests,
liens or encumbrances on the Collateral.
3
63
4. Affirmative Covenants. CNSI covenants and agrees that, from and after
the date on which the Loan is made, and until the Loan and the Note, together
with interest, and all other obligations incurred hereunder and thereunder, are
paid or otherwise satisfied in full:
4.1 Financial Information. CNSI will furnish the following reports to
VPLP:
(1) As soon as practicable after the end of each fiscal year,
and in any event within ninety (90) days thereafter, a consolidated
balance sheet of CNSI, as at the end of such fiscal year, and consolidated
statements of operations, accumulated earnings and cash flows of CNSI for
such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail audited (without scope limitations imposed by CNSI) and
certified by independent public accountants of recognized national
standing;
(2) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year, and in any
event within forty-five (45) days thereafter, a consolidated, unaudited
balance sheet of CNSI as of the end of each such quarterly period, and
consolidated, unaudited statements of operations, accumulated earnings and
cash flows of CNSI for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for
the corresponding periods of the previous fiscal year, except that the
unaudited financial statements need not contain footnotes and shall be
subject to changes resulting from year-end audit adjustments, and setting
forth any events which could reasonably be expected to have an adverse
effect upon CNSI's finances or the results of its operations, all in
reasonable detail and certified by the principal financial or accounting
officer of CNSI;
(3) So long as CNSI is subject to the reporting requirements
of the Exchange Act, in lieu of the documents required by Sections 4.1 (1)
and (2) and within the time periods required in Sections 4.1 (1) and (2)
for the furnishing of financial information or as soon as otherwise
available, whichever is earlier, copies of all documents filed by CNSI
with the SEC, including, but not limited to, its reports filed on Form
10-K, Form 10-Q, Form 8-K or any successor form or forms;
(4) As soon as available information and data on any material
adverse changes in or any event or condition which materially adversely
affects or could materially adversely affect the business, operations,
properties or plans of CNSI;
(5) Immediately upon becoming aware of any condition or event
which constitutes a breach of the Credit Documents, or any agreement
contemplated hereby, written notice specifying the nature and period of
existence thereof an what action CNSI is taking or proposes to take with
respect thereto; and
4
64
(6) With reasonable promptness, such other information and
data with respect to CNSI, as VPLP may from time to time reasonably
request.
4.2 Performance of Obligations. CNSI will perform in all material
respects all of its obligations under the terms of each material agreement,
mortgage, indenture, security agreement and other instrument by which it is
bound.
5. Miscellaneous.
5.1 Payment of Expenses, etc. CNSI shall pay all reasonable
out-of-pocket costs and expenses of VPLP in connection with the enforcement of
this Credit Agreement and the other Credit Documents.
5.2 Notices. Any notice required under this Agreement shall be
sufficient if sent by registered or certified mail postage and charges prepaid,
return receipt requested, or by hand delivery including overnight delivery
service to the following addresses or such address hereinafter specified in
writing:
VPLP: Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
CNSI: Cambridge Neuroscience, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
5.3 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that CNSI may not assign or transfer any
of its rights or obligations hereunder, whether by operation of law or
otherwise, without the prior written consent of VPLP, except in the event of an
acquisition or merger of, or the sale of substantially all of its assets by,
CNSI, as a result of which the acquiror, survivor or purchaser of assets has
cash and cash equivalents, as of the effective date of such transaction, of less
than $50,000,000, determined in accordance with generally accepted accounting
principles.
5.4 No Waiver; Remedies Cumulative. No failure or delay on the part
of VPLP exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between CNSI and VPLP or the holder of
the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the
5
65
exercise of any other right, power or privilege hereunder or thereunder. The
rights, powers and remedies expressly provided herein or in any other Credit
Documents are cumulative and not exclusive of any rights, powers or remedies
which VPLP or the holder of the Note would otherwise have. No notice to or
demand on CNSI in any case shall entitle CNSI to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
VPLP or the holder of any Note to any other or further action in any
circumstances without notice or demand.
5.5 Governing Law, Severability. This Agreement shall be governed and
construed in accordance with the laws of the State of California. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, and each
other provision of the Agreement shall be severable and enforceable to the
fullest extent permitted by applicable law.
5.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
5.7 Effectiveness; Integration. This Agreement and the other Credit
Documents, together with all exhibits and schedules, constitutes the entire
agreement of the parties with respect to the subject matter hereof and thereof.
5.8 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
5.9 Amendment or Waiver. Neither this Credit Agreement nor any other
Credit Document nor any terms or hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by VPLP.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
"CNSI"
. CAMBRIDGE NEUROSCIENCE, INC.
By:
----------------------------------
Its:
--------------------------------
6
66
"VPLP"
VISION PHARMACEUTICALS L.P., a Texas limited
partnership, dba Allergan, by Allergan
General, Inc., its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
7
67
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT A
FORM OF
SECURED CONVERTIBLE PROMISSORY NOTE
$2,000,000 ____________, 199__
FOR VALUE RECEIVED, receipt of which is hereby acknowledged, CAMBRIDGE
NEUROSCIENCE, INC., a Delaware corporation, ("Borrower") hereby promises to pay
to VISION PHARMACEUTICALS L.P., a Texas Limited Partnership, ("Holder"), or
order, the principal sum of Two Million Dollars ($2,000,000), in cash in lawful
money of the United States (or as otherwise permitted pursuant to Section 2
below), together with interest at the rate of twelve (12%) per annum on
all unpaid principal of this Note, calculated based on the actual number of days
elapsed divided by 360.
This Note has been issued in connection with that certain Collaborative
Research, Development and Marketing Agreement dated as of November 20, 1996 (the
"Collaboration Agreement") and that certain Credit Agreement dated as of
November 20, 1996 (the "Credit Agreement") by and between Borrower and Holder
and all capitalized terms not defined herein shall have the meaning set forth in
the Collaboration Agreement.
Principal and all accrued interest on this Note shall become due and
payable upon the earlier of:
(i) Termination of the Collaboration Agreement;
(ii) Attainment of the milestone described as ************* as set forth in
Section 9.4.1 of the Collaboration Agreement. In such case, any amount due
Holder hereunder shall be credited against the milestone payment due from
Holder to Borrower, and any excess due Holder shall be paid by wire
transfer of immediately available funds.
(iii) Within five (5) days of the end of any fiscal quarter at which the
cash and cash equivalents of Borrower, determined in accordance with
generally accepted accounting principles, are less than $5,000,000;
(iv) In the event of the acquisition or merger of, or sale of substantially
all of the assets of, CNSI, as a result of which the acquiror, survivor or
purchaser of assets has cash and cash equivalents equal to or greater than
$50,000,000 determined in
8
68
accordance with generally accepted accounting principles as of the
effective date of such transaction; or
(v) Demand by Holder on an Event of Default as set forth in Section 4
below.
1. Prepayment. Borrower shall be entitled at any time to prepay any
portion or all of the indebtedness owed hereunder without penalty. Borrower
shall also be entitled to prepay in cash any portion of the indebtedness which
Holder elects to convert under Section 2(a) below, prior to such conversion.
Each prepayment hereunder shall be credited first to accrued interest and then
to principal. Interest shall thereupon cease to accrue upon the principal so
paid. Such prepayment will be made by wire transfer of immediately available
funds.
2. Conversion Rights.
(a) Right to Convert. Subject to and in compliance with the provisions
of this Section 2, Holder may, at Holder's option, at such time as the
principal and accrued interest are due under this Note, elect to convert
all or any part of the principal amount of this Note, and accrued interest,
outstanding at the time of such conversion (the "Conversion Rights") into a
number of shares of Common Stock of Borrower (the "Borrower Common Stock")
equal to the result obtained by dividing the principal amount, and accrued
interest, of this Note Holder elects to convert by 85% of the fair market
value of a share of Borrower's Common Stock on the date of such election
(the "Conversion Price"). For purposes hereof, such fair market value shall
equal the average closing sale price of Borrower's Common Stock as reported
on the primary exchange on which such shares are traded, or if closing sale
prices are not reported, the closing bid price of such shares, for the five
(5) trading days preceding Holder's election to convert.
(b) Manner of Exercising Conversion Rights. In order to exercise the
Conversion Rights, Holder shall deliver to Borrower during normal business
hours at the Borrower's address as set forth in Section 17 of the Security
Agreement, (i) the original of this Note duly endorsed for transfer to
Borrower and (ii) written notice to Borrower stating that Holder elects to
exercise the Conversion Rights. Unless Borrower exercises its right to
prepay under Section 1 above all of the principal, and accrued interest,
which Holder elects to convert within two (2) days of receipt of Holder's
notice, as soon as practicable (but in no event more than three (3)
business days) after the date on which Borrower receives this Note duly
endorsed and the required notice of exercise, Borrower shall issue and
deliver to Holder (i) a certificate for the number of whole shares of
Borrower Common Stock issuable on such conversion, (ii) in the event this
Note is converted in part, a new Note of like tenor for the remaining
unpaid balance, and (iii) cash, as provided in Subsection 2(c) below, in
respect of any fraction of a share of Borrower Common Stock otherwise
issuable upon such conversion, and as provided in Subsection 2(d) below in
respect of interest on principal so converted. Such conversion shall be
deemed to have been effected on the date the shares of Borrower Common
Stock issuable upon exercise of the
9
69
Conversion Rights are actually issued to the Holder, and the Holder shall
be deemed to have become the Holder of record of the shares represented
thereby on such date.
(c) Fraction of a Share. Borrower shall not be required to issue a
fraction of a share or scrip representing fractional shares of Borrower
Common Stock upon conversion of this Note. If any fraction of a share of
Borrower Common Stock would, except for the provisions of this Subsection
2(c), be issuable on the conversion of this Note, Borrower shall pay to
Holder a cash payment equal to the value of such fraction based on the
Conversion Price.
(d) Payment of Interest on Converted Principal. Promptly upon
conversion of all or any portion of the principal, Borrower shall pay to
Holder by wire transfer of immediately available funds, all accrued but
unpaid interest on the principal so converted.
(e) Obligor to Reserve Stock. As long as Holder's Conversion Rights
are in effect, Borrower shall at all times reserve and keep available out
of its authorized but unissued Borrower Common Stock, for the purpose of
effecting the conversion of this Note, such number of its duly authorized
shares of Borrower Common Stock as shall from time to time be sufficient to
effect the conversion of this Note. Borrower covenants that all shares of
Borrower Common Stock which may be issued upon conversion of this Note will
upon issue be fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof.
(f) Reclassification, Reorganization, Consolidation or Merger. In the
event of any reclassification, capital reorganization or other change of
outstanding shares of Borrower Common Stock or in the event of any
consolidation or merger of Borrower with or into another corporation (other
than a merger in which Borrower is the continuing corporation and that does
not result in any reclassification, capital reorganization or other change
of outstanding shares of Borrower Common Stock) or in the event of any
sale, lease, transfer or conveyance to another corporation of the property
and assets of Borrower as an entirety or substantially as an entirety,
Borrower shall, as a condition precedent to such transaction, cause
effective provisions to be made so that Holder shall have the right
thereafter, by converting this Note, to acquire the kind and amount of
shares of stock and other securities and property (including cash)
receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of shares of
Borrower Common Stock. Any such provision shall include provisions for
adjustments in respect of such shares of stock and other securities and
property, and other provisions hereof, to continue and protect the rights
of Holder hereunder. The foregoing provisions shall similarly apply to
successive reclassifications, capital reorganizations and changes of
outstanding shares of Borrower Common Stock and to successive
consolidations, mergers, sales or conveyances.
3. Other Agreements. The obligations of Borrower under this Note are
secured pursuant to that certain Security Agreement dated ________, 199__,
between Borrower and Holder. This Note is entitled to the benefits and subject
to the conditions of the Security Agreement, the
10
70
Credit Agreement, and that certain Stock Purchase Agreement dated November 20,
1996 (the "Stock Purchase Agreement"), as the same may be amended from time to
time.
4. Default. If any of the following events (hereafter called "Events of
Default") shall occur:
(a) If Borrower shall default in the payment of any principal or
interest due under this Note when the same shall become due and payable,
whether at maturity or by acceleration or upon demand or otherwise; or
(b) If Borrower shall make a general assignment for the benefit of
creditors; or
(c) If Borrower shall file a voluntary petition in bankruptcy, or
shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
Federal Bankruptcy Act or other applicable federal, state or other statute,
law or regulation, or shall file any answer admitting the material
allegation of a petition filed against Borrower in such proceeding, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of Borrower of all or any substantial part of the
properties of Borrower, or Borrower shall commence the winding up or the
dissolution or liquidation of Borrower; or
(d) If, within sixty (60) days after a court of competent jurisdiction
shall have entered an order, judgment or decree approving any complaint or
petition against Borrower seeking reorganization, dissolution or similar
relief under the present or any future Federal Bankruptcy Act or other
applicable federal, state or other statute, law or regulation, such order,
judgment or decree shall not have been dismissed or stayed pending appeal,
or if, within sixty (60) days after the appointment, without the consent or
acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower,
such appointment shall not have been vacated or stayed pending appeal, or
if, within sixty (60) days after the expiration of any such stay, shall not
have been vacated; or
(e) If Borrower should breach any of the covenants, representations,
warranties, terms or conditions of this Note, the Credit Agreement, the
Stock Purchase Agreement, the Security Agreement or the Collaboration
Agreement, or contained in any statement or certificate at any time given
or made to Holder pursuant thereto or in connection therewith, and in the
case of any breach of any representations, warranties or covenants in the
Stock Purchase Agreement or the Collaboration Agreement capable of cure,
such breach shall continue for thirty (30) days after notice thereof from
the Holder to Borrower;
11
71
then, and in each and every such case, Holder may by notice in writing to
Borrower declare all amounts under this Note to be forthwith due and payable and
thereupon the balance shall become so due and payable, without presentation,
protest or further demand or notice of any kind, all of which are hereby
expressly waived.
5. Borrower and Holder intend to contract in compliance with all state and
federal usury laws governing the loan evidenced by this Note. Borrower and
Holder agree that none of the terms of this Note shall be construed as a
contract for, or requirement to pay interest at a rate in excess of, the maximum
interest rate allowed by any applicable state or federal usury laws. If Holder
receives sums which constitute interest that would otherwise increase the
effective interest rate on this Note to a rate in excess of that permitted by
any applicable law, then all such sums constituting interest in excess of the
maximum lawful rate shall at Holder's option either be credited to the payment
of principal or returned to Borrower. The provisions of this paragraph control
the other provisions of this Note and any other agreement between Holder and
Borrower.
6. Borrower hereby waives presentment, demand, protest and notice of
non-payment or dishonor of this Note. If an action is brought for collection
under this Note, the Holder hereof shall be entitled to receive all costs of
collection, including, without limitation, its reasonable attorneys' fees.
7. No delay or failure on the part of Holder in the exercise of any right
or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Holder of any right or
remedy preclude any other right or remedy. Holder, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower or any other indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Holder may at any time release, surrender, substitute or
exchange any collateral securing this Note and may release any party secondarily
liable for the indebtedness evidenced by this Note.
8. This Note shall be construed in accordance with and governed by the
internal laws of the State of California, and where applicable and except as
otherwise defined herein, terms used herein shall have the meanings given them
in the California Uniform Commercial Code.
CAMBRIDGE NEUROSCIENCE, INC.
By:
----------------------------------
Its:
---------------------------------
12
72
EXHIBIT B
FORM OF
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into this day of ____________, 199__ by and between CAMBRIDGE NEUROSCIENCE,
INC., a Delaware corporation, ("CNSI"), and VISION PHARMACEUTICALS L.P., a Texas
limited partnership, (the "Secured Party").
R E C I T A L S
1. Pursuant to that certain Collaborative, Research, Development and
Marketing Agreement by and between CNSI and Secured Party dated November 20,
1996 (the "Collaboration Agreement") and that certain Credit Agreement by and
between CNSI and Secured Party dated November 20, 1996 (the "Credit Agreement"),
Secured Party has agreed to loan to CNSI Two Million Dollars ($2,000,000) (the
"Loan") as evidenced by a secured promissory note (the "Note").
2. As an inducement to make the Loan, CNSI has agreed to grant for the
benefit of the Secured Party a security interest as set forth herein.
A G R E E M E N T
1. Security Interest. Pursuant to the Uniform Commercial Code, CNSI
hereby grants to Secured Party a security interest in the Collateral, as more
fully described at Paragraph 2 below, to secure payment and performance of the
obligations of CNSI, as defined and described at Paragraph 3 below.
2. Collateral.
The Collateral of CNSI is described as follows:
(a) all rights useful in the field of research, development and
commercialization activities with respect to compounds which block one or more
than one subclass of the glutamate-activated ion channels, including NMDA
channels and, and/or one or more than one subclass of sodium channels, for the
treatment of ophthalmic diseases and disorders (the "Field"), except Excluded
Compounds (as defined in the Collaboration Agreement), under present and future,
foreign and domestic, patents, patent applications, patent extensions,
certificates of invention and applications for certificates of invention,
together with any divisions, continuations or continuations-in-part owned by, or
licensed to CNSI, with the
13
73
right to sublicense, as of the date hereof and developed during the term of the
Collaboration Agreement. Such rights as of the date hereof, are listed in
Schedule 1 hereto; and
(b) all rights useful in the Field in present and future
inventions, trade secrets, copyrights, data, regulatory submissions or other
intellectual property of any kind necessary or useful in the Field (including
any proprietary biological materials, compounds or reagents) and all
confidential technical information in the possession of CNSI as of the date
hereof and developed during the term of the Collaboration Agreement necessary or
useful for the development, manufacture, use or sale of pharmaceutical products
in the Field but excluding any such technology licensed to Boehringer Ingelheim
International GmbH ("BI") pursuant to the License Agreement between CNSI and BI
dated as of Xxxxx 00, 0000 (xxx "XX License") (the rights described in Section
2(a) and this Section 2(b) being collectively, the "Technology Collateral"); and
(c) all proceeds of the foregoing Technology Collateral, for
purposes of this Security Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds is sold, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, all rights to payment, including return
premiums, with respect to any insurance relating thereto.
CNSI represents and warrants that Schedule 1 hereto is a complete and accurate
list of all U.S. and foreign patents and patent applications, rights under which
are included in the Technology Collateral.
3. Obligations Secured. The obligations ("Obligations") secured by this
Security Agreement shall include (a) the performance by CNSI of the obligations
set forth in (i) the Note and (ii) this Security Agreement; (b) all payments
made or expenses incurred by Secured Party, including, but not limited to,
reasonable attorneys' fees and legal expenses in the exercise, preservation or
enforcement of any of the rights, powers or remedies of Secured Party or in the
enforcement of the obligations of CNSI under the Note or this Security
Agreement; and (c) any obligations of CNSI to Secured Party arising from
amendments, modifications, renewals or extensions of any of the foregoing
obligations.
4. Collateral Encumbrances; Covenants of CNSI.
(a) Except as set forth on Schedule 2 hereto (the "Permitted
Encumbrances"), CNSI owns the Collateral free and clear of any lien except for
the lien created by this Security Agreement, and no effective financing
statement, assignment or other instrument similar in effect, which covers all or
any part of the Collateral, is on file in any recording office.
(b) As to the Collateral, CNSI covenants with the Secured Party as
follows:
(i) CNSI will not create, permit or suffer to exist, and will
defend the Collateral against and take such other action as is necessary
to remove, any lien or
14
74
encumbrance on the Collateral except the Permitted Encumbrances, and will
defend the right, title and interest of Secured Party in and to the
Collateral and in and to the proceeds thereof against the claims and
demands of all persons.
(ii) CNSI will comply with all laws, statutes and regulations
pertaining to the Collateral.
(iii) CNSI will pay when due all taxes, licenses, charges and
other impositions on or for the Collateral.
(iv) CNSI, at its own expense, will execute, file and record
such assignments, statements, notices and agreements, take such action and
obtain such certificates and documents, in accordance with all applicable
laws, statutes, and regulations (whether state, federal or local), as
requested by Secured Party or as necessary to perfect, evidence and
continue Secured Party' security interest in the Collateral, including,
without limitation, assignments for security in the U.S. Patent and
Trademark Office and corresponding foreign patent offices. CNSI shall
submit all such assignments, statements, notices or agreements to Secured
Party for review prior to filing or recordation.
(v) CNSI will deliver to Secured Party all instruments and
other items of Collateral for which possession is required for perfection.
(vi) CNSI will, upon demand, give Secured Party such
information as reasonably requested concerning the Collateral and CNSI's
business, and permit Secured Party to inspect and copy the records
thereof.
(vii) CNSI will keep or require any goods which are security
for or represented by the Collateral to be insured in amounts, on terms
and with carriers as is customary and appropriate for the business in
which CNSI is engaged.
(viii) CNSI will, as appropriate, properly care for, house,
store and maintain the Collateral in good condition, free of misuse,
abuse, waste and deterioration, and promptly and duly observe and perform
any contract or agreement pertaining to or part of the Collateral.
(ix) CNSI will not, without Secured Party's written consent,
exchange, lease, lend, use, operate, demonstrate, sell or dispose of the
Collateral or CNSI's rights therein other than in the ordinary course of
business
(x) CNSI will not, without Secured Party's written consent,
permit anything to be done that may impair, or fail to do anything
necessary or advisable to preserve, the Collateral's value and the
security.
15
75
(xi) CNSI will advise Secured Party promptly, in reasonable
detail, (A) of any material lien, security interest, encumbrance or claim
made or asserted against any of the Collateral, (B) of any material change
in the composition of the Collateral, and (C) of the occurrence of any
other event that would have a material adverse effect on the aggregate
value of the Collateral or on the security interests created hereunder.
(xii) Upon reasonable notice to CNSI (unless an Event of
Default has occurred and is continuing, in which case no notice is
necessary), Secured Party and its representatives shall also have the
right to enter into and upon any premises where any of the Collateral is
located for the purpose of inspecting the same, observing its use or
otherwise protecting their interests therein.
(xiii) In the event that any of the Technology Collateral is
infringed, misappropriated or diluted by a third party, CNSI shall notify
Secured Party promptly after it learns thereof and shall, unless Secured
Party shall reasonably determine that such Technology Collateral is not
material to the conduct of CNSI's business, promptly xxx, at its own
expense, for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and
take such other actions as Secured Party shall reasonably deem appropriate
under the circumstances to protect such Technology Collateral.
5. Default.
(a) The occurrence of any of the following shall be an event of
default hereunder:
(i) If CNSI shall make a general assignment for the benefit
of creditors; or
(ii) If CNSI shall file a voluntary petition in bankruptcy,
or shall be adjudicated a bankrupt or insolvent, or shall file any
petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present
or any future Federal Bankruptcy Act or other applicable federal, state or
other statute, law or regulation, or shall file any answer admitting the
material allegation of a petition filed against CNSI in such proceeding,
or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of CNSI of all or any substantial part of
the properties of CNSI, or CNSI shall commence the winding up or the
dissolution or liquidation of CNSI; or
(iii) If, within sixty (60) days after a court of competent
jurisdiction shall have entered an order, judgment or decree approving any
complaint or petition against CNSI seeking reorganization, dissolution or
similar relief under the present or any future Federal Bankruptcy Act or
other applicable federal, state or other statute, law or regulation, such
order, judgment or decree shall not have been dismissed or stayed
16
76
pending appeal, or if, within sixty (60) days after the appointment,
without the consent or acquiescence of CNSI, of any trustee, receiver or
liquidator of CNSI or of all or any substantial part of the properties of
CNSI, such appointment shall not have been vacated or stayed pending
appeal, or if, within sixty (60) days after the expiration of any such
stay, shall not have been vacated; or
(iv) If CNSI should breach any of the covenants,
representations, warranties, terms or conditions of the Note or this
Security Agreement, or contained in any statement or certificate at any
time given or made to Secured Party pursuant thereto or in connection
therewith, and in the case of any breach of any representation, warranty
or covenant capable of cure, such breach shall continue for thirty (30)
days after notice thereof from Secured Party to CNSI.
(b) Upon the occurrence of an event of default pursuant to this
Section 5, Secured Party, in addition to all other rights, powers and privileges
enumerated in Section 6 below, and subject to the rights of the respective
parties contained in Sections 1 and 2 of the Note, may (1) declare the unpaid
balance, in whole or in part, of CNSI's Obligations immediately due and payable,
without demand or notice and proceed to collect same; and (2) waive or remedy
any default without waiving such default or any prior or subsequent default.
6. Remedies.
(a) Upon the occurrence of an event of default pursuant to Section
5 hereof, Secured Party, in addition to any other remedy available under the
Uniform Commercial Code, in its own or CNSI's name, and subject to the rights of
the respective parties contained in Sections 1 and 2 of the Note, without notice
and at CNSI's expense, may, but is not obligated to:
(i) as appropriate take possession of the Collateral with or
without legal process, require CNSI to assemble the Collateral and make it
available to the Secured Party at a reasonably convenient place, or,
whether or not the Collateral is present at the place of sale, sell the
Collateral at a public sale in the county where such Collateral is located
or where this Security Agreement was made, or sell the Collateral at a
private sale and bid at such private sale;
(ii) collect, by legal proceedings or otherwise, and endorse,
receive and receipt for all dividends, interest, payments, proceeds and
other sums and property now or hereafter payable on or on account of
Collateral;
(iii) enter into any extension, reorganization, deposit,
merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for, the
Collateral;
(iv) insure, process and preserve the Collateral; and
17
77
(v) transfer the Collateral to its own or its nominee's name.
(b) CNSI also agrees to pay all costs of Secured Party, including,
without limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of their rights and remedies hereunder.
7. Grant of License to Use Technology Collateral. For the purpose of
enabling Secured Party to exercise rights and remedies under Section 6 hereof at
such time as Secured Party, without regard to this Section 7, shall be lawfully
entitled to exercise such rights and remedies, CNSI hereby grants to Secured
Party an irrevocable, exclusive license in the Field (exercisable without
payment of royalty or other compensation to CNSI) to use, license or sublicense
any Technology Collateral, and wherever the same may be located, and including,
without limitation, in such license reasonable access to all media in which any
of the licenses items may be recorded or stored and to all computer and
automatic machinery software and programs used for the compilation or printout
thereof.
8. Secured Party's Appointment as Attorney-in-Fact.
(a) CNSI hereby irrevocably constitutes and appoints Secured Party
and any officer or agent thereof, with full power or substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of CNSI and in the name of CNSI or in its own name, from time to
time in Secured Party's discretion, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
and deliver any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Security Agreement.
(b) Secured Party agrees that, except as upon the occurrence and
during the continuation of an Event of Default, it will forebear from exercising
the power of attorney or any rights granted to Secured Party pursuant to this
Section 8. CNSI hereby ratifies, to the extent permitted by law, all that said
attorneys shall lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 8 is a power coupled with any interest
and shall be irrevocable until the Obligations are indefeasibly paid in full.
(c) CNSI also authorizes Secured Party, at any time and from time
to time upon the occurrence and during the continuation of any Event of Default,
(i) to communicate in its own name with any party to any contract or agreement
which is part of the collateral hereunder with regard to the assignment of the
right, title and interest of CNSI in and under such contracts and agreements and
other matters relating thereto and (ii) to execute, in connection with the sale
provided for in Section 6 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
18
78
9. Termination.
(a) This Security Agreement and the security interest granted to
Secured Party by CNSI hereunder shall terminate upon satisfaction in full of all
of the CNSI's Obligations to Secured Party by payment or otherwise.
(b) If applicable, and promptly upon termination of this Security
Agreement, the Secured Party agrees to execute and file with the Massachusetts
Secretary of State a termination statement on Form UCC-2 and a collateral
assignment for filing in the Patent and Trademark Office terminating Secured
Party' security interest in the Collateral at the expense of the CNSI. This
subparagraph (b) is subject to specific performance and injunctive relief for
the benefit of CNSI in the event of a failure by the Secured Party to duly
comply with a reasonable request for such compliance.
10. General.
(a) Such care as Secured Party give to the safekeeping of its own
property of like kinds shall constitute reasonable care of the Collateral when
in Secured Party' possession, but Secured Party is not required to make
presentment, demand or protest, or give notice and need not take action to
preserve any rights against prior parties in connection with any obligation or
evidence of indebtedness held as Collateral.
(b) CNSI shall give the Secured Party prior written notice of (i)
any change of place of business and address thereof, and (ii) any change in
policies or certificates of insurance required for the Collateral.
(c) This Security Agreement is a continuing agreement and shall
apply to all past, present and future Obligations of CNSI to Secured Party,
whether or not such Obligations continue, increase, decrease or create new
indebtedness after or before payment of any prior indebtedness, notwithstanding
the bankruptcy of, or other event or proceedings affecting the CNSI.
(d) Time is of the essence. Acceptance of partial or delinquent
payments or failure to exercise any right, power or remedy shall not waive any
Obligation of CNSI or modify this Security Agreement. Secured Party, and its
successors and assigns, have all rights, powers and remedies herein and as
provided by law, including the rights, powers and remedies of a secured party
under the Uniform Commercial Code, and may exercise the same and effect any
set-off and proceed against the Collateral or other security for CNSI's
Obligations at any time.
11. Cumulative Rights. The rights, powers and remedies of Secured Party
under this Security Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any statute or rule of law, or any
other agreement between CNSI and Secured Party or otherwise, all of which
rights, powers and remedies shall be cumulative and may be
19
79
exercised successively or concurrently without impairing Secured Party' security
interest in the Collateral.
12. Waiver. Any forbearance or failure or delay by Secured Party in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Secured Party shall continue in
full force and effect until such right, power or remedy is specifically waived
in a writing executed by Secured Party. CNSI waives any right to require Secured
Party to proceed against any person or to exhaust any of the Collateral or to
pursue any remedy in Secured Party' power.
13. Binding Upon Successors. All rights of Secured Party under this
Security Agreement shall inure to the benefit of its successors and assigns, and
all obligations of CNSI shall bind its successors and assigns.
14. Entire Agreement; Severability. This Security Agreement contains the
entire agreement between Secured Party, and CNSI with respect to the subject
matter hereof. If any of the provisions of this Security Agreement shall be held
invalid or unenforceable, this Security Agreement shall be construed as if not
containing those provisions and the rights and obligations of the parties hereto
shall be construed and enforced accordingly.
16. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the internal laws of the State of California and
where applicable and except as otherwise defined herein, terms used herein shall
have the meanings given them in the California Uniform Commercial Code.
17. Place of Business; Trade Name; Collateral Location; Records. CNSI
represents that its chief place of business is Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000, and that Cambridge Neuroscience, Inc. is the only trade
name or style used by CNSI and that the Collateral described in Paragraph 2
hereof is located at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and
that CNSI's records concerning the Collateral are kept at Xxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000.
18. Notice. Any written notice, consent or other communication provided
for in this Security Agreement shall be deemed given if delivered by hand, by
courier against receipt, by certified or registered mail, return receipt
requested, or by overnight delivery service providing evidence of receipt, at
the following addresses, or to such other address with respect to any party as
such party shall notify the other in writing:
Secured Party: Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
20
80
CNSI: Cambridge Neuroscience, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
19. Attorneys' Fees. In the event of any controversy, claim or dispute
between the CNSI and the Secured Party arising out of or relating to this
Security Agreement, or the breach hereof, the prevailing party shall be entitled
to recover from the losing party reasonable attorneys' fees, expenses and costs.
21
81
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CNSI:
CAMBRIDGE NEUROSCIENCE, INC. a
Delaware corporation
By:
-----------------------------------
Its:
----------------------------------
Secured Party:
VISION PHARMACEUTICALS L.P., a Texas limited
partnership, dba Allergan, by Allergan
General, Inc., its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
22
82
Schedule 1
to
Security Agreement
Patents and Patent Applications
83
Schedule 2
to
Security Agreement
Permitted Encumbrances
84
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT F
COUNTRIES FOR PATENT FILINGS
*************
******
******
******
**************************
*****
*********
***********
*****
***********
85
EXHIBIT G
---------
CAMBRIDGE NEUROSCIENCE AND ALLERGAN COLLABORATE TO
DEVELOP TREATMENTS FOR OPHTHALMIC DISEASES
CAMBRIDGE, MASSACHUSETTS, AND IRVINE, CALIFORNIA, NOVEMBER 21, 1996 -- Cambridge
NeuroScience, Inc. (Nasdaq: CNSI) and Allergan Inc. (NYSE: AGN) today announced
a collaboration to develop treatments for glaucoma and other ophthalmic
diseases. The collaboration will bring together Cambridge NeuroScience's nerve
protection expertise and its library of ion channel blocking molecules with
Allergan's research, development and commercialization expertise in the field of
ophthalmology. The agreement could potentially yield more than $20 million to
Cambridge NeuroScience in equity investments, research and development funding
and milestone payments.
Cambridge NeuroScience and Allergan will jointly research and develop glutamate
ion channel blockers (including N-methyl-D-aspartate "NMDA" ion channel
blockers), sodium channel blockers, and combinations blockers, initially for the
treatment of glaucoma. Allergan will make a $3.0 million in research funding
over the next three years, and will establish a $2.0 million line of credit for
Cambridge NeuroScience. Allergan will be responsible for the development of
potential products arising from the collaboration and will bear all of the
development costs. Successful development of one or more products will provide
significant milestone payments to Cambridge NeuroScience. Upon
commercialization, Allergan will pay Cambridge NeuroScience royalties on product
sales.
"We believe that it may be possible to treat glaucoma by blocking ion channels
and thereby protecting the retina and the optic nerve from damage," commented
Xx. Xxxxxx X. Xxxxxx, corporate vice president, Science and Technology of
Allergan. "We are very impressed both with the expertise and the proprietary
technology at Cambridge NeuroScience in the area of ion channel blockers, as
evidenced by their advanced work with CERESTAT[Registered Trademark] in stroke
and head injury. Cambridge NeuroScience's technology combined with Allergan's
ophthalmic research capability provides us the opportunity to develop and
commercialize superior new products for the treatment and management of glaucoma
and other serious ophthalmic diseases."
Glaucoma is the second leading cause of preventable blindness in the world, with
almost 3,000,000 patients in the United States alone. The disease is usually
associated with increased pressure within the eye, which can damage the retina
and the optic nerve and eventually lead to blindness. Current therapies for
glaucoma lower intraocular pressure by reducing the production of aqueous humor
in the eye and/or by increasing outflow from the eye. The successful development
of a product capable of directly protecting the retina and optic nerve from
glaucomatous damage would represent a significant advancement in the treatment
of this sight threatening disease.
"As Cambridge NeuroScience nears the completion of its development of
CERESTAT[Registered Trademark], we are leveraging eight years of ion channel
research into other therapeutic areas without an incremental financial
commitment," said Xxxxx Xxxxx, Ph.D., President and CEO of Cambridge
NeuroScience. "Allergan, a world leader in the development of ophthalmic
products, has established sophisticated assays, preclinical models and
expertise in the development of drugs for eye disease. In addition, Allergan is
a leader in the global marketing of drugs and devices for the treatment of eye
disease. This synergistic collaboration allows Cambridge NeuroScience to
explore areas of clinical need outside the central nervous system, and allows
Allergan to develop an innovative approach to the treatment of glaucoma."
This press release contains forward-looking statements based on the current
expectations of management. There are certain important factors that could cause
results to differ from those anticipated by the statements made above,
including, but no limited to, the continued funding of the collaboration by
Allergan and Cambridge NeuroScience, the success of both companies' research
efforts, future clinical trials, and the acceptance by regulatory authorities of
the outcomes of clinical trials as a basis for marketing approval.
Allergan Inc., headquartered in Irvine, California, is a technology-driven,
global health care company, focused on specialty pharmaceutical products for
specific disease areas that deliver value to customers, satisfy unmet medical
needs and improve patients' lives.
Cambridge NeuroScience, Inc. is a leading neuroscience company engaged in the
discovery and development of proprietary pharmaceuticals focusing on nerve cell
survival. The Company is developing a number of products to treat stroke,
traumatic brain injury and chronic neurodegenerative disorders such as multiple
sclerosis, peripheral neuropathies and other degenerative diseases.
###
86
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT H
Third Party Licence:
****************************** between Cambridge NeuroScience, Inc. and
the **********************************************************************
********************* on behalf of ************************************
*************************; with Amendments ********************.
