Exclusive Option Agreement
Exclusive
Option Agreement (the “Agreement”)
is
entered into as of the ___ day of February, 2008 (“Effective
Date”)
by and
between NeuralStem, Inc., a Delaware corporation having its principal offices
at
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 (“NeuralStem”)
and CJ
CheilJedang Corporation, a South Korean corporation having its principal offices
at CJ Xxxx., 000, 0-xx, Xxxxxxxxx-xx, Xxxx-xx, Xxxxx, Xxxxx, 100-749
(“CJ”).
The
parties have previously entered in to that certain Memorandum of Understanding
dated as of July 30, 2007 (the “MOU”),
pursuant to which the parties agreed to negotiate in good faith the terms on
which CJ may obtain an option to negotiate an exclusive license to certain
inventions and technology owned or controlled by NeuralStem. The parties now
desire to set forth the terms of such option. Therefore, in consideration of
the
mutual covenants set forth below, and other good and valuable consideration
paid
and received, the parties agree as follows:
1. Grant
of Option. Subject
to all of the terms and conditions of this Agreement, Neuralstem hereby grants
to CJ an exclusive option to negotiate in good faith (“Option”)
the
terms pursuant to which CJ may obtain an exclusive license (the “License”)
to
develop, manufacture, market, distribute and sell one or more pharmaceutical
products incorporating Neuralstem human spinal cord cells and/or certain
technology then owned or controlled by Neuralstem for transplantation in to
patients for all indications for which necessary approval from the U.S. Food
and
Drug Administration has been obtained by NeuralStem, in all cases as described
in the patent and patent applications of Neuralstem set forth on Exhibit
A
to this
Agreement (the “IP
Rights”). The
parties acknowledge and agree that the negotiations which may occur regarding
the License shall address the following:
(a) The
License is not intended to include any in
vitro
uses of
any products based on the IP Rights for any purposes, which in all circumstances
will be reserved to Neuralstem.
(b) The
term
of the License will be the longer of (i) the life of the last-to-expire IP
Rights, or (ii) 20 years from the commencement of the License. The License
will
be subject to customary termination rights for breaches and insolvency of a
party. The License will also address a right of first negotiation granted to
CJ
with respect to therapeutic, in
vivo
uses,
for the “Territory” (as defined below), of the products based upon Neuralstem
human spinal cord cells and/or certain technology subsequently developed and
offered for use in humans by Neuralstem during the term of the
License.
(d) The
territory to be covered by the License will include Korea, Indonesia,
Philippines, Malaysia, Singapore and Vietnam (the “Territory”).
For
so long as the Option remains in effect as set forth in this Agreement, either
party may, upon written notice to the other party, initiate a good faith
negotiation concerning the terms on which the Territory, if a License is
executed by the parties, may be extended to include China and Japan. If such
notice is so given, the parties shall negotiate in good faith with respect
to
the terms of such extension of the Territory for a period of not more than
ninety (90) days from the date of the notice of exercise. If the parties are
unable to agree on the terms of such extension as of the end of such period,
Neuralstem agrees that it will not grant a license to any of the IP Rights
to
any third party in China or Japan for a period of 18 months after the expiration
of such ninety (90) day period on terms and conditions materially equal to
or
more favorable to such third party, taken as a whole, than those last negotiated
with CJ during such ninety (90) day period.
(e) The
License will specify that CJ will (i) have no manufacturing or research and
development obligations with respect to any products based on the IP Rights,
(ii) be responsible for any regulatory approvals necessary to market and sell
any such products in the Territory, and (iii) have customary obligations to
monitor and enforce the IP Rights in the Territory.
(f) The
parties specifically acknowledge and agree that the parties have not mutually
agreed to (i) the rate of any royalties which may be due and owing with respect
to the IP Rights and related products under a license agreement, or the manner
of calculation or reporting of any royalties, (ii) the amounts of any upfront
or
annual license fees, minimum royalty payments, or other economic matters related
to the sale of products or the maintenance of the license rights, (iii) the
fields of use of the IP Rights, (iv) the relative rights and obligations of
the
parties with respect to patent prosecution, maintenance, enforcement and
infringement actions, (v) warranties to be given by Neuralstem, (vi) support
or
assistance, if any, to be provided by Neuralstem, or (vii) substantial other
economic, business and intellectual property matters of a type typically
addressed in an exclusive license, including without limitation the rights,
if
any, which may be granted to CJ with respect to sublicenses, affiliates of
CJ,
or rights to transfer or assign the License. Consequently, the parties further
acknowledge and confirm that no License or other rights in or to any IP Rights
shall arise unless and until the parties execute a mutually agreed, definitive
license agreement addressing all such matters to the mutual satisfaction of
the
parties.
2. Option
Period.
The
Option for the License may be exercised at any time at the sole discretion
of CJ
by delivery of written notice of exercise to Neuralstem (the “Option
Exercise Notice”)
from
the date on which Neuralstem delivers written notice to CJ that Neuralstem
has
successfully concluded the first human clinical trial of a product based on
the
IP Rights, together with an offer for exercise of the Option for such product
(the “Option
Exercise Offer”),
through and including the second anniversary of such Option Exercise Offer
(provided
that if
no Option Exercise Offer has been so given by Neuralstem on or before the second
anniversary of the Effective Date, CJ may give the Option Exercise Notice from
and after the second anniversary of the Effective Date through and including
the
fifth anniversary of the Effective Date; provided further
that if
no Option Exercise Offer has been so given by Neuralstem on or before the fifth
anniversary of the Effective Date, the period within which CJ may exercise
the
Option shall be extended for an additional three-year period (the time period
as
so determined above, “Option
Exercise Period”).
Upon
receipt of the Option Exercise Notice, the parties shall negotiate in good
faith
with respect to the terms of the License for a period of not more than ninety
(90) days (the “Option
Negotiation Period”).
If
the Option Exercise Notice has not been given in a timely manner during the
Option Exercise Period, of if the parties are unable to execute and deliver
a
mutually satisfactory License during the Option Negotiation Period, the Option
with respect to any and all of the IP Rights shall terminate and be of no
further force or effect, regardless of whether any such IP Rights were
previously the subject of the Option Exercise Offer or other good faith
negotiations of the parties.
The
Option Exercise Period and the Option Negotiation Period may only be extended
by
mutual written agreement of the parties. The Option, the Option Exercise Period
and the Option Negotiation Period will terminate immediately if either party
is
the subject of a bankruptcy, insolvency, or similar legal process or event
or is
unable to pay its debts as they become due. In addition, the Option may be
terminated by either party upon any material breach by the other party which
is
not cured within thirty (30) days of delivery of written notice of such breach
from the non-breaching party. Upon termination of the Option, this Agreement
shall terminate and neither party shall have any further obligations hereunder;
provided
that
termination of the Option will not terminate the rights or obligations of the
parties under the Securities Purchase Agreement or the Registration Rights
Agreement (each as defined below), or under Section 9 below, and shall not
terminate any obligations or liabilities of a party arising prior to the date
of
termination, provided
further
that
CJ’s sale, transfer, assignment or other disposition of all or any part of the
securities purchased under the Securities Purchase Agreement will not affect
the
existence, validity or the terms of the Option or this Agreement, which will
remain effective in accordance with the terms and conditions
hereof.
As
further consideration for the grant of the Option, CJ agrees that while this
Agreement remains in effect CJ shall use good faith effort to monitor the
Territory with respect to potential infringement of the IP Rights in the
Territory by third parties, will notify Neuralstem of any such potential
infringement of which it becomes aware, and will assist Neuralstem (at no out
of
pocket cost to CJ) concerning any efforts Neuralstem may choose to take, in
its
discretion, with respect to any such potential infringement.
Page
2 of
8
Upon
execution of this Agreement, the parties will form a joint committee (the
“Committee”)
for
the purpose of informing and sharing with the other such information as the
progress and status of development, clinical trials, regulatory process and
patent registration concerning the IP Rights and any other technologies and
products subsequently developed and offered for use in humans by Neuralstem,
as
well as the industry-wide development and trend related to stem cell products.
The Committee shall consist of CEO and CSO of Neuralstem and officer/manager
of
CJ and convene or communicate periodically (one teleconference each calendar
month at a minimum). In addition, Neuralstem shall xxxxxxx XX with quarterly
reports informing CJ of the progress and status of the development, regulatory
and patent filing status of each product based on the IP Rights, together with
reasonable and necessary documents and materials corroborating or otherwise
supporting such report. All information exchanged in connection with any
activities of the Committee shall be subject to the existing confidentiality
obligations of the parties.
3. Exclusivity
and Related Matter.
During
the Option Exercise Period, and so long as this Agreement remains in effect,
Neuralstem agrees that it will not grant to any third party a license in or
to
any of the IP Rights in the Territory. In addition, if CJ exercises the Option
and the parties are thereafter unable following good-faith negotiations to
execute a mutually acceptable and legally binding License during the Option
Negotiation Period, Neuralstem agrees that it will not grant any license
concerning such product to any third party in the Territory for a period of
18
months after the Option Negotiation Period expires on terms and conditions
materially equal to or more favorable to such third party, taken as a whole,
than those last negotiated with CJ during the Option Negotiation
Period.
4. Option
Consideration.
In
consideration of the grant of the Option, the parties hereby agree to execute,
deliver and perform, effective as of the Effective Date, the Securities Purchase
Agreement in the form attached to this Agreement as Exhibit
B
(the
“Securities
Purchase Agreement”)
and
the Registration Rights Agreement in the form attached hereto as Exhibit
C
(the
“Registration
Rights Agreement”),
pursuant to which CJ has agreed to purchase $2,500,000 of the common stock
of
Neuralstem at the price, and on the terms and conditions, set forth in the
Securities Purchase Agreement and the Registration Rights
Agreement.
5. Representations.
Each
party represents to the other that it has the full right, power and authority
to
enter into and perform its obligations under this Agreement, and that it has
not
entered into any binding agreements inconsistent with such
representation.
6. Option
Superseded by License. Upon
execution of the License during the Option Negotiation Period, this Option
shall
terminate and all obligations of the parties hereunder shall cease.
7. Governing
Law.
This
Agreement and any claim, dispute or loss arising out of, or in connection
therewith, shall be governed by the laws of the State of Delaware without
reference to conflict of laws rules.
8. Notices.
Any
notice required or permitted by this Agreement shall be in writing and deemed
delivered if delivered by any overnight courier service to the receiving party’s
authorized representative at the addresses shown below, or be electronic or
hand
delivery, with delivery confirmed. Notices to Neuralstem shall be delivered
to
the address first set forth above, Attention: President, and notices to CJ
shall
be delivered to the address first set forth above, Attention: Stem Cell Business
Team. Either party may change the address for delivery of notice pursuant to
a
written notice delivered in accordance with this Section 7.
9. Confidentiality.
The
parties agree that the confidentiality obligations of the parties set forth
in
Section 5 of the MOU will remain effective. Neither this Section 9 nor Section
5
of the MOU are intended to, nor do they, supersede any existing confidentiality
and non-use obligations binding on the parties with respect to any Products
or
any other confidential or proprietary information of either party, or with
respect to any such obligations as the parties may subsequently agree, which
such obligations remain binding and enforceable in accordance with their
respective terms. The terms, conditions and existence of this Agreement shall
be
deemed confidential information of the parties, and may only be disclosed by
a
party as required by applicable law or by a party to its accountants, attorneys
or other professional advisors having a need to know such information.
Page
3 of
8
10. Entire
Agreement; Miscellaneous.
This
Agreement (including exhibits) constitutes the entire agreement between the
parties concerning the subject matter hereof and, except as specifically set
forth in this Agreement, supersedes all prior written and oral agreements and
understandings with respect thereto. This Agreement may not be amended or
modified except by an instrument in writing signed by both parties. The parties
specifically acknowledge and agree that Section 5 of the MOU shall continue
to
be of full force and effect in accordance with its terms. This Agreement, and
the rights and obligations set forth in this Agreement, may not be assigned
by
CJ without the prior written consent of Neuralstem, which shall not be
unreasonably withheld; provided
if CJ
may so assign this Agreement to any of its Affiliates (as defined in the
Securities Purchase Agreement), NeuralStem will not unreasonably withhold or
delay such consent so long as CJ notifies Neuralstem in writing of such
assignment in advance, and provides Neuralstem with such reasonable information
concerning the resources of such Affiliate as Neuralstem may reasonably request,
including without limitation information concerning such Affiliate’s financial
and technical resources. Neuralstem shall not be deemed to have unreasonably
withheld or delayed such consent if such Affiliate does not, in the good faith
judgment of Neuralstem, have the necessary and sufficient financial, technical
and other resources required to execute and perform the terms of this Agreement
and any License which the parties may enter into. A party’s failure to enforce
any of its rights hereunder shall not be construed as a waiver of such rights,
nor shall one or more instances of non-enforcement be construed as a continuing
waiver or as a waiver in any other instance.
11. Remedies.
In the
event of a breach by Neuralstem or CJ of any of their respective obligations
under this Agreement, CJ or Neuralstem, as the case may be, in addition to
being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to seek injunctive relief,
specific performance or other equitable remedies of its rights under this
Agreement. Neuralstem and CJ agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of
any
of the provisions of this Agreement and hereby further agree that, in the event
of any action for injunctive relief, specific performance or other equitable
remedies in respect of such breach, it shall not assert or shall waive the
defense that a remedy at law would be adequate.
12. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which together shall be deemed the same agreement.
A fax or other copy of this Agreement shall be treated as an original for all
purposes.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
authorized representatives as of the date first written above.
|
CJ
CheilJedang Corporation
|
|||||
|
By:
|
By:
|
Jin
Xxx Xxx
|
|||
|
Its:
|
Its:
|
Chief
Executive Officer
|
|||
Page
4 of
8
Exhibit
A
IP
Rights
|
Matter #
|
Title
|
Country
ID
|
Appl. No.
|
Filed
|
Patent No.
|
Issued
|
Status
|
Expiration
Date
|
Pub. No.
|
|||||||||
|
037
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
US
|
60/629,220
|
17-Nov-04
|
|
|
Expired
|
|
|
|||||||||
|
041
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
WO
|
PCT/US05/41631
|
11/17/2005
|
|
|
NAT
PHASE
|
|
|
|||||||||
|
042
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
US
|
11/281,640
|
17-Nov-05
|
|
|
PENDING
|
|
2006/0141622
|
|||||||||
|
055
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
CN
|
2.0058E+11
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
057
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
EP
|
5851748.3
|
11/17/2005
|
|
|
PUBLISHED
|
11/17/2025
|
|
|||||||||
|
058
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
ID
|
W00200701532
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
059
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
XXXXXXXXX
|
XX
|
000000
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
060
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
JP
|
2007-543219
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
061
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
KR
|
00-0000-0000000
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
062
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
MY
|
PCT/US05/41631
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
063
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
PH
|
0-0000-000000
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
064
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
RU
|
2007122507
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
Page
5 of
8
|
065
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
SG
|
200703490-3
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
066
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEURODEGENERATIVE
CONDITIONS
|
VN
|
0-0000-00000
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
067
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
NO
|
20073078
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
068
|
TRANSPLANTATION
OF HUMAN NEURAL CELLS FOR TREATMENT OF NEUROLOGICAL
DISORDERS
|
IN
|
PCT/US05/41631
|
11/17/2005
|
|
|
PENDING
|
11/17/2025
|
|
|||||||||
|
075
|
US-CON:
TRANSPLANTATION OF HUMAN NEURAL CELLS FOR TREATMENT OF NEURODEGENERATIVE
CONDITIONS
|
US
|
11/932,923
|
10/31/2007
|
|
|
PENDING
|
|
|
Page
6 of
8
Exhibit
B
Securities
Purchase Agreement
Page
7 of
8
Exhibit
C
Registration
Rights Agreement
Page
8 of
8
