<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1997
REGISTRATION NO. 333-31435
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
OSIRIS THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8071 34-1728301
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification
of incorporation or Classification Code Number) Number)
organization)
</TABLE>
------------------------
2001 ALICEANNA STREET
BALTIMORE, MARYLAND 21231
(410) 522-5005
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
JAMES S. BURNS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OSIRIS THERAPEUTICS, INC.
2001 ALICEANNA STREET
BALTIMORE, MARYLAND 21231
(410) 522-5005
(Name, address, including zip code and telephone number, including area code, of
agent for service)
------------------------------
COPIES TO:
ALAN L. DYE, ESQ. GORDON M. BAVA, ESQ.
GEORGE P. BARSNESS, ESQ. ALLEN Z. SUSSMAN, ESQ.
HOGAN & HARTSON L.L.P. MANATT, PHELPS & PHILLIPS, LLP
555 THIRTEENTH STREET, N.W. 11355 WEST OLYMPIC BOULEVARD
WASHINGTON, DC 20004-1109 LOS ANGELES, CALIFORNIA 90064
(202) 637-5600 (310) 312-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses, other than the
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the Common Stock being registered. All amounts shown are
estimates except for the registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT
---------
<S> <C>
Securities and Exchange Commission registration fee................................ $ 12,807
NASD filing fee.................................................................... 4,727
Nasdaq National Market fee......................................................... 50,000
Blue sky qualification fees and expenses........................................... 20,000
Accounting fees and expenses....................................................... *
Legal fees and expenses............................................................ *
Printing and engraving expenses.................................................... *
Transfer agent and registrar fees.................................................. *
Miscellaneous expenses............................................................. *
Total.......................................................................... *
---------
$ *
---------
---------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation, as amended, (the "Charter")
provides for the indemnification of the Company's directors and officers to the
fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers or controlling
persons of the Company pursuant to the Charter and Bylaws, as amended, of the
Company and the Delaware General Corporation Law, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable.
The Charter limits the personal liability of the Company's directors to the
fullest extent permitted by the Delaware General Corporation Law. Therefore, the
directors of the Company are not personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (i) for any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law, relating to prohibited
dividends or distributions or the repurchase or redemption of stock; or (iv) for
any transaction from which the director derives an improper personal benefit. As
a result of this provision, the Company and its stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
Additionally, the Company has entered into indemnification agreements, in
the form attached hereto as Exhibit 10.31 with certain of its directors,
officers and other key personnel, which may, in certain cases, be broader than
the specific indemnification provisions contained under applicable law. The
indemnification agreement may require the Company, among other things, to
indemnify such officers, directors and key personnel against certain liabilities
that may arise by reason of their status or service as directors, officers or
employees of the Company, to advance the expenses incurred by such parties as a
result of any threatened claims or proceedings brought against them as to which
they could be indemnified and to cover such officers, directors and key
employees under the Company's directors' and officers' liability insurance
II-1
<PAGE>
policies to the maximum extent that insurance coverage is maintained. The
Company maintains an insurance policy, providing an aggregate of $2,000,000 in
coverage, insuring all of its directors and officers against certain liabilities
arising from actions taken in their official capacities as directors and
officers.
The Underwriting Agreement, in the form attached hereto as Exhibit 1.1,
provides for the indemnification of directors, officers, employees, agents and
controlling persons of the Company by the Underwriters under certain
circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On December 1, 1994, the Company entered into a three-year consulting
agreement with Max Link, Ph.D., Chairman of the Company's Board of Directors.
The agreement entitled Dr. Link to purchase a total of 80,000 shares of Common
Stock at a price of $0.34 per share and to purchase 100,000 shares of Series D
Preferred Stock for $2.55 per share.
On January 18, 1995, the Company entered into a Sublease Agreement with the
Maryland Economic Development Corporation ("MEDCO") for 30,000 square feet of
renovated laboratory and office space in Baltimore, Maryland. Under the Sublease
Agreement and related agreements, MEDCO (together with the City of Baltimore)
guaranteed renovation bond financing for up to $3,600,000 to renovate the
Company's facilities. As part of the transaction, the State of Maryland and the
City of Baltimore purchased $700,000 of the Company's Series D Convertible
Preferred Stock ("Series D Preferred Stock") and received warrants to purchase
33,000 shares of Series D Preferred Stock at an exercise price of $3.00 per
share.
On various dates in 1995 and 1996, the Company sold 3,599,070 shares of
Series D Preferred Stock for an aggregate of $10,623,004 to various existing and
new investors. In connection with these sales, the Company sold, for nominal
consideration, warrants to purchase 230,497 shares of Common Stock at an
exercise price of $3.00 per share pursuant to an agreement with the European
Placement Agent.
On various dates in 1996, the Company sold 2,246,224 shares of Series E
Convertible Preferred Stock ("Series E Preferred Stock") for an aggregate of
$10,108,004 to various existing and new investors. In connection with these
sales, the Company sold, for nominal consideration, warrants to purchase 86,675
shares of Common Stock at an exercise price of $4.50 per share pursuant to an
agreement with the European Placement Agent.
On June 16, 1997, the Company issued and sold 1,176,500 shares of Common
Stock to Novartis Pharma AG ("Novartis") for $10,000,250. In addition, the
Company entered into a Research and Licensing Agreement with Novartis
Pharmaceuticals Corporation, the U.S. affiliate of Novartis, pursuant to which
Novartis Pharmaceuticals Corporation paid the Company an initial up-front
payment of $3,000,000 for rights to the MSC technology in the fields of treating
degenerative diseases, regenerating cartilage and certain gene therapy
applications. In exchange, the Company will receive, subject to certain
conditions, up to $50,000,000 over five years for research and development
funding of certain portions of the Company's bone, cartilage and gene therapy
research programs.
Since June 30, 1994, the Company has granted an aggregate of 20,000 shares
of Common Stock to its directors as compensation for attending Board of Director
meetings.
The issuances described above were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Form of Restated Certificate of Incorporation, as amended.**
3.1.1 Proposed Form of Amendment to Restated Certificate of Incorporation, as amended.**
3.2 Form of Bylaws, as amended.**
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Hogan & Hartson L.L.P. with respect to the legality of the securities being
registered.*
10.1 Share Purchase Agreement for Gryphon Pharmaceuticals, Inc. stock, dated December 23, 1994, by
and between the Company and The Johns Hopkins University.**
10.2 Stockholders Agreement for Gryphon Pharmaceuticals, Inc., dated December 23, 1994, by and
between the Company and The Johns Hopkins University.**
10.3 Registration Rights Agreement for Gryphon Pharmaceuticals, Inc. stock, dated December 23,
1994, by and between the Company and The Johns Hopkins University.**
10.4 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series C Convertible Preferred offering.**
10.5 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series D Convertible Preferred offering.**
10.6 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series E Convertible Preferred offering.**
10.7 Stock Purchase Agreement, dated June 16, 1997, by and between the Company and Novartis Pharma
AG.
10.8 Technology Transfer and License Agreement, dated March 31, 1993, by and between the Company
and Case Western Reserve University.+
10.9 Research and License Agreement, dated December 23, 1994, by and between Gryphon
Pharmaceuticals, Inc. and The Johns Hopkins University.+
10.10 License Agreement, dated December 23, 1994, by and between the Company and Gryphon
Pharmaceuticals, Inc.+
10.11 Research Agreement, dated February 22, 1995, by and between the Company and Case Western
Reserve University.+
10.12 Material Transfer and Research Agreement, dated April 1, 1995, by and between the Company and
the Fred Hutchinson Cancer Research Center, with amendments.**
10.13 Research Contract, dated June 11, 1996, as amended on May 31, 1997, by and between the
Company and the Defense Advanced Research Projects Agency.+
10.14 Clinical Study Support Agreement, dated October 28, 1996, by and between the Company,
University Hospitals of Cleveland, Ireland Cancer Center and Case Western Reserve
University.**
10.15 Research and Licensing Agreement, dated June 16, 1997, by and between the Company and
Novartis Pharmaceuticals Corporation.+
10.16 Master Equipment Lease Agreement, dated as February 28, 1994 and as amended on June 20, 1995,
by and between Dominion Ventures, Inc. and Osiris Therapeutics, Inc.**
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------
10.17 Master Lease Agreement, dated January 18, 1995, by and between Saga Limited Partnership and
Maryland Economic Development Corporation.**
<S> <C>
10.18 Sublease Agreement effective January 18, 1995, as amended on June 2, 1995, by and between
Maryland Economic Development Corporation and Osiris Therapeutics, Inc.**
10.19 Financing and Construction Loan Agreement, dated as of June 2, 1995, by and among Maryland
Economic Development Corporation, The Whiting-Turner Contracting Company, Mayor and City
Council of Baltimore, Signet Trust Company and the Company.**
10.20 Loan Agreement, dated June 1, 1995, by and between the Company and Signet Bank/ Maryland.**
10.21 Consulting Agreement, dated March 11, 1993, by and between the Company and Arnold I. Caplan,
Ph.D.**
10.22 Consulting Agreement, dated March 11, 1993, by and between the Company and Victor M.
Goldberg, M.D.**
10.23 Consulting Agreement, dated March 11, 1993, by and between the Company and Stephen
Haynesworth, Ph.D.**
10.24 Employment Agreement, dated March 11, 1993, as amended, by and between the Company and James
S. Burns.**
10.25 Employment Agreement, dated October 1, 1994, by and between the Company and Daniel R.
Marshak, Ph.D.**
10.26 Consulting Agreement, dated November 23, 1994, by and between the Company and Max Link,
Ph.D.**
10.27 1994 Amended and Restated Stock Incentive Plan, as amended, and form of Stock Option
Agreements.**
10.28 Consulting Agreement, dated November 1, 1995, by and between the Company and Friedli
Corporate Finance AG.**
10.29 Employment Agreement, dated November 1, 1996, by and between the Company and Michael J.
Demchuk, Jr.**
10.30 Employment Agreement, dated June 1, 1997, by and between the Company and David J. Fink,
Ph.D.**
10.31 Form of Indemnification Agreement.**
10.32 Research Agreement between the Company and the Centro di Biotecnologie Avanzate.+
11.1 Statement re computation of pro forma net loss per share.**
21.1 Subsidiaries.**
23.1 Consent of Coopers & Lybrand L.L.P.**
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).*
23.3 Consent of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.A.*
24.1 Power of Attorney (see page II-6).**
27.1 Financial Data Schedule.**
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Portions have been omitted pursuant to a request for confidential treatment.
Unredacted agreement has been submitted to the Commission.
II-4
<PAGE>
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set forth
therein is not applicable or is included elsewhere in the Consolidated Financial
Statements or the notes thereto.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Form S-1 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Baltimore, State of Maryland on the 13th day of August, 1997.
OSIRIS THERAPEUTICS, INC.
By: /s/ JAMES S. BURNS
-----------------------------------------
James S. Burns
President, Chief Executive Officer,
Treasurer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Form S-1 Registration Statement has been signed by the following
persons in the capacities indicated on the 13th day of August, 1997.
NAME TITLE
- ------------------------------ ---------------------------
President, Chief Executive
/s/ JAMES S. BURNS Officer,
- ------------------------------ Treasurer and Director
James S. Burns (Principal Executive
Officer)
Vice President & Chief
Financial
/s/ MICHAEL J. DEMCHUK, JR. Officer, Secretary and
- ------------------------------ Assistant Treasurer
Michael J. Demchuk, Jr. (Principal Financial and
Accounting Officer)
* Chairman of the Board
- ------------------------------
Max Link, Ph.D.
* Director
- ------------------------------
Jack L. Bowman
* Director
- ------------------------------
Peter Friedli
* Director
- ------------------------------
Mark Novitch, M.D.
*By: /s/ MICHAEL J.
DEMCHUK, JR.
- ------------------------------
Michael J. Demchuk, Jr.
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Form of Restated Certificate of Incorporation, as amended.**
3.1.1 Proposed Form of Amendment to Restated Certificate of Incorporation, as amended.**
3.2 Form of Bylaws, as amended.**
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Hogan & Hartson L.L.P. with respect to the legality of the securities being
registered.*
10.1 Share Purchase Agreement for Gryphon Pharmaceuticals, Inc. stock, dated December 23, 1994, by
and between the Company and The Johns Hopkins University.**
10.2 Stockholders Agreement for Gryphon Pharmaceuticals, Inc., dated December 23, 1994, by and
between the Company and The Johns Hopkins University.**
10.3 Registration Rights Agreement for Gryphon Pharmaceuticals, Inc. stock, dated December 23,
1994, by and between the Company and The Johns Hopkins University.**
10.4 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series C Convertible Preferred offering.**
10.5 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series D Convertible Preferred offering.**
10.6 Form of Registration Rights Agreement by and among the Company and the Investors in the
Series E Convertible Preferred offering.**
10.7 Stock Purchase Agreement, dated June 16, 1997, by and between the Company and Novartis Pharma
AG.
10.8 Technology Transfer and License Agreement, dated March 31, 1993, by and between the Company
and Case Western Reserve University.+
10.9 Research and License Agreement, dated December 23, 1994, by and between Gryphon
Pharmaceuticals, Inc. and The Johns Hopkins University.+
10.10 License Agreement, dated December 23, 1994, by and between the Company and Gryphon
Pharmaceuticals, Inc.+
10.11 Research Agreement, dated February 22, 1995, by and between the Company and Case Western
Reserve University.+
10.12 Material Transfer and Research Agreement, dated April 1, 1995, by and between the Company and
the Fred Hutchinson Cancer Research Center, with amendments.**
10.13 Research Contract, dated June 11, 1996, as amended on May 31, 1997, by and between the
Company and the Defense Advanced Research Projects Agency.+
10.14 Clinical Study Support Agreement, dated October 28, 1996, by and between the Company,
University Hospitals of Cleveland, Ireland Cancer Center and Case Western Reserve
University.**
10.15 Research and Licensing Agreement, dated June 16, 1997, by and between the Company and
Novartis Pharmaceuticals Corporation.+
10.16 Master Equipment Lease Agreement, dated as February 28, 1994 and as amended on June 20, 1995,
by and between Dominion Ventures, Inc. and Osiris Therapeutics, Inc.**
10.17 Master Lease Agreement, dated January 18, 1995, by and between Saga Limited Partnership and
Maryland Economic Development Corporation.**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------
10.18 Sublease Agreement effective January 18, 1995, as amended on June 2, 1995, by and between
Maryland Economic Development Corporation and Osiris Therapeutics, Inc.**
<S> <C>
10.19 Financing and Construction Loan Agreement, dated as of June 2, 1995, by and among Maryland
Economic Development Corporation, The Whiting-Turner Contracting Company, Mayor and City
Council of Baltimore, Signet Trust Company and the Company.**
10.20 Loan Agreement, dated June 1, 1995, by and between the Company and Signet Bank/ Maryland.**
10.21 Consulting Agreement, dated March 11, 1993, by and between the Company and Arnold I. Caplan,
Ph.D.**
10.22 Consulting Agreement, dated March 11, 1993, by and between the Company and Victor M.
Goldberg, M.D.**
10.23 Consulting Agreement, dated March 11, 1993, by and between the Company and Stephen
Haynesworth, Ph.D.**
10.24 Employment Agreement, dated March 11, 1993, as amended, by and between the Company and James
S. Burns.**
10.25 Employment Agreement, dated October 1, 1994, by and between the Company and Daniel R.
Marshak, Ph.D.**
10.26 Consulting Agreement, dated November 23, 1994, by and between the Company and Max Link,
Ph.D.**
10.27 1994 Amended and Restated Stock Incentive Plan, as amended, and form of Stock Option
Agreements.**
10.28 Consulting Agreement, dated November 1, 1995, by and between the Company and Friedli
Corporate Finance AG.**
10.29 Employment Agreement, dated November 1, 1996, by and between the Company and Michael J.
Demchuk, Jr.**
10.30 Employment Agreement, dated June 1, 1997, by and between the Company and David J. Fink,
Ph.D.**
10.31 Form of Indemnification Agreement.**
10.32 Research Agreement between the Company and the Centro di Biotecnologie Avanzate.+
11.1 Statement re computation of pro forma net loss per share.**
21.1 Subsidiaries.**
23.1 Consent of Coopers & Lybrand L.L.P.**
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).*
23.3 Consent of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.A.*
24.1 Power of Attorney (see page II-6).**
27.1 Financial Data Schedule.**
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Portions have been omitted pursuant to a request for confidential treatment.
Unredacted agreement has been submitted to the Commission.
<PAGE>
NOVARTIS PHARMA AG
OSIRIS THERAPEUTICS, INC.
STOCK PURCHASE AGREEMENT
June 16, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and Sale of Common Stock 1
1.1 Authorization 1
1.2 Sale of Common Stock 1
1.3 Closing 1
2. Closing Date, Delivery. 2
2.1 Closing Date 2
2.2 Delivery 2
2.3 Further Assurances 2
3. Representations, Warranties and Covenants of the Company. 2
3.1 Organization, Good Standing and Qualification 2
3.2 Capitalization and Voting Rights 2
3.3 Subsidiaries 3
3.4 Authorization 4
3.5 Valid Issuance of Shares 4
3.6 Liabilities 5
3.7 Governmental Consents 5
3.8 Litigation 5
3.9 Employees and Consultants 5
3.10 Patents and Trademarks 6
3.11 Compliance with Other Instruments 6
3.12 Agreements; Action 6
3.13 Registration Rights 7
3.14 Title to Property and Assets 7
3.15 Financial Statements 8
3.16 Employee Benefit Plans 8
3.17 Tax Returns, Payments and Elections 10
3.18 Insurance 10
3.19 Labor Agreements and Actions 10
3.20 Real Property Holding Corporation 10
3.21 Offering 10
3.22 Environmental and Safety Laws 10
3.23 Licenses and Other Rights; Compliance with Laws 11
3.24 Board of Directors 12
3.25 Reliance 13
<PAGE>
4. Representations, Warranties and Covenants of the Investor 13
4.1 Authorization, Governmental Consents and Compliance with Other
Instruments 13
4.2 Purchase Entirely for Own Account 13
4.3 Disclosure of Information 14
4.4 Investment Experience and Accredited Investor Status 14
4.5 Restricted Securities 14
4.6 Further Limitations on Disposition 14
4.7 Legends 15
5. Conditions to Closing of Investor. 15
5.1 Representations and Warranties Correct 15
5.2 Covenants 16
5.3 Compliance Certificate 16
5.4 Legal Opinion 16
5.5 Certification of Resolutions and Officers 16
5.6 Certification of No Material Adverse Change 16
5.7 Research Collaboration and License Agreement 17
6. Conditions to Closing of the Company. 17
6.1 Representations and Warranties Correct 17
6.2 Covenants 17
6.3 Compliance Certificate 17
6.4 Receipt of Purchase Price 17
6.5 Legal Opinion 17
6.6 Research Collaboration and License Agreement 18
7. Mutual Conditions to Closing. 18
7.1 Qualifications 18
7.2 Absence of Litigation 18
7.3 Waiver by Series C Stockholders 18
8. Standstill Agreement. 18
9. Additional Covenants and Agreements. 19
9.1 Delivery of Financial Statements 19
9.2 Assignment of Rights to Financial Information 20
9.3 Termination of Covenants 20
9.4 Right of Osiris to Purchase Shares 20
9.5 Further Restriction on Sale of Shares 21
9.6 Inspection of Properties 22
<PAGE>
9.7 Equity Purchases from the Company 22
9.8 Exchange of the Shares for Series F Convertible Preferred
Stock 24
10. Registration Rights; Compliance with the Act. 25
10.1 Definitions 25
10.2 Form S-3 Registration 25
10.3 Company Registration 27
10.4 Underwriting Requirements 28
10.5 Obligations of the Company 28
10.6 Furnish Information 29
10.7 Delay of Registration 29
10.8 Indemnification 29
10.9 Reports Under Securities Exchange Act of 1934 31
10.10 Amendment of Registration Rights 32
11. Miscellaneous. 33
11.1 Survival of Warranties 33
11.2 Remedies 33
11.3 Successors and Assigns 34
11.4 Entire Agreement 34
11.5 Governing Law 34
11.6 Counterparts 34
11.7 Titles and Subtitles 34
11.8 Nouns and Pronouns 34
11.9 Notices 34
11.10 Finder's Fee 36
11.11 Expenses 36
11.12 Amendments and Waivers 36
11.13 Severability 36
11.14 Confidentiality and Publicity 36
11.15 Termination 37
EXHIBIT A 38
SCHEDULE OF EXCEPTIONS 38
EXHIBIT B 44
Compliance Certificate of Osiris 44
EXHIBIT C 45
Opinion of Hogan & Hartson L.L.P. 45
<PAGE>
EXHIBIT D 46
Research Collaboration and License Agreement 46
EXHIBIT E 47
Compliance Certificate of Novartis 47
EXHIBIT F 48
Opinion of Counsel to Novartis 48
EXHIBIT G 49
Certificate of Designation 49
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 16th day of
June, 1997, by and between Novartis Pharma AG ("Novartis" or the "Investor"),
a corporation organized under the laws of Switzerland with its principal place
of business at Lichtstrasse 35, CH-4002, Basel, Switzerland and Osiris
Therapeutics, Inc. ("Osiris" or the "Company"), a Delaware corporation with
its principal place of business at 2001 Aliceanna Street, Baltimore, Maryland,
U.S.A.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Common Stock.
1.1 Authorization. The Company will authorize the sale and issuance of
1,176,500 shares of its $0.001 par value Common Stock (the "Common Stock")
having the rights and privileges set forth in the Company's Restated
Certificate of Incorporation (the "Restated Certificate").
1.2 Sale of Common Stock.
(a) Subject to the terms and conditions hereof, the Company will issue
and sell to the Investor, and the Investor will buy from the Company, at the
Closing (as defined below), 1,176,500 shares of Common Stock (the "Shares")
for a purchase price of $8.50 per share in cash in U.S. dollars, or
$10,000,250 in the aggregate in cash in U.S. dollars (the "Aggregate Purchase
Price"). The parties agree that Novartis may assign the right and obligation
to purchase the Shares for the Aggregate Purchase Price, and all of its other
rights and obligations under this Agreement, to an "Affiliate" as defined in
the Research Collaboration and License Agreement of even date, in which case
the term "Investor" shall refer herein to such Affiliate (provided that such
assignment shall be ineffective to the extent that such Affiliate fails to
perform any such obligation, in which event Novartis shall continue to be
deemed the Investor hereunder).
(b) In the event of any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company prior to the Closing which affects or relates to the Common Stock, the
number of Shares and the purchase price per Share (but not the Aggregate
Purchase Price) shall be adjusted proportionately.
1.3 Closing. The closing of purchase and sale of the Shares (the
"Closing") shall occur at 11:00 a.m. on the Closing Date (as defined in
Section 2.1 herein) at the Company's offices at 2001 Aliceanna Street,
Baltimore, Maryland, 21231.
<PAGE>
2. Closing Date, Delivery.
2.1 Closing Date. The Closing shall be held on June 16, 1997 or such
other date as the Company and the Investor may agree upon (the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to the Investor a
stock certificate, registered in the Investor's name, representing the Shares,
against payment of the Aggregate Purchase Price by certified or cashier's
check payable to the Company, or by wire transfer of same day funds per the
Company's wiring instructions.
2.3 Further Assurances. The Company and the Investor hereby covenant and
agree, without the necessity of any further consideration, to execute,
acknowledge and deliver any and all such other documents and take any such
other action as may be reasonably necessary to carry out the intent and
purposes of this Agreement.
3. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to the Investor as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power
and corporate authority to own and operate its properties and assets, to
carry on its business as now conducted and as proposed to be conducted, to
enter into this Agreement, to sell the Shares and to carry out the other
transactions contemplated hereunder. The Company and each of its subsidiaries
is qualified to transact business and is in good standing in each jurisdiction
in which the failure to qualify would have a material adverse effect on its
business, properties or financial condition (a "Material Adverse Effect").
The Company has delivered to the Investor true, correct and complete copies
of the Restated Certificate, and Bylaws in effect on the date hereof.
3.2 Capitalization and Voting Rights. The authorized capital of the
Company as of the date hereof consists of:
(a) 20,000,000 shares of $.001 par value Preferred Stock ("Preferred
Stock"), of which 2,122,000 shares have been designated Series A Convertible
Preferred Stock, 750,000 shares have been designated Series B Convertible
Preferred Stock, 740,000 shares have been designated Series C Convertible
Preferred Stock and Series C-1 Convertible Preferred Stock, 3,600,000 shares
have been designated Series D Convertible Preferred Stock, 2,788,000 shares
have been designated Series E Convertible Preferred Stock and 1,176,500 shares
<PAGE>
have been designated Series F Convertible Preferred Stock, of which 2,068,625
shares of Series A Convertible Preferred Stock, 619,750 shares of Series B
Convertible Preferred Stock, 735,294 shares of Series C Convertible Preferred
Stock, 3,599,070 shares of Series D Convertible Preferred Stock, 2,246,224
shares of Series E Convertible Preferred Stock and no shares of Series F
Convertible Preferred Stock are issued and outstanding. Except as set forth
in Schedule 3.2 of Exhibit A to this Agreement, the rights, privileges and
preferences of the Series A, Series B, Series C, Series C-1, Series D, Series
E and Series F Convertible Preferred Stock are as stated in the Restated
Certificate.
(b) 30,000,000 shares of Common Stock, of which 4,332,241 shares are
issued and outstanding.
(c) Except as set forth in Schedules 3.2 and 3.13 of Exhibit A to this
Agreement, there are: (i) no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements pursuant to which the Company
is or may become obligated to issue, sell, repurchase or redeem any shares
of its capital stock or any other securities of the Company; (ii) no
restrictions on the transfer of capital stock of the Company imposed by the
Restated Certificate or Bylaws of the Company, any agreement to which the
Company is a party, any order of any court or any governmental agency to which
the Company is subject, or any statute other than those imposed by relevant
state and federal securities laws; (iii) no cumulative voting rights for any
of the Company's capital stock; and (iv) no registration rights under the
Securities Act of 1933, as amended (the "Securities Act") with respect to
shares of the Company's capital stock. The Company has reserved up to
1,050,000 shares of its Common Stock for issuance pursuant to the exercise of
existing options or options to be granted in the future under its Amended and
Restated 1994 Stock Incentive Plan.
(d) Except as set forth in Schedule 3.2 of Exhibit A to this Agreement,
the Company is not a party to or is not subject to any agreement or
understanding relating to, and to the Company's knowledge there is no agreement
or understanding between any persons and/or entities which affects or relates
to, the voting of shares of capital stock of the Company or the giving of
written consents by a shareholder or director of the Company.
3.3 Subsidiaries. Except as set forth in Schedule 3.3 of Exhibit A to
this Agreement, the Company does not presently own or control, directly or
indirectly, any other corporation, association, or other business entity and
does not currently own or control, directly or indirectly, any capital stock
or other ownership interest, directly or indirectly, in any corporation,
association, partnership, trust, joint venture or other entity. Each of the
Company's subsidiaries is duly organized and existing under the laws of its
jurisdiction of organization and is in good standing under such laws. None of
the Company's subsidiaries owns or leases property or engages in any activity
in any jurisdiction that might require its
<PAGE>
qualification to do business as a foreign corporation and in which failure to
do so would have a Material Adverse Effect.
3.4 Authorization. All corporate action on the part of the Company and
its stockholders necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the Company hereunder
and the authorization, issuance and delivery of the Shares to be sold
hereunder has been taken or will be taken prior to the Closing. This
Agreement has been duly executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and similar laws affecting creditor rights. The
execution, delivery and performance of this Agreement and compliance with the
provisions hereof by the Company, will not:
(a) violate any provision of law, statute, ordinance, rule or regulation
or any ruling, writ, injunction, order, judgment or decree of any court,
administrative agency or other governmental body, and will not require any
filing or registration by the Company with any federal or state administrative
agency or other governmental body other than filing pursuant to the
Hart-Scott-Rodino Pre-Merger Notification Act ("HSR Act") if applicable and
other than filings pursuant to federal and state securities laws to the extent
applicable;
(b) conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under (i) any agreement, document, instrument, contract, note,
indenture, mortgage or lease to which the Company is a party or under which
the Company or any of its assets is bound or affected, other than any such
breaches or defaults as would not have a Material Adverse Effect, (ii) the
Company's Restated Certificate or (iii) the Bylaws of the Company; or
(c) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company which would
have a Material Adverse Effect.
3.5 Valid Issuance of Shares.
(a) The issuance, sale and delivery of the Shares being purchased by the
Investor hereunder have been duly authorized by all requisite corporate action
of the Company, and the Shares, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be validly
issued and outstanding, fully paid and nonassessable and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company.
<PAGE>
(b) Except as set forth in Schedule 3.2 of Exhibit A to this Agreement,
the outstanding shares of Common Stock and Series A, Series B, Series C, Series
C-1, Series D and Series E Preferred Stock are all duly authorized and
validly issued, fully paid and nonassessable, and were issued in compliance in
all material respects with all applicable federal and state securities laws.
3.6 Liabilities. Except as set forth in Schedule 3.6 of Exhibit A to
this Agreement and the Exhibits hereto, the Company has not incurred any unpaid
indebtedness for money borrowed or any other contractual liabilities in excess
of $500,000 individually or $1,000,000 in the aggregate.
3.7 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated
by this Agreement, (i) except as may be required pursuant to the HSR Act and
(ii) except for registration or qualification, or taking such action to secure
exemption from such registration or qualification, of the Shares under
applicable state or federal securities laws, which actions shall be taken, by
and at the expense of the Company, on a timely basis as may be required.
3.8 Litigation. Except as set forth in Schedule 3.8 of Exhibit A to this
Agreement, there is no action, suit, proceeding or investigation pending or,
to the Company's knowledge, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which
reasonably would be expected to have, either individually or in the aggregate,
a Material Adverse Effect, or result in any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
the foregoing. To the Company's knowledge, there are no legal actions or
investigations pending or threatened involving the employment by or with the
Company of any of the Company's current employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers or alleging a violation of any federal, state
or local statute or common law relationship with the Company. The Company
is not a party to any order, writ, injunction, judgment or decree of any court.
3.9 Employees and Consultants. Except as set forth in Schedule 3.9 of
Exhibit A to this Agreement:
(a) To the Company's knowledge, none of its employees is obligated under
any contract (including licenses, covenants or contracts of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts to
<PAGE>
promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by
the employees of the Company, nor the conduct of the Company's business as
proposed, will, to the Company's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, any material contract, covenant or instrument under which any of such
employees is now obligated.
(b) Each employee of, or consultant to, the Company, who has or is
proposed to have access to confidential or proprietary information of the
Company, is a signatory to, and is bound by, an agreement with the Company
relating to noncompetition, nondisclosure, proprietary information and
assignment of patent, copyright and other intellectual property rights.
(c) To the Company's knowledge, no employee of, or consultant to, the
Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement with the Company
including, but not limited to, those matters relating to (i) the relationship
of any such employee with the Company or to any other party as a result of the
nature of the Company's business as currently conducted, or (ii) unfair
competition, trade secrets or proprietary information.
3.10 Patents and Trademarks. Except as set forth in a letter from the
Company to Novartis dated the date hereof and delivered to Novartis
simultaneously with the execution of this Agreement, there are no outstanding
options, licenses, or agreements of any kind relating to the Company's
patents, service marks, trademarks, copyrights, trade secrets, proprietary
rights or other intellectual property (hereinafter collectively the
"Intellectual Property"); nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to, the Intellectual
Property of any other person or entity. The Company has not received any
written communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the Intellectual
Property of any other person or entity. To the Company's knowledge, all
patents owned by or licensed to the Company were validly obtained and are
valid and enforceable by the Company.
3.11 Compliance with Other Instruments. The Company is not in violation
or default of any provisions of the Restated Certificate or the Company's
Bylaws or of any judgment, order, writ or decree to which the Company is a party
or by which it is bound.
3.12 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and as set
forth in Schedule 3.12 of Exhibit A to this Agreement, there are no
<PAGE>
agreements, understandings, transactions or proposed transactions between the
Company and any of its officers, directors, or affiliates, or any affiliate
thereof, and none of any such individuals or entities has any interest in any
party to any such agreement, understanding, transaction or proposed
transaction.
(b) Except as set forth in Schedule 3.12 of Exhibit A to this Agreement,
there are no agreements, understandings, instruments, contracts, transactions
or proposed transactions to which the Company is a party or by which it is
bound which involve (i) obligations of, or payments to the Company in excess
of $50,000, or (ii) the license of any patent, copyright, trade secret or
other proprietary right to or from the Company.
(c) Except as set forth in Schedule 3.12 of Exhibit A to this Agreement,
the Company has not (i) declared or paid any dividends, or authorized or made
any distribution upon or with respect to any class or series of its capital
stock, (ii) made any loans or advances to any person, other than ordinary
advances to employees for travel expenses, or (iii) sold, exchanged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.
(d) The Company has not admitted in writing its inability to pay its
debts generally as they become due, filed or consented to the filing against it
of a petition in bankruptcy or a petition to take advantage of any insolvency
act, made an assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any substantial part
of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other laws or of the
United States or any other jurisdiction.
(e) To the Company's knowledge, the Company is in compliance with all
obligations, agreements and conditions contained in any evidence of
indebtedness or any loan agreement or other contract or agreement (whether or
not relating to indebtedness) to which the Company is a party or is subject
(collectively, the "Obligations"). To the Company's knowledge, all other
parties to such Obligations are in compliance with the terms and conditions
of such Obligations.
3.13 Registration Rights. Except as provided in Schedule 3.13 of
Exhibit A to this Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
3.14 Title to Property and Assets. Except as set forth in the Company's
Balance Sheet as of December 31, 1996 and the related notes thereto, the
Company has good, legal and merchantable title to all of its assets, including
all properties and assets reflected on such Balance Sheet, free and clear of
all liens,
<PAGE>
claims, restrictions or encumbrances (other than those described
therein), except those assets disposed of since the date of such Balance
Sheet in the ordinary course of business, none of which assets either alone or
in the aggregate are material, either in nature or amount, to the business of
the Company. All machinery and equipment included in such properties which
are material to the business of the Company are in good condition and repair,
and each lease of real or personal property to which the Company is a party
is fully effective, affords the Company peaceful and undisturbed possession of
the subject matter of the lease, and such lease is free of any liens, claims,
restrictions or encumbrances. Each such lease constitutes a valid and
binding obligation of, and is enforceable in accordance with its terms
against, the Company and, to the Company's knowledge, the other parties
thereto. Except as set forth in Schedule 3.8 of Exhibit A to this Agreement,
with respect to the property and assets it leases, the Company is in all
material respects in compliance with such leases, has not received notice of
any allegations that it is in default thereunder in any respect and holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.15 Financial Statements. The Company has delivered to the Investor (i)
its audited financial statements (Balance Sheets, Statements of Operations,
Statements of Shareholder's Equity and Statements of Cash Flow) at December
31, 1996, 1995 and 1994 and for the fiscal years then ended, respectively
(the "Audited Financial Statements") and (ii) its unaudited financial
statements as of and for the three months ended March 31, 1997 (the "Unaudited
Financial Statements") (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated and fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated
therein, except in the case of the Unaudited Financial Statements which are
subject to normal year-end adjustments, none of which shall be material, and
the absence of footnotes. Except as set forth in the Financial Statements and
in the material agreements listed in Schedule 3.15 of Exhibit A to this
Agreement, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to March 31, 1997 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the
financial statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the
Company. Except as disclosed in the Financial Statements, the Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with GAAP.
3.16 Employee Benefit Plans. Except as set forth in Schedule 3.16 of
Exhibit A to this Agreement, there are no "employee benefit plans" as such term
<PAGE>
is defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA") maintained by the Company or any stock purchase plan, stock
option plan, fringe benefit plan, bonus plan or any other deferred
compensation agreement, plan, practice or pending arrangement sponsored,
maintained or to which contributions are made by the Company by or on
behalf of current or former employees of the Company, their dependents or
any other party. The Osiris Retirement Savings Plan (the "Savings Plan") is
the only Plan sponsored, maintained or contributed to by the Company which
is an "employee pension benefit plan" as such term is defined in Section 3(2)
of ERISA. The Company has delivered to the Investor a current, accurate and
complete copy of the Savings Plan (including all other instruments relating
thereto). The Savings Plan is the subject of a request for a determination
letter as to its qualification under Section 401 of the Internal Revenue Code
of 1986, as amended (the "Code"). The trust created under the Savings Plan is
exempt from taxation pursuant to Section 501(a) of the Code. The Savings Plan
and the trust forming a part thereof, as well as any other employee benefit
plan sponsored by the Company, have been administered and enforced in
accordance with their terms, and no actions, suits, investigations or other
disputes are pending (other than routine claims for benefits in the ordinary
course) or, to the Company's knowledge, threatened with respect to any
employee benefit plan or employee pension benefit plan and the Company has
no knowledge of any facts which could give rise to any such actions, suits,
investigations or other disputes. Other than set forth in Schedule 3.16 of
Exhibit A to this Agreement, the Company has no current plans to substantially
alter the benefits or coverage available under any of the employee benefit,
employee pension benefit or other plans, arrangements or practices referred to
above, and has retained the right to amend, modify or terminate any such plan,
arrangement or practice.
3.17 Tax Returns, Payments and Elections. The Company has filed all tax
returns and reports as required by law, including without limitation, all
federal, state and local income, excise or franchise tax returns, real estate
and personal property tax returns, sales and use tax returns, payroll tax
returns and other tax returns or reports required to be filed by it. These
returns and reports are true and correct in all material respects. The
Company has paid or made provision for the payment of all accrued and unpaid
taxes and other charges to which the Company is subject and which are not
currently due and payable. The federal income tax returns of the Company
have never been audited by the Internal Revenue Service, and the Company has
not agreed to an extension of the statute of limitations with respect to any
of its tax years. Neither the Internal Revenue Service nor any other taxing
authority is now asserting, nor, to the Company's knowledge, is threatening to
assert, against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith; nor does such
deficiency or claim or basis for such a deficiency or claim exist. The
Company has not elected, pursuant to the Code, to be treated as a Subchapter
S corporation or a collapsible corporation pursuant to Section 341(f) or
Section 1362(a) of the Code, nor has it made any other elections pursuant to
the Code (other than
<PAGE>
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material adverse effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted or any of its properties or material assets.
3.18 Insurance. The Company has in full force and effect fire, casualty
and liability insurance policies, with coverage, in the case of property
insurance, sufficient in amount (subject to reasonable deductibles) to allow
it to replace any of its properties that might be damaged or destroyed, and in
the case of casualty and liability insurance, in amounts customary and
adequate for business similar to the business of the Company.
3.19 Labor Agreements and Actions. The Company does not have any
collective bargaining agreements covering any of its employees, nor is the
Company bound by or subject to (and none of its assets or properties is bound
by or subject to) any written or oral, express or implied, contract, commitment
or arrangement with any labor union, and no labor union has requested or, to
the knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the business,
properties or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted), nor is the
Company aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company, nor
does the Company have a present intention to terminate the employment of any
of the foregoing. Except as set forth in this Agreement and Schedule 3.19 of
Exhibit A to this Agreement, the employment of each officer and employee of
the Company is terminable at the will of the Company.
3.20 Real Property Holding Corporation. The Company is not, and has not
been at any time a "United States real property holding corporation "as defined
in Section 897 of the Code.
3.21 Offering. Subject to the accuracy of the Investor's
representations set forth in Section 4 of this Agreement, the offer, sale and
issuance of the Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of the Securities Act
and from all applicable state registration or qualification requirements, other
than those with which the Company has complied or will comply.
3.22 Environmental and Safety Laws.
(a) To the Company's knowledge, the Company is not in violation of any
Environmental Law (as hereinafter defined) and to its knowledge, no material
expenditures are or will be required in order to comply with any
<PAGE>
Environmental Law. As used in this Agreement, "Environmental Law" shall mean
any applicable federal, state and local law, ordinance, rule or regulation
that regulates, fixes liability for, or otherwise relates to, the handling,
use (including use in industrial processes, in construction, as building
materials, or otherwise), treatment, storage and disposal of hazardous and
toxic wastes and substances, and to the discharge, leakage, presence,
migration, actual Release (as hereinafter defined) or threatened Release
(whether by disposal, a discharge into any water source or system or into the
air, or otherwise) of any pollutant or effluent.
(b) The Company has not used, generated, manufactured, refined, treated,
transported, stored, handled, disposed, transferred, produced, processed or
released (hereinafter together defined as "Release") any Hazardous Materials
(as hereinafter defined) on, from or affecting any Property (as hereinafter
defined) in any manner or by any means in violation of any Environmental Laws
and to the Company's knowledge, there is no threat of such Release. As used
herein, the term "Property" shall include, without limitation, land, buildings
and laboratory facilities owned or leased by the Company or as to which the
Company now has any duties, responsibilities (for cleanup, remedy or
otherwise) or liabilities under any Environmental Laws, or as to which the
Company or any subsidiary of the Company may have such duties,
responsibilities or liabilities because of past acts or omissions of the
Company or any such subsidiary or their predecessors, or because the Company
or any such subsidiary or their predecessors in the past was such an owner or
operator of, or bore some other relationship with, such land, buildings or
laboratory facilities. The term "Hazardous Materials" shall include, without
limitation, any flammable explosives, petroleum products, petroleum by-
products, radioactive materials, hazardous wastes, hazardous substances, toxic
substances or related materials as defined by Environmental Laws.
(c) The Company has not received written notice that the Company is a
party potentially responsible for costs incurred at a cleanup site or
corrective action under any Environmental Laws. The Company has not received
any written requests for information in connection with any inquiry by any
Governmental Authority (as hereinafter defined) concerning disposal sites or
other environmental matters. As used herein, "Governmental Authority" shall
mean any nation or government, any federal, state, municipal, local,
provincial, regional or other political subdivision thereof, and any entity or
person exercising executive, legislative, judicial regulatory or
administrative functions of or pertaining to government.
(d) The stockholders of the Company have had no control over, or
authority with respect to, the waste disposal operations of the Company.
3.23 Licenses and Other Rights; Compliance with Laws. The Company has
all franchises, permits, licenses and other rights and privileges necessary to
permit it to own its properties and to conduct its business as presently
<PAGE>
conducted, other than such franchises, permits, licenses and other rights and
privileges which the failure to have would not have a Material Adverse
Effect. The Company is in compliance in all material respects under each,
and the transactions contemplated by this Agreement will not cause a violation
under any, of such franchises, permits, licenses and other rights and
privileges. The Company is in compliance in all material respects with all
laws and governmental rules and regulations applicable to its businesses,
properties and assets, and to the products and services sold by it, including,
without limitation, all such rules, laws and regulations relating to fair
employment practices, occupational safety and health and public safety.
The Company is in compliance in all material respects with the applicable
provisions of the Clinical Laboratories Improvement Act of 1967, as amended.
3.24 Board of Directors.
(a) The Company currently has six members on its Board of Directors
(the "Board of Directors") and one vacancy. Except as set forth in Section
3.24(b), the Company has not extended any offer or promise or entered into
any agreement, arrangement, understanding or otherwise, whether written or
oral, with any person or entity by which the Company has agreed to allow such
person or entity to serve on, or to nominate, recommend or elect another
person to serve on, the Board of Directors.
(b) At the request of the Investor, a representative designated by the
Investor, reasonably acceptable to the Company, shall be elected to fill the
currently existing vacancy on the Board of Directors and shall be nominated
and recommended for election to the Board of Directors at successive annual
meetings of the shareholders of the Company. The Company's obligation to
nominate a Novartis representative at each annual meeting of the shareholders
shall cease upon the earlier of (i) the Investor's termination of research
funding under the Research Collaboration and License Agreement, unless
such termination is permitted under such agreement based on a breach by the
Company of any of its obligations under such agreement or (ii) the first date
following the third anniversary of the Closing Date on which the Investor owns
less than four percent (4%) of the issued and outstanding Common Stock
(including any shares of Common Stock into which other securities owned by
the Investor can be converted) unless such reduction below 4% results from
action by the Company. The Investor may, in lieu of designating a
representative to serve on the Board of Directors as permitted herein,
designate a representative, reasonably acceptable to the Company, who shall
be permitted to attend all meetings of the Board of Directors as an observer,
and who shall receive notice of such meetings in the same manner and at the
same times as the members of the Board of Directors. The rights granted to
Novartis pursuant to this Section 3.24(b) may not be assigned or otherwise
conveyed by Novartis or by a subsequent permitted transferee of any such
rights without the prior written consent of the Company; provided, however,
that the consent of the
<PAGE>
Company shall not be required for an assignment of such rights to an Affiliate
of Novartis.
3.25 Reliance. The Company understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by the Investor. No representation or warranty by the Company in this
Agreement, and no written statement contained in any document, certificate or
other writing delivered by the Company to the Investor contains any untrue
statement of material fact or omits to state any material fact necessary to
make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
4. Representations, Warranties and Covenants of the Investor.
The Investor hereby represents and warrants the following:
4.1 Authorization, Governmental Consents and Compliance with Other
Instruments. All corporate action on the part of the Investor necessary for
the authorization, execution and delivery of this Agreement and the
performance of all obligations of the Investor hereunder has been taken or
will be taken prior to the Closing. This Agreement constitutes a valid and
legally binding obligation of the Investor, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency
and similar laws affecting creditor rights. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Investor is required in connection with the consummation of the
transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any provision of the Investor's corporate charter or
other equivalent documents or any instrument, judgment, order, writ, decree
or contract to which the Investor is a party or by which it is bound.
4.2 Purchase Entirely for Own Account. The Investor is aware that the
Company is entering into this Agreement in reliance upon the Investor's
representation to the Company, which by the Investor's execution of this
Agreement the Investor hereby confirms, that the Shares will be acquired for
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that the
Investor has no present intention of selling, granting any participation in,
or otherwise distributing the Shares. By executing this Agreement, the
Investor further represents that the Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person, with respect to any
of the Shares. The Investor represents that it has full
<PAGE>
power and authority to enter into this Agreement. In addition, the Investor
agrees not to sell, assign, transfer, pledge, encumber, hypothecate, permit to
become subject to a security interest, grant an option in or otherwise dispose
of the Common Stock acquired hereunder by the Investor, without regard to the
registration of such shares, to any United States Person (as that term is
defined in Regulation S under the Securities Act) for a period of one year
after the closing of the purchase of the Common Stock, if, in the reasonable
judgment of the Company, such action might make Regulation S unavailable to
the Company as a basis for not registering under the Securities Act the
initial issuance of the Shares to the Investor.
4.3 Disclosure of Information. The Investor has received all the
information from the Company and its management that the Investor considers
necessary or appropriate for deciding whether to purchase the Common Stock
hereunder. The Investor further represents that it has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Common Stock.
4.4 Investment Experience and Accredited Investor Status. The Investor
(i) is an "accredited investor" (as defined in Regulation D promulgated under
the Securities Act) and (ii) is not a United States Person as that term is
defined in Regulation S under the Securities Act, and is not acquiring the
Shares for the account or benefit of any United States Person. The Investor is
an investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, and bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the
investment in the Shares hereunder.
4.5 Restricted Securities. The Investor understands that the Shares,
when issued, will be "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act.
4.6 Further Limitations on Disposition. Without in any way limiting the
representations set forth above or the obligations of the Investor under
Section 9.5, the Investor further represents, warrants and agrees that it will
not make any disposition of all or any portion of the Shares (except to an
Affiliate in accordance with Section 1.2), unless and until:
<PAGE>
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) the disposition is made pursuant to Rule 144 or similar provisions
of the federal securities laws as in effect from time to time (in which case, if
required by the Company's transfer agent, the Investor will provide an opinion
of counsel reasonably satisfactory to the Company that such disposition is not
required to be registered under the Securities Act); or
(c) (i) The Investor shall have notified the Company of the proposed
disposition and the identity of the proposed transferee, and (ii) if
requested by the Company, the Investor shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Shares under the
Securities Act.
4.7 Legends. It is understood that the certificates evidencing the
Shares will bear the following legends:
(a) These securities have not been registered under the Securities Act
of 1933. They may not be sold, offered for sale, pledged or hypothecated in the
absence of an effective registration statement with respect to the securities
under such Act or the availability of an exemption from the registration
requirements of such Act."
(b) Any legend required by applicable state securities laws.
5. Conditions to Closing of Investor. The Investor's obligation to
purchase the Shares at the Closing is subject to the fulfillment as of the
Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date, except that:
(a) there shall be delivered at the Closing a certificate, signed by an
officer of the Company, which contains the representation and warranty set
forth in Section 3.2, but substituting the then-current numbers of shares for
the numbers of shares set forth in Section 3.2; and
(b) if there shall be available more recent financial statements than
those referred to in Section 3.15, there shall be delivered at the Closing a
certificate, signed by an officer of the Company, which contains
<PAGE>
the representation and warranty set forth in Section 3.15, but substituting
the most recent financial statements then available (which shall have been
delivered to the Investor at least three business days prior to such Closing)
for the financial statements referred to in Section 3.15.
5.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects. All
proceedings to have been taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have been
taken or obtained, and all documents incidental thereto shall be satisfactory
to the Investor and its counsel, and the Investor and its counsel shall have
received copies (executed or certified, as may be appropriate) of all documents
which the Investor or its counsel may reasonably have requested in connection
with such transactions.
5.3 Compliance Certificate. The Company shall have delivered to the
Investor a certificate of the Company in the form of Exhibit B hereto,
executed by the President and Chief Executive Officer of the Company,
certifying to the fulfillment of the conditions specified in Sections 5.1
and 5.2 of this Agreement.
5.4 Legal Opinion. All legal matters incident to the purchase of the
Shares shall be satisfactory to the Investor's counsel, and the Investor shall
have received from Hogan & Hartson L.L.P., counsel for the Company, such firm's
opinion addressed to the Investor and dated the date of the Closing, in the
form of Exhibit C hereto.
5.5 Certification of Resolutions and Officers. The Company shall have
delivered to the Investor a certificate or certificates, dated the date of the
Closing, of the Secretary of the Company certifying as to (i) the resolutions
of the Board of Directors (and the vote of the stockholders, if necessary)
authorizing the execution and delivery of this Agreement, the issuance to
the Investor of the Shares, the execution and delivery of such other documents
and instruments as may be required by this Agreement, and the consummation
of the transactions contemplated hereby, and certifying that such resolutions
were duly adopted and have not been rescinded or amended as of said date,
and (ii) the name and the signature of the officers of the Company authorized
to sign, as appropriate, this Agreement and the other documents and
certificates to be delivered pursuant to this Agreement by either the
Company or any of its officers.
5.6 Certification of No Material Adverse Change. The Company shall have
delivered to the Investor certificates, dated the date of the Closing, of the
Chief Financial Officer of the Company certifying that since December 31,
1996, there has not been any material adverse change in the financial
<PAGE>
condition or operations of the Company, and that, except to the extent
reflected in the financial statements referred to in Section 3.15 (or in such
later financial statements, as the case may be), and except for liabilities
arising in the ordinary course of business (none of which liabilities either
alone or in the aggregate are material either in nature or amount to the
business of the Company), the Company has no material accrued or contingent
liabilities which are not specifically described in such financial statements.
5.7 Research Collaboration and License Agreement. The Company and the
Investor shall have entered into the Research Collaboration and License
Agreement in the form of Exhibit D hereto.
6. Conditions to Closing of the Company.
The Company's obligation to sell the Shares at the Closing is subject to the
fulfillment as of the Closing Date of the following conditions:
6.1 Representations and Warranties Correct. The representations and
warranties made by the Investor in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as though such representations and warranties had been made on the Closing
Date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Investor on or prior to the Closing Date
shall have been performed or complied with in all material respects. All
proceedings to have been taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have
been taken or obtained, and all documents incidental thereto shall be
satisfactory to the Investor and its counsel, and the Company and its counsel
shall have received copies (executed or certified, as may be appropriate) of
all documents which the Company or its counsel may reasonably have requested
in connection with such transactions.
6.3 Compliance Certificate. The Investor shall have delivered to the
Company a certificate of the Investor in the form of Exhibit E hereto, executed
by the Head of Financial Evaluation and Mergers and Acquisitions of the
Investor, certifying to the fulfillment of the conditions specified in Sections
6.1 and 6.2 of this Agreement.
6.4 Receipt of Purchase Price. The Company shall have received from the
Investor the Aggregate Purchase Price by certified or cashier's check payable
to the Company, or by wire transfer of same day funds per the Company's wiring
instructions, for the Shares to be purchased by the Investor.
6.5 Legal Opinion. All legal matters incident to the purchase of the
Shares by the Investor shall be satisfactory to the Company's counsel and the
Company shall have received from counsel to the Investor reasonably
satisfactory to
<PAGE>
the Company his opinion addressed to the Company and dated the date of the
Closing, in the form of Exhibit F hereto.
6.6 Research Collaboration and License Agreement. The Company and the
Investor shall have entered into the Research Collaboration and License
Agreement in the form of Exhibit D hereto.
7. Mutual Conditions to Closing. The obligations of each of the Investor
and the Company to consummate the Closing are subject to the fulfillment as of
the Closing Date of the following conditions:
7.1 Qualifications. All consents, permits, approvals, qualifications
and registrations required to be obtained or effected with any governmental
authority, including, without limitation, necessary Blue Sky law permits and
qualifications required by any state for the offer and sale to the Investor of
the Shares, shall have been obtained or effected, and any filings required
under the HSR Act shall have been made and the required waiting period shall
have elapsed.
7.2 Absence of Litigation. There shall be no injunction, actions,
suits, proceeding or investigations pending or currently threatened against the
Company or the Investor which questions the validity of this Agreement or the
right of the Company or the Investor to enter into it, or to consummate the
transactions contemplated hereby.
7.3 Waiver by Series C Stockholders. The holders of the outstanding
shares of the Company's Series C Convertible Preferred Stock (collectively, the
"Series C Investors") shall have waived the provisions of Section 2.3 of the
Investors' Rights Agreement dated May 25, 1994 by and between the Series C
Investors and the Company with respect to the Shares and any Series F
Convertible Preferred Stock exchangeable therefor (and any Common Stock
issued upon conversion thereof) in accordance with Section 9.8 of this
Agreement.
8. Standstill Agreement.
Prior to the earlier of (i) three years from the Closing Date or (ii) two
years from the date of consummation of an underwritten initial public offering
of the Common Stock, neither the Investor nor any subsidiary, parent
corporation or other affiliate of the Investor shall (A) propose, nominate or
support for election to the Board of Directors (other than as contemplated by
Section 3.24) any person whose nomination has not been approved by a majority
of the full Board of Directors, or vote or cause to be voted in favor of any
such person any securities of the Company entitled to vote in the election of
directors ("Voting Stock"), (B) without the express written consent of the
Company, acquire beneficial ownership of any Voting Stock, any securities
convertible into or exchangeable for Voting Stock,
<PAGE>
or any other right to acquire Voting Stock (except, in any case, by way of
stock dividends or other distributions or offerings made available to holders
of any Voting Stock generally), or make a tender, exchange or other offer to
acquire Voting Stock, if, after giving effect to such acquisition, the
Investor would beneficially own (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act")) more than
fifteen percent (15%) of the voting power represented by all Voting Stock of
the Company or (C) encourage or support a tender, exchange or other offer or
proposal by any other person, entity or group (an "Offeror") the consummation
of which would result in a "change of control" of the Company (an "Acquisition
Proposal"). For purposes of this Section 8, a "change of control" shall mean
(i) a merger or consolidation to which the Company is a party and as a result
of which the persons who were stockholders of the Company immediately prior to
the effective date of such merger or consolidation beneficially own (as
defined in Rule 13d-3 under the Securities Exchange Act) less than twenty
percent (20%) of the Voting Stock outstanding immediately following the
effectiveness of such merger or consolidation; (ii) the acquisition by the
Offeror of beneficial ownership of Voting Stock which, when combined with
all other Voting Stock beneficially owned by the Offeror, represents fifteen
percent (15%) or more of the voting power represented by the issued and
outstanding Voting Stock; (iii) a sale of all or substantially all of the
Company's assets (other than to a wholly owned subsidiary of the Company);
or (iv) a liquidation or dissolution of the Company. The restrictions imposed
on the Investor by the foregoing provisions of this Section 8 shall terminate
upon the public announcement by an Offeror of an Acquisition Proposal or the
acquisition by an Offeror of beneficial ownership of more than fifteen percent
(15%) of the voting power represented by all Voting Stock of the Company.
Following such termination, however, and until the earlier of (i) three years
from the Closing Date or (ii) two years from the date of consummation of an
underwritten initial public offering of the Common Stock, the Investor shall
not support, encourage, assist or act in concert with the Offeror to effect a
change of control of the Company. It shall be a condition to a Transfer (as
defined in Section 9.4) of Shares by the Investor, in whole or in part, to any
person or entity (other than in unsolicited broker's transactions following
completion by the Company of an underwritten initial public offering), that
such person or entity agrees to be bound by the provisions of this Section 8
For purposes of this Section 8, such transferee shall be deemed to have
acquired the transferred shares on the Closing Date.
9. Additional Covenants and Agreements.
9.1 Delivery of Financial Statements. The Company shall deliver to the
Investor:
(a) as soon as practicable, but in any event within one hundred and
twenty (120) days after the end of each fiscal year of the Company, statements
of operations, shareholders' equity and cash flow for such fiscal year, a
balance sheet of the Company as of the end of such year, all in reasonable
detail,
<PAGE>
prepared in accordance with GAAP, and audited and certified by independent
public accountants of nationally recognized standing selected by the Company;
(b) such other information relating to the business of the Company as
the Investor may from time to time reasonably request, provided, however, that
the Company shall not be obligated to provide information which it deems in
good faith to be proprietary unless such Investor or assignee of such Investor
agrees in writing to hold in confidence and trust and to act in a fiduciary
manner with respect to all information so provided.
9.2 Assignment of Rights to Financial Information. The rights granted
pursuant to Section 9.1 may not be assigned or otherwise conveyed by the
Investor or by a subsequent permitted transferee of any such rights without
the prior written consent of the Company; provided, however, that the consent
of the Company shall not be required for an assignment of the rights granted
pursuant to Section 9.1(b) to an Affiliate of Novartis.
9.3 Termination of Covenants. The covenants set forth in Section 9.1
shall terminate when the sale of securities pursuant to a registration
statement filed by the Company under the Securities Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the Securities Exchange
Act, whichever event shall first occur.
9.4 Right of Osiris to Purchase Shares
(a) The right of the Investor to sell or offer to sell, or otherwise
transfer or distribute any of the Shares in any manner which would constitute a
sale within the meaning of the Securities Act (any such sale, disposition or
transfer hereinafter referred to as a "Transfer"), except to an Affiliate of
Novartis in accordance with Section 1.2 hereof, shall be subject to a right
of first refusal of the Company as set forth in this Section 9.4(a). Any
attempted or purported Transfer of the Shares by operation of law, by death
or otherwise, in violation of this Section 9.4, shall be null and void and of
no legal force or effect. If the Investor desires to dispose of any or all of
the Shares (the "Offered Shares"), the Investor shall first submit to the
Company a written offer (the "Offer") to sell the Offered Shares to the
Company at a price and on such other terms and conditions as shall be
specified in the Offer. The Offer by its terms shall remain open and
irrevocable for a period of 45 days from the date of delivery of the Offer
to the Company (the "45-Day Period"). The Company shall notify the Investor
prior to the end of the 45-Day Period of its intention to purchase, or to
place with other purchasers, all (but not less than all) of the Offered Shares
by delivering a written notice to the Investor (the "Notice of Acceptance")
which shall fix a closing date that is not more than 20 days after the date of
delivery of such notice.
<PAGE>
If the Company fails to deliver to the Investor a Notice of Acceptance as to
the Offered Shares, the Company shall provide written notice to the Investor
(the "Counter-offer") within the 45-Day Period of the price at which, and the
other terms and conditions upon which, the Company or its designees would be
willing to purchase the Offered Shares. Upon receipt of the Counter-offer,
the Investor shall have 45 days within which to elect to sell the Offered
Shares to the Company or its designees pursuant to the Counter-offer. Such
election shall be made by a written notice of election provided to the
Company, which notice shall fix a closing date not more than 20 days after
the date of delivery of such notice. Any time during the 45 days following
its receipt of the Counter-offer, the Investor may sell to any person or
entity (other than a "competitor" of the Company, as defined below) all (but
not less than all) of the Offered Shares, provided that such sale is at a
price and upon terms and conditions that are more favorable to the Investor
than those specified in the Counter-offer. If the Offered Shares are not sold
to the Company or another party within such 45-day period, such Shares shall
continue to be subject to the requirements of this Section 9.4. It shall be a
condition to a Transfer of Shares by the Investor, in whole or in part, to any
person or entity, that such person or entity agrees to be bound by the
provisions of this Section 9.4 and Section 8. For purposes of this Section
9.4(a), a "competitor" shall mean any person or entity engaged in or promoting
the research, development, testing, study or commercialization of methods of
repairing or regenerating bone, cartilage or bone marrow stroma of a
mesenchymal origin.
(b) The provisions of this Section 9.4 shall not apply to any sale of
Shares that occurs upon or following the consummation by the Company of an
underwritten initial public offering of the Common Stock.
9.5 Further Restriction on Sale of Shares. The Investor shall not offer,
sell, pledge, grant an option to purchase, or otherwise dispose of any of the
Shares, other than (i) as permitted by Section 1.2 of this Agreement or (ii)
to an Affiliate of the Investor, prior to the first anniversary of the Closing
Date. The Investor agrees that it shall, if so requested by the Company,
enter into an agreement providing that it shall not offer, sell, pledge, grant
an option to purchase, or otherwise dispose of any of the Shares: (i) during
the period of one hundred and eighty (180) days after the closing of the
initial underwritten public offering of the Common Stock or (ii) during a
period of up to one hundred and eighty (180) days after the closing of an
underwritten follow-on or secondary offering of the Company's Common Stock,
without the prior written consent of the Company and/or the Company's
underwriters; provided, however, that (A) this Section 9.5 shall not apply or
be effective unless a majority of the officers and directors of the Company
and a majority of all holders of five (5%) percent or more of the Common Stock
of the Company on a fully diluted basis enter into similar agreements, and (B)
the Investor shall not be required to agree, in connection with any offering,
to a lock-up period that is longer than the shortest lock-up period agreed to
by any person or entity having a contractual obligation to the Company to
agree to a lock-up in connection with such offering.
<PAGE>
9.6 Inspection of Properties. The Company shall permit the Investor
from time to time, at the Investor's expense, to visit and inspect the Company's
properties and to discuss the Company's affairs, finances and accounts with
its officers, all at such reasonable times as may be requested by the
Investor; provided, however, that the Company shall not be obligated pursuant
to this Section 9.6 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information; and
provided further, that such right shall terminate upon the transfer by the
Investor (other than to an Affiliate of Novartis) of 50% or more of the Shares
or the power to vote such Shares. The rights granted to Novartis pursuant to
this Section 9.6 may not be assigned or otherwise conveyed by Novartis or by
a subsequent permitted transferee of any such rights without the prior written
consent of the Company; provided, however, that the consent of the Company
shall not be required for an assignment of such rights to an Affiliate of
Novartis.
9.7 Equity Purchases from the Company.
(a) Definitions. For purposes of this Section 9.7:
(i) "New Securities" means any Equity Securities (defined herein)
issued by the Company; provided that "New Securities" shall not include (A) any
securities issuable upon conversion of any convertible Equity Security, (B)
any securities issuable upon exercise of any option, warrant or other similar
Equity Security, (C) any securities issuable in connection with any stock
split, stock dividend or recapitalization of the Company where such securities
are issued to all holders of a class of the Company's capital stock on a
proportionate basis or (D) any Common Stock issuable in connection with or
after an underwritten initial public offering of the Common Stock.
(ii) "Equity Securities" means any Common Stock or other voting
stock, any securities of the Company convertible into or exchangeable for
Common Stock or other voting stock, or any options, rights or warrants (or any
similar securities) issued by the Company to acquire Common Stock or other
voting stock.
(iii) "Person" means an individual, a partnership, a joint
venture, a corporation, a trust, an incorporated or unincorporated
organization, a government or any department or agency thereof.
(iv) "Pro Rata Share" means the fraction of an entire issuance of
New Securities, the numerator of which shall be the number of shares of Common
Stock owned by the Investor (including for this purpose any shares of Common
Stock issuable upon conversion of any shares of Series F Convertible Preferred
Stock owned by the Investor) immediately prior to such issuance of such New
Securities and the denominator of which shall be the aggregate number of
shares of Common Stock outstanding immediately prior to such issuance of
such New Securities
<PAGE>
(including for this purpose any shares of Common Stock issuable upon exercise
or conversion of any outstanding Equity Securities).
(v) "Fair Market Value" with respect to any security, means, as
of any date of determination, the fair market value of such security as of
such date of determination, as determined in good faith by a majority of the
full Board of Directors.
(b) Subscription Rights. So long as the Investor has the right to
designate a representative to serve on the Board of Directors pursuant to
Section 3.24(b), if the Board of Directors shall authorize the issuance of New
Securities to any Person after the Closing and prior to the consummation of
an underwritten initial public offering of the Common Stock (other than any
New Securities issued to (i) officers, employees or directors of the Company
pursuant to any employee stock offering, plan or arrangement approved by the
Company's Board of Directors, (ii) any person or entity in connection with a
corporate partnering or license agreement, joint venture arrangement, or other
transaction in which the issuance of New Securities is incidental to or
coincident with the Company's establishment of a business relationship with
such person or entity (a "Partnering Transaction"), or (iii) Novartis or its
affiliates), then prior to each such issuance of New Securities, the Company
shall offer to the Investor a Pro Rata Share of such New Securities. Any
offer of New Securities made to the Investor under this Section 9.7 shall be
made by notice in writing (the "Subscription Notice") at least 10 calendar
days prior to the date on which the meeting of the Board of Directors is held
to authorize the issuance of such New Securities. The Subscription Notice
shall set forth (i) the number of New Securities proposed to be issued to
Persons other than the Investor and the terms of such New Securities, (ii) the
consideration, if any, for which such New Securities are proposed to be issued
and the terms of payment, (iii) the number of New Securities offered to the
Investor in compliance with the provisions of this Section 9.7 and (iv) the
proposed date of issuance of such New Securities. Not later than 20 days
after such Board of Directors meeting authorizing such issuance is held, the
Investor shall notify the Company in writing whether it elects to purchase all
or any portion of the New Securities offered to the Investor pursuant to the
Subscription Notice. If the Investor shall elect to purchase any such New
Securities, the New Securities which it shall have elected to purchase shall
be issued and sold to the Investor by the Company at the same time and on the
same terms and conditions as the New Securities are issued and sold to third
parties (except that, if such New Securities are issued for consideration
other than cash, the Investor shall pay the Fair Market Value thereof). If,
for any reason, the issuance of New Securities to third parties is not
consummated, the Investor's right to its Pro Rata Share of such issuance shall
lapse, subject to the Investor's ongoing subscription right with respect to
issuances of New Securities at later dates or times. Notwithstanding any
other provision of this Agreement, if the Board of Directors shall authorize
the issuance of New Securities to any Person prior to the Closing and prior to
the consummation of an underwritten initial public offering of
<PAGE>
the Common Stock (other than any New Securities issued to (i) officers,
employees or directors of the Company pursuant to any employee stock
offering, plan or arrangement approved by the Company's Board of Directors,
(ii) any person or entity in connection with a Partnering Transaction, or
(iii) Novartis or its affiliates), the Company shall be obligated to offer to
the Investor, in accordance with the terms, conditions and procedures set
forth in the foregoing provisions of this Section 9(b), a Pro Rata Share of
such New Securities as though the Investor were then the owner of all of
the Shares. Notwithstanding the foregoing, in the event that the Company
issues New Securities in connection with a Partnering Transaction, the
Company shall, simultaneously with or promptly after such Partnering
Transaction, offer to the Investor, for the same purchase price, a number of
securities of the same class (and, where applicable, the same series) as such
New Securities equal to the product of (A) the Investor's Pro Rata Share
(expressed as a percentage) and (B) the sum of (i) the number of such New
Securities and (ii) the number represented by the Investor's Pro Rata Share of
such New Securities. The Investor shall have 20 days following its receipt of
such offer within which to deliver a notice of acceptance to the Company. If
the Investor elects to accept the offer, the closing of the transaction shall
take place on the tenth business day following such acceptance, or on such
other date as may be mutually agreed upon by the Company and the Investor.
9.8 Exchange of the Shares for Series F Convertible Preferred Stock.
In the event the Company shall not have consummated an underwritten initial
public offering of its Common Stock on or prior to the date that is one year
from the Closing Date, the Company agrees, upon the written request of holders
of all the then outstanding Shares, to exchange one share of Series F
Convertible Preferred Stock, par value $.001 per share, for each such
outstanding Share (as adjusted to reflect any stock split, stock dividend,
combination of shares or similar change affecting the Common Stock). Such
written notice shall be furnished to the Company within 30 days following the
first anniversary of the Closing Date (if the Company shall not have consummated
an underwritten initial public offering within one year after the Closing Date
as aforesaid). Such notice shall be accompanied by the certificates evidencing
the Shares for surrender and cancellation whereupon the Company shall issue and
deliver to each holder of Shares a certificate for the number of shares of
Series F Convertible Preferred Stock to which such holder is entitled. Upon
issuance and delivery thereof, Series F Convertible Preferred Stock shall be
duly authorized, validly issued and fully paid and non-assessable. The rights,
powers and privileges of the Series F Convertible Preferred Stock shall be
as set forth in the Certificate of Designation of Series F Convertible
Preferred Stock of Osiris Therapeutics, Inc. attached hereto as Exhibit G.
<PAGE>
10. Registration Rights; Compliance with the Act.
The Company covenants and agrees as follows:
10.1 Definitions. For purposes of this Section 10:
(a) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration
or ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Common Stock sold to
the Investor pursuant to this Agreement (or issued upon conversion of the
Series F Convertible Preferred Stock exchanged for the Shares pursuant to
Section 9.8) and (2) any Common Stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such Common Stock, excluding in all cases, however, (i) any Registrable
Securities sold by a person in a transaction in which his rights under this
Section 10 are not assigned, or (ii) any Registrable Securities sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction.
(c) The term "Holder" means any person owning or having the right to
registration of Registrable Securities hereunder; and
(d) The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Securities and Exchange Commission ("SEC")
which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
10.2 Form S-3 Registration. If the registration of Registrable
Securities under the Securities Act can be effected on Form S-3 (or any
successor short-form registration promulgated by the Securities and Exchange
Commission), subject to the provisions of this Section 10, the Company will use
reasonable best efforts to effect registration under the Securities Act on Form
S-3, including a Form S-3 shelf registration, of all or such portion of the
Registrable Securities as the Investor (or other Holder(s)) shall specify
by written notice given to the Company; provided, however, that the market
value of the Registrable Securities to be included in any such registration
shall be estimated to be at least $3,000,000 at the time of filing of such
registration statement (unless such Registrable Securities constitute all of
the Registrable Securities owned by the Investor or other Holder(s) at such
time), and provided further that the Company shall not be required to effect
more than three such registrations pursuant to this Section 10.2. The Company
shall maintain the effectiveness of any Form S-3 registration until all of the
Registrable Securities included in such registration statement have been
sold. The obligations of the Company to prepare and file a Form S-3
<PAGE>
registration statement pursuant to this Section 10.2 and to maintain such
registration pursuant to 10.3 shall be suspended during any period of time
that the Registrable Securities held by the Investor (or such Holder(s)) are,
in the opinion of Hogan & Hartson L.L.P. or other counsel to the Company
reasonably satisfactory to the Investor, eligible for resale without volume
limitation pursuant to Rule 144(k) under the Act.In case the Company shall
receive from the Investor (or other Holder(s)) a written request or requests
that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all of the Investor's or such
other Holder's Registrable Securities, or Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $3,000,000, the
Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders (if any); and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any
such registration, qualification or compliance, pursuant to this Section 10.2:
(1) if Form S-3 is not available for such offering by the Holders; (2) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$3,000,000 (unless such Registrable Securities constitute all of the
Registrable Securities owned by the Investor or other Holder(s) at such
time); (3) if the Company shall furnish to the Holders a certificate signed
by the President and Chief Executive Officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than 120 days after receipt of the request of the Holder
or Holders under this Section 10.2; or (4) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute
a general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so
<PAGE>
requested to be registered as soon as practicable after receipt of the request
or requests of the Holders. All expenses incurred in connection with the
registrations, qualifications and compliance requested pursuant to Section
10.2 (exclusive of underwriting discounts and commissions and any fees and
expenses of a special counsel to a selling shareholder) shall be paid by the
Company.
10.3 Company Registration. If after one year from the Closing Date (but
without any obligation hereunder to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for
stockholders other than the Holder(s)) any of its stock or other securities
under the Securities Act in connection with the public offering of such
securities (other than (i) a registration effected pursuant to Section 2.1 of
the Registration Rights Agreement dated December 31, 1996 by and between the
Company and the State of Maryland Department of Business and Economic
Development, as modified by a letter agreement of even date therewith (unless
consented to in writing by the State of Maryland Department of Business and
Economic Development), (ii) a registration effected pursuant to Section 2.1 of
any of the Registration Rights Agreements by and between the Company and the
purchasers of the Series E Convertible Preferred Stock (unless consented to in
writing by such purchasers), (iii) a registration effected pursuant to Section
7.3 of the Warrant Agreement dated September 24, 1993 by and between the
Company and Spencer Trask Securities Incorporated (unless consented to in
writing by the Holders of a Majority of the Warrant Shares (as such terms are
defined therein), (iv) a registration relating solely to the sale of
securities to current or former employees, officers, advisors, consultants or
directors of the Company or any subsidiary of the Company pursuant to a
stock purchase plan or stock option or stock awards approved by the Board of
Directors of the Company, (v) a registration on Form S-4 or any similar
successor form, (vi) a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or
(vii) a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities which are also
being registered), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after giving of such notice by the Company in
accordance with Section 11.9, the Company shall, subject to the provisions of
Section 10.4, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
The Company shall not be obligated to effect, or to take any action to effect,
any registration pursuant to this Section 10.3 if, at the time such
registration would otherwise be required, the Company delivers to the
Holder(s) seeking to have their Registrable Securities included in such
Registration an opinion of counsel, in form and substance reasonable
acceptable to such Holder(s), to the effect that the Registrable Securities
requested to be registered may then be sold or transferred pursuant to Rule
144(k) of the Securities Act.
<PAGE>
10.4 Underwriting Requirements. In connection with any offering
involving any underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 10.3 to include any of a Holder's
Registrable Securities in such underwriting unless such Holder accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the managing underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities of such stockholders that the
managing underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities owned by such stockholders,
including Registrable Securities, which the managing underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the Holder(s) and the
holders of other securities entitled to be included in such underwriting under
the terms of any registration rights agreement with the Company, according to
the total amount of Registrable Securities or other such securities entitled to
be included therein owned by each Holder and other holders or in such other
proportions as shall be agreed to by a majority in interest of the Holders and
such other holders, except as otherwise provided (i) in Sections 1.2(b) and 1.8
of the Investors' Rights Agreement dated May 25, 1994 by and between the
Company, and the Series C Investors and (ii) in Section 4(d) of the Placement
Agency Agreement dated June 25, 1993 by and between the Company and Spencer
Trask Securities Incorporated.
10.5 Obligations of the Company. Whenever required under this Section
10 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities sought to be included therein and use its best
efforts to cause such registration statement to become effective as promptly
as practicable.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may
<PAGE>
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Promptly notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
10.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 10 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition
of such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
10.7 Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 10.
10.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 10:
(a) The Company will indemnify and hold harmless each Holder registering
Registrable Securities for resale, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act , against any and all losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Securities Exchange Act, or any other statute or common
law of the United States of America
<PAGE>
or any other country or political subdivision thereof, including any amount
paid in settlement of any litigation commenced or threatened (including any
amounts paid pursuant to or in settlement of claims made under the
indemnification or contribution provisions of any underwriting or similar
agreement entered into by the Investor in connection with any offering or
sale of securities covered by this Agreement), and shall promptly reimburse
them, as and when incurred, for any legal or other expenses incurred by them
in connection with investigating any claims and defending any actions, insofar
as any such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act or the Securities Exchange Act;
provided, however, that the indemnity agreement contained in this subsection
10.8(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by the Investor or other Holder seeking indemnification.
(b) Each selling Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter, any other Holder selling securities in
such registration statement and any controlling person of any such underwriter
or other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, the Securities Exchange Act, or any other statute or common
law of the United States of America or any other country or political
subdivision thereof, including any amounts paid in settlement of any
litigation commenced or threatened (including any amounts paid pursuant to or
in settlement of claims made under the indemnification or contribution
provisions of any underwriting or similar agreement entered into by the
Company in connection with any offering or sale of securities covered by this
Agreement), and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation
<PAGE>
occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 10.8(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 10.6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 10.8(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
10.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 10.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due
to actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 10.6 to the extent of such
prejudice, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 10.6.
(d) The obligations of the Company and Holders under this Section 10.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 10 and otherwise.
10.9 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best efforts to:
<PAGE>
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its Common
Stock under Section 12 of the Securities Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of
the fiscal year in which the first registration statement filed by the
Company for an underwritten offering of its securities to the general public
is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of SEC Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule
or regulation of the SEC (exclusive of Rule 144A) which permits the selling of
any such securities without registration or pursuant to such form.
10.10 Amendment of Registration Rights. Any provision of Section 10
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of at least fifty-one percent
(51%) of the Registrable Securities then outstanding; and with the same
consent the Company may enter into a supplemental agreement for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of Section 10. Any amendment, waiver or supplemental
agreement effected in accordance with this Section 10.8 shall be binding
upon each Holder of any securities which are or at one time were Registrable
Securities (or which are or were convertible into Registrable Securities),
each future holder of all such securities, and the Company.
<PAGE>
11. Miscellaneous.
11.1 Survival of Warranties; Indemnification. (a) The warranties and
representations of the Company and the Investor contained in this Agreement
(other than those contained in Section 3.22) or in any certificate or other
instrument delivered at the Closing shall survive for a period of one year
following the Closing. The representations and warranties of the Company set
forth in Section 3.22 shall survive indefinitely until, by their respective
terms, they are no longer operative. The Company shall indemnify, defend and
hold the Investor and the Investor's directors, officers, employees, agents
and affiliates harmless against any and all liabilities, loss, cost or damage,
together with all reasonable costs and expenses related thereto (including
legal and accounting fees and expenses), arising from, relating to, or
connected with (i) the untruth, inaccuracy or breach of any statements,
representations, warranties or covenants of the Company contained in Section
3.22 or (ii)(A) any Release on, from or affecting any property of the Company
or any Subsidiary, whether on the premises of the Company or any Subsidiary
or through other Persons, and whether by the Company or any Subsidiary or any
predecessor to any of the businesses or assets of the Company or any
Subsidiary, of any hazardous materials, whether or not disclosed pursuant
to this Agreement, (B) any noncompliance by the Company or any Subsidiary
(or by any other Person with respect to any of the Company's or any
Subsidiary's property) with any Environmental Law, whether or not disclosed
pursuant to this Agreement, or (C) any environmental remediation expenses
associated with any property owned or leased at any time by the Company or
any Subsidiary, or the storage, transportation or disposal practices of the
Company or any Subsidiaries for pollutants, toxic or hazardous material,
hazardous substances, hazardous constituents or waste or any kind, whether
or not disclosed pursuant to this Agreement; provided, however, that the
Company's obligation of indemnity under this Section 11.1 shall not apply to
any liability, loss, cost or damage caused by or resulting from the negligence
or willful misconduct of the Investor. The foregoing indemnification shall
survive the termination of this Agreement for any reason.
11.2 Remedies. In case any one or more of the covenants or agreements
set forth in this Agreement shall have been breached by any party hereto, the
party or parties entitled to the benefit of such covenants or agreements may
proceed to protect and enforce their rights either by suit in equity or action
at law, including, but not limited to, an action for damages as a result of
any such breach or an action for specific performance of any such covenant or
agreement contained in this Agreement. The rights, powers and remedies of the
parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement
or law. No single or partial assertion or exercise of any right, power or
remedy of a party hereunder shall preclude any other or further assertion
or exercise thereof.
<PAGE>
11.3 Successors and Assigns. Except as otherwise expressly provided
in this Agreement, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties. Subject to Section 1.2 of this Agreement, this
Agreement and the rights and duties of the Investor set forth herein may be
freely assigned, in whole or in part, by the Investor to an Affiliate of the
Investor. In addition, the Investor may assign its rights under Section 10
hereof in connection with any permitted transfer by the Investor of all of the
Shares. Neither this Agreement, nor any of the rights or duties of the Company
set forth herein, shall be assigned by the Company, in whole or in part,
without having first received the written consent of the Investor.
Notwithstanding the foregoing sentence, the Company may assign this Agreement,
and the rights and the duties of the Company set forth herein, to an entity or
person which purchases all or substantially all of its assets or voting
securities, so long as the successor agrees in writing to be bound by all of
the terms of this Agreement. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
11.4 Entire Agreement. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings,
whether written or oral, with respect thereto; provided, however, that this
Agreement is not intended to supersede the Research Collaboration and License
Agreement of even date herewith between the Company and the Investor.
11.5 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware (without regard to the conflict of law
principles thereof).
11.6 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.
11.7 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.8 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
11.9 Notices. Unless otherwise provided, all notices. requests,
consents and other communications hereunder to any party shall be given in
<PAGE>
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or duly sent by first class registered or certified mail,
or other courier service, postage prepaid, or telecopied with a confirmation
copy by regular mail, and addressed or telecopied to the party to be notified
at the address or telecopier number indicated for such party at the address or
telecopier number, as the case may be, set forth below or such other address
or telecopier number, as the case may be, as may hereafter be designated in
writing by the addressees to the addressor listing all parties:
To the Company: Osiris Therapeutics, Inc.
2001 Aliceanna Street
Baltimore, Maryland 21231
Attention: James S. Burns
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: Alan L. Dye, Esq.
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Attention: Elliot M. Olstein, Esq.
To the Investor: Novartis Pharma AG
Lichtstrasse 35
CH-4002 Basel
Switzerland
Attention: Joseph Mamie
With a copy (which shall not constitute notice) to:
Robert L. Thompson, Jr., Esq.
Executive Vice President and
General Counsel
Novartis Corporation
556 Morris Avenue
Summit, New Jersey 07901
All such notices, requests, consents and other communications shall be deemed
to have been received: (a) in the case of personal delivery, on the date of
<PAGE>
such delivery; (b) in the case of mailing, on the seventh business day
following the date of such mailing; and (c) in the case of facsimile
transmission, when confirmed by facsimile machine report.
11.10 Finder's Fee. The Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' fee (and the reasonable costs and expenses of
defending against such liability or asserted liability) for which the Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the reasonable costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
11.11 Expenses. Each party shall pay its own fees and expenses with
respect to this Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or the Restated Articles, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party
may be entitled.
11.12 Amendments and Waivers. Except as provided in Section 8.8 of
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor.
11.13 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
ineffective, and the balance of the Agreement shall be interpreted as if such
provision were so excluded, without invalidating the remaining provisions of
this Agreement.
11.14 Confidentiality and Publicity. Neither the Company nor the
Investor will disclose to any person (other than its attorneys, accountants,
employees, officers and directors) the existence or terms of this Agreement or
any of the transactions contemplated hereby without the prior written consent
of the other party, except as may, in the reasonable opinion of such party's
counsel, be required by law (in which event the disclosing party will first
consult with the other party with respect to such disclosure). If the Company
is required to provide a copy of this Agreement or any related document to any
third party, the Company shall redact from such document, to the extent
permitted by law, all confidential information, and shall consult with the
Investor regarding such redaction prior to submission of this Agreement or
any related document to such third party. The Company and the Investor will
consult and reach agreement with one another as to the form and substance of
any press release or any other public disclosure of the existence or terms of
this Agreement or the transactions contemplated hereby.
<PAGE>
11.15 Termination. If each of the conditions set forth in Articles 5,6
and 7 have not been satisfied or waived (by the party entitled thereunder to
make such waiver) by 5:00 p.m., Maryland time, on December 31, 1997, this
Agreement shall terminate and be null, void and of no force or effect.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
NOVARTIS PHARMA AG
By: _________________________________
Name: ______________________________
Title: ______________________________
By: _________________________________
Name: ______________________________
Title: ______________________________
OSIRIS THERAPEUTICS, INC.
By: _/s/ James S. Burns______________
James S. Burns,
President and Chief Executive Officer
<PAGE>
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
Between
CASE WESTERN RESERVE UNIVERSITY
and
OSIRIS THERAPEUTICS, INC.
This agreement effective as of the 1st day of January, 1993 ("Effective
Date"), is between OSIRIS THERAPEUTICS, Inc., corporation domiciled in the
State of Ohio having an address at 11000 Cedar Avenue, Cleveland OH 44106
("OSIRIS"), and Case Western Reserve University, an Ohio non-profit
corporation having Its principal office at 2040 Adelbert Road, Cleveland,
Ohio ("CWRU").
BACKGROUND
CWRU, with principal activities in teaching and scholarship, makes its
capabilities available to commercial entities for research to the extent that
it complements and does not conflict with CWRU's principal activities. In this
spirit, CWRU is prepared to continue Its development relationship with OSIRIS
(a company created to commercialize the mesenchymal stem cell technology) and
to license the Technology, as that Item is defined in Article X below,
including that established by Dr. Arnold I. Caplan while working as a full-
time professor at CWRU. This license transfers the state-of-the-art of the
mesenchymal stem cell technology to OSIRIS, according to the terms and
conditions set forth below. This state-of-the-art includes patents and know-
how. Future. patents based on
<PAGE>
this know-how will be made in the name of CWRU and will be covered by the
royalty agreement stated herein If substantially invented at CWRU in the
future.
AGREEMENT
ARTICLE I: LICENSE
1.1 Grant and Subject Matter. CWRU grants OSIRIS a sole and exclusive
worldwide License, under Technology, Existing Patent Rights (to the extent not
owned by OSIRIS) and Developed Patent Rights ("License") to make, have made,
use and sell Product and Process (terms defined in Section 10), including the
right to grant sublicenses.
1.2 Term of Agreement. This Agreement shall be in full force and effect
from the date first set forth above and shall remain in effect for twenty-five
(25) years or until all patents Issued in all countries in accordance with this
License hereunder have expired or until otherwise terminated by operation of
law, whichever is last to occur, or by the acts of the parties in accordance
with the terms of this Agreement.
1.3 Retained Rights. CWRU will retain a royalty-free right to use the
Technology and patent rights of the License for any nonclinical research,
testing or educational purpose of CWRU. In no event shall CWRU have any right
to use the Technology or the patent rights of the License for any commercial
purpose whatsoever. In addition, the License will be subject to such rights as
are required to be accorded to any governmental agency as a consequence of
prior or contemporaneous funding for research or development of the subject
matter of the License.
1.4 Sublicenses. OSIRIS agrees to forward to CWRU a copy of any and all
fully executed sublicense agreements, and further agrees
<PAGE>
to forward annually a copy of such reports received by OSIRIS from Its
sublicensees during the preceding twelve (12) month period under the
sublicenses as shall be pertinent to a royalty accounting to CWRU under said
sublicense agreement.
1.5 The license granted under Existing Patent Rights is royalty-free.
1.6 The license granted under Developed Patent Rights is royalty-
bearing as provided in Paragraph 6.2.
ARTICLE II: TITLE
Except as provided in Section 3.1, CWRU shall retain title to the
subject matter of the License.
ARTICLE III: PATENTS
3.1 To the extent permitted by existing obligations, CWRU hereby
assigns all right, title and interest in and to Existing Patent Rights to
OSIRIS. OSIRIS shall bear all responsibility for, and shall take all actions
in connection with, the prosecution of the Existing Patent Rights. CWRU shall
cooperate with OSIRIS with respect to such prosecutions.
3.2 New Applications. CWRU shall own all Developed Patent Rights. In
the event either party hereto believes a patent application should be filed
with respect to the Technology, such party shall notify the other party hereto.
If OSIRIS fails to file such application within sixty (60) days after the date
of such notice, CWRU shall have the right to file the application in its own
name, at its own expense; provided, however, that CWRU's application must be
filed within six (6) months after the expiration of OSIRIS' sixty (60) day
filing period.
<PAGE>
If CWRU does not file within such six-month period, CWRU must give a new
notice to OSIRIS, and the process described above must be repeated in its
entirety, before CWRU shall have the right to file such application.
3.3 OSIRIS shall own any patent application which is directed to an
invention made by an employee of OSIRIS or by an Investigator when the
Investigator is working on the premises of OSIRIS.
3.4 Cost. OSIRIS will pay the cost of all patent applications filed by
it pursuant to Section 3.2.
3.5 Reports. The party filing the patent application pursuant to
Section 3.2 above shall keep the other informed in a timely manner of the
status of the application.
3.6 Infringement. Each party shall promptly notify the other party if
it becomes aware of any infringement of any patents licensed as part of this
Agreement. Neither OSIRIS nor CWRU shall have any obligation to Initiate
litigation to protect any patent or proprietary right granted under this
Agreement. However, each party will have the unqualified right to Initiate
legal action, or to fully participate in any legal action Initiated by the
other party, to protect its interests. In any litigation, each party and
their respective attorneys will cooperate with the other party. If OSIRIS
elects to institute suit against any third party to protect any patent or
proprietary rights granted under this Agreement, fifty percent (50%) of
associated costs (including reasonable attorneys' fees) which have been paid
by OSIRIS may be offset against royalties owed to CWRU pursuant to Article
VI, but such offsetting shall not exceed fifty percent (50%) of the total
royalties owed to CWRU. All damages awarded in any suit will belong
exclusively to the party Initiating the suit, except that
<PAGE>
the amounts offset pursuant to this Section 3.6 will be reimbursed to CWRU
from damages awarded to OSIRIS after OSIRIS's own legal costs have been
reimbursed.
3.7 In the event that litigation against OSIRIS is Initiated by a third-
party charging OSIRIS with Infringement of a patent of the third party as a
result of the manufacture, use or sale by OSIRIS of Product or Process for
which royalties are due to CWRU hereunder, OSIRIS shall promptly notify CWRU
in writing thereof. OSIRIS's costs as to any such defense shall be creditable
against any and all payments due and payable to CWRU under Article VI of this
Agreement but no royalty payment after taking into consideration any such
credit shall be reduced by more than 50%.
ARTICLE IV: CONFIDENTIALITY
4.1 Confidentiality. CWRU and OSIRIS agree to advise their respective
employees that it is necessary to hold in confidence all information received
from the other party in connection with the License ("Information") for a
period of two years following disclosure. The receiving party will use
reasonable efforts to prevent disclosure of such Information during such
period. This Section 4.1 shall not apply, however, to Information which:
(i) is now in or shall enter the public domain as the result of
its disclosure in a publication, the issuance of a patent or otherwise
without the legal fault of the receiving party;
(ii) the receiving party can prove was in Its possession in
written form at the time of disclosure by the other party; or
<PAGE>
(iii) comes into the hands of the receiving party by means of a
third party who is entitled to make such disclosure and who has no
obligation of confidentiality toward the disclosing party.
(iv) where disclosure is required under any applicable ruling,
regulation or law, including but not limited to regulatory filings.
(v) where disclosure is made through the filing of a patent
application.
Notwithstanding the foregoing, OSIRIS can disclose information to a
third party under an obligation of confidentiality similar to the obligation of
confidentiality under this agreement.
4.2 Remedies. Each party shall be entitled to injunctive relief if
there is a threat that Information that is the subject matter of the License
will be disclosed by the other party contrary to the terms of this agreement.
Each party shall notify the other party in writing of any proposed release of
Information thirty (30) days prior to release of such Information. The party
receiving such notice will have thirty (30) days to review the materials and
shall not unreasonably withhold permission for the Information to be released.
4.3 (a) During the period in which OSIRIS holds a license, CWRU and
Investigators (as defined in Paragraph 10.9) shall not, without OSIRIS' prior
written approval, distribute or allow Material (as defined in Paragraph 10.8)
to be distributed to for-profit entities or persons known to be employed
thereby or consulting or performing research therefor.
(b) CWRU and Principal Investigator (as defined in Paragraph 10.7)
shall have the right to transfer Material to not-for-profit entities or persons
known to be affiliated therewith provided that such entities
<PAGE>
or persons sign a material transfer agreement mutually agreed to by the
parties to this Agreement.
(c) Prior to any such distribution of any such Material, CWRU and
OSIRIS shall use best efforts to consider the patentability of such Material
and cooperate to file, where appropriate, a patent application for such
Material prior to Its distribution, in accordance with Article III of this
Agreement.
ARTICLE V: PUBLICATION
CWRU will provide OSIRIS with a copy of any proposed publication
relating to the Technology thirty (30) days prior to their submission for
publication. OSIRIS will have thirty (30) days from the date of receipt of
each such proposed publication to review the materials. Upon receipt within the
thirty-day (30) period of a written notice from OSIRIS identifying those
portions of the proposed publication for which it wishes publication delayed,
CWRU will use its best efforts either to cause the materials identified to be
deleted or to cause publication to be delayed for ninety (90) days
ARTICLE VI: ROYALTIES, CONSIDERATION AND PAYMENTS
6.1 Payment. OSIRIS agrees to pay to CWRU an amount equal to $83,061
for the licenses and rights granted under this Agreement and for the filing and
prosecution of Existing Patent Rights. Such amount shall be paid within
thirty (30) days of the initial financing of OSIRIS, which financing shall be
in an amount of at least $2,000,000, ("Initial Capitalization").
<PAGE>
6.2 Royalties. As consideration for the License, OSIRIS will pay CWRU
a royalty on all Product or Process providing that such Product or Process
where sold is covered by a claim of a granted patent which is a Developed
Patent Right licensed under this Agreement ("Royalty Bearing Product") as
follows.
(i) [*CONFIDENTIALITY REQUESTED*] of the Net Sales of Royalty Bearing
Products sold by OSIRIS; and
(ii) [*CONFIDENTIALITY REQUESTED*] of the royalties received by OSIRIS
from Its SUBLICENSEES' sales of a Royalty Bearing Product.
Provided, however, that with respect to each Royalty Bearing -Product
covered under either (I) or (II) above, no royalty shall be payable for the
first three years in which such Royalty Bearing Product is sold. Net Sales
shall be defined as the amount received from sales of all Royalty Bearing
Products less discounts, returns, transportation costs, insurance costs and
taxes of any kind whatsoever.
6.3 Royalty Payments. (a) Royalties due will be paid to CWRU every
year for the term of this Agreement on the 31st of March, and shall be
calculated according to the Net Sales of all Royalty Bearing Products during
the calendar year immediately preceding the year in which such royalty payments
are due. Each royalty payment shall be accompanied by an accounting showing
the calculation of net sales for the calendar year in question.
6.4 In the event that royalties are to be paid by OSIRIS to a party who
is not an Affiliate of OSIRIS for Royalty Bearing Product ("Other Royalties"),
for which royalties are also due to CWRU pursuant to Paragraph 6.2 then the
royalties to be paid to CWRU by OSIRIS pursuant to Paragraph 6.2 shall be
reduced by 50% of the amount of such Other
<PAGE>
Royalties, but in no event shall any royalties under Paragraph 6.2 be reduced
by more than fifty percent (50%).
6.5 Equity Interest to CWRU. CWRU will be sold 1,200 shares of
OSIRIS' Common Stock based on the Founders' capitalization in Appendix A.
The Initial Capitalization shall mean the first capitalization of the company
in which the total capital contribution is at least two million dollars. The
selling price shall be $0.10 per share. The shares will be sold in accordance
with a Restricted Stock Purchase Agreement which contains terms among others
that prior to an initial public offering OSIRIS or its designee will have a
right of first refusal with respect to a any transfer of the shares; and that
the shares will be subject to underwriter "lock-up" restrictions in any
underwritten offering.
6.6 Foreign currency conversions. When royalties accrue for currencies
other than United States dollars, payment to CWRU shall be in United States
dollars converted from that foreign currency at the average of the rates
established by BankAmerica for that foreign currency on the last business day
of each month of the calendar year which ended immediately preceding the day on
which OSIRIS pays such royalties to CWRU.
6.7 Audit Rights. CWRU has the right to inspect any books or records
of OSIRIS containing information which may be reasonably necessary for the
purpose of verifying the royalties payable to CWRU. This inspection is to be
made by an independent certified public accountant of CWRU's choice to whom
OSIRIS has no reasonable objection. The inspection is to be done at the
expense of CWRU, upon reasonable notice, during normal business hours and no
more than once per year.
<PAGE>
6.8 Initial Capitalization. If, by December 31, 1993, OSIRIS has not
received funding of at least $2 million ($2,000,000), this Agreement shall
terminate, unless extended by mutual agreement and OSIRIS shall, at its sole
expense, transfer to CWRU all right, title and interest in the Existing Patent
Rights.
6.9 Minimum Performance. if, after the sixth anniversary of the
Initial capitalization of OSIRIS, payments due to CWRU under Article VI fall
below fifty thousand dollars ($50,000) per year, the License granted by this
Agreement shall be terminated unless OSIRIS pays CWRU the difference between
the amount due and fifty thousand dollars ($50,000), unless extended by mutual
agreement.
ARTICLE VII: BREACH AND TERMINATION
7.1 Breach. If either party at any time commits any material breach of
the Agreement and fails to remedy It within thirty (30) days after receiving
written notice of the breach or such additional time as may be reasonably
required to effect the cure so long as the curing party Is continuing to
diligently pursue its efforts to cure, the aggrieved party may, at its option,
cancel this Agreement by notifying the other in writing. This remedy is in
addition to any other remedies to which it may be entitled. Any failure
to cancel this Agreement for any breach will not constitute a waiver by the
aggrieved party of its right to cancel this Agreement for any other breach
whether similar or dissimilar in nature.
7.2 Bankruptcy. CWRU may terminate this Agreement if OSIRIS files or
has filed against it a petition in bankruptcy which is not dismissed within
thirty (30) days, or files an assignment for benefit of creditors, or if a
receiver is appointed for all or part of its assets, or if it petitions for or
consents to any relief under any applicable insolvency,
<PAGE>
moratorium or similar statute. All rights and licenses granted to OSIRIS under
or pursuant to this Agreement are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights
to "intellectual property" as defined under Section 101(60) of the Bankruptcy
Code. The parties hereto agree that so long as OSIRIS, as a licensee of
such rights under this Agreement, shall continue to perform all obligations
under this Agreement, including but not limited to the making of timely
royalty payments, OSIRIS shall retain and may fully exercise all of its rights
and elections under the Bankruptcy Code, and pursuant to Section 365(n),
OSIRIS shall have the right to receive all current embodiments of the licensed
intellectual property. The parties hereto further agree that, in the event
that CWRU files or has filed against it a petition in bankruptcy which Is not
dismissed within thirty (30) days, or files an assignment for benefit of
creditors, or if a receiver Is appointed for all or part of its assets, or if
it petitions for or consents to any relief under any applicable insolvency,
moratorium or similar statue, OSIRIS shall have the right to retain and
enforce Its rights under this Agreement with respect to the Technology,
Existing Patent Rights and Developed Patent Rights.
7.3 Force Majeure. Each of the parties will be excused from
performance of this Agreement only to the extent that performance Is prevented
by conditions beyond the reasonable control of the party affected. The parties
will, however, use their best efforts to avoid or cure such conditions. The
party claiming such conditions as an excuse for delaying performance will give
prompt written notice of the conditions, and its intent to delay performance,
to the other party and will resume its performance as soon as performance Is
possible.
<PAGE>
7.4 Effect of Termination. OSIRIS' License shall terminate
simultaneously with any termination of this Agreement. Except as provided in
Section 6.8 above, expiration, cancellation or termination of this Agreement
will not affect any previously vested or accrued rights of either party under
this Agreement. Upon termination of this Agreement by either party, in whole
or as to any specified patent or any claim of such patent, OSIRIS shall provide
CWRU with a written inventory of all products affected by such termination in
process of manufacture, in use or in stock and shall request each sublicensee
to provide such written inventory. OSIRIS and Its sublicensees shall have the
right to sell off such inventory unless OSIRIS is the subject of a pending or
threatened product liability claim.
7.5 Effect of termination of this Agreement on sublicenses. Any
sublicense granted by OSIRIS under this Agreement shall provide for automatic
assignment to CWRU of OSIRIS interest therein upon termination of this
Agreement. CWRU agrees to accept such assignment and the sublicense shall
remain in full force and effect as a direct license from CWRU in accordance
with the terms and conditions thereof. CWRU agrees to confirm in writing Its
obligations under this Paragraph to a sublicensee at the request of OSIRIS.
7.6 Termination. OSIRIS shall have the right to terminate this
Agreement or any of the licenses granted hereunder in any country upon
providing CWRU with sixty (60) days prior written notice.
<PAGE>
ARTICLE VIII: REPRESENTATIONS AND WARRANTIES
8.1 Agreements. Each party represents that, to the best of its
knowledge, this Agreement does not violate any of its prior commitments or
agreements.
8.2 Claims. Each party represents that, to the best of Its knowledge,
there are no legal actions, pending or threatened, which would question this
Agreement or the right of either party to perform its obligations under
this Agreement.
8.3 Authorization by CWRU. CWRU warrants that execution and
performance of this Agreement have been duly authorized by all necessary
corporate actions.
8.4 Authorization by OSIRIS. OSIRIS warrants that execution and
performance of this Agreement have been duly authorized by all necessary
corporate actions.
8.5 Patentability, Infringement. CWRU makes no representation or
warranties of any kind other than those of this Article VIII including but not
limited to warranties of patentability, merchantability or fitness for a
particular purpose.
8.6 CWRU represents that to the best of its knowledge, CWRU owns all
right, title and interest in and to Existing Patent Rights and that all
Investigators will be obligated to assign all right, title and interest in and
to Technology and Developed Patent Rights to CWRU.
ARTICLE IX: MISCELLANEOUS
9.1 Indemnification.
(a) OSIRIS will defend, indemnify and hold CWRU harmless from any loss,
cost, damage, liability or expense imposed, on CWRU as a
<PAGE>
result of any third party claim arising from OSIRIS' use, application or
marketing of any Product or Process arising from this Agreement.
(b) CWRU will defend, indemnify and hold OSIRIS harmless from any loss,
cost, damage, liability or expense imposed on OSIRIS as a result of any claim
arising from CWRU's breach of any term or provision of this Agreement.
(c) The party to be indemnified shall promptly notify the indemnifying
party of any claim to be indemnified. The indemnifying party shall have the
right to control the defense, settlement or compromise of any claim.
9.2 Insurance. OSIRIS shall not commence selling on a commercial basis
of any Products in connection with this License until it has obtained for
itself or for CWRU at Its own cost or special arrangements and expense,
comprehensive general liability and products liability insurance with limits of
at least [*CONFIDENTIALITY REQUESTED*] per occurrence/[*CONFIDENTIALITY
REQUESTED*] aggregate, and naming CWRU as additional insured. Upon the start of
human clinical trials of any Product OSIRIS shall obtain comprehensive general
liability insurance in accordance with the foregoing. Such insurance shall be
provided by insurers of recognized responsibility and well-rated by national
organizations, and each policy shall state that the insurer will not terminate
it or significantly reduce coverage without giving CWRU at least forty-five
(45) days prior written notice. The product liability insurance shall provide
worldwide coverage and shall be on an "occurrence" basis. If such insurance
is not available when OSIRIS is ready to commence human clinical trials or
selling Products, CWRU agrees to waive the insurance requirement until such
insurance becomes available if and only if OSIRIS has and maintains a net
worth of at least [*CONFIDENTIALITY REQUESTED*]
<PAGE>
as determined by a review of OSIRIS' books conducted at OSIRIS' expense by an
independent firm of certified public accountants mutually satisfactory to CWRU
and OSIRIS. After the Initial review, CWRU may have further reviews conducted
from time to time, but not more than once each year.
9.3 Sublicense. OSIRIS shall require all of Its sublicensees hereunder
to indemnify and hold harmless CWRU under the same terms as stated in Section
9.1(a) and to carry comprehensive general liability insurance and product
liability insurance with limits of at least [*CONFIDENTIALITY REQUESTED*] per
occurrence/[*CONFIDENTIALITY REQUESTED*] aggregate naming CWRU as an
additional insured under the same terms as Section 9.2.
9.4 Independent Contractors. OSIRIS and CWRU are independent
contractors, and neither shall have any responsibility for the work performed
by or on behalf of the other except to the extent expressly set forth in this
Agreement.
9.5 Use of Name. OSIRIS will not use the name of CWRU, related schools
or departments in any publication or marketing materials without the written
consent of CWRU. CWRU will not use the name of OSIRIS in any publication or
marketing materials without the written consent of OSIRIS.
9.6 Assignment. This Agreement Is not assignable or transferable
except with the written consent of both parties; consent will not be withheld
unreasonably, except that OSIRIS without the consent of CWRU may assign this
Agreement to an Affiliate or to a transferee of all or substantially all of
the portion of the business to which this Agreement relates. Any such
assignee or transferee of OSIRIS' interest shall expressly assume in writing
the performance of all of the terms and
<PAGE>
conditions of this Agreement to be performed by OSIRIS and such assignment
shall not relieve OSIRIS of any of its obligations under this Agreement. Any
assignment or transfer without such consent or covered by such exception
shall be void.
9.7 Registration. OSIRIS agrees to register this Agreement when
required by local or federal law and to pay all costs and legal fees connected
with such registration.
9.8 Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of and be binding upon the respective successors,
permitted assigns and legal representatives of the parties hereto.
9.9 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio, excluding that body of law
applicable to choice of law.
9.10 Headings. The headings and captions used in this Agreement do not
form part of this Agreement, but are included solely for convenience.
9.11 Notices. All notices required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery to the party to be notified or five (5) days after deposit with the
United States Postal Service, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
party below, or at such other address as such party may designate by ten (10)
days prior notice to the other party hereto:
<PAGE>
If to OSIRIS: Copy to:
OSIRIS Therapeutics, Inc. Elliot M. Olstein, Esq.
Carella, Byrne, Bain, Gilfilian,
11000 Cedar Avenue Cecohi & Stewart
Cleveland, Ohio 44106 6 Becker Farm Road Roseland,
Attn: President New Jersey 07068
If to CWRU:
Dean of Graduate Studies and Research
Case Western Reserve University
2040 Adelbert Road
Cleveland, Ohio 44106
9.12 Amendments and Waivers. No modification of this Agreement will
be signed by both parties.
9.13 Illegality. If any term or condition of this Agreement is
contrary to applicable law, that term or condition will not apply and will not
invalidate any other part of this Agreement. However, if Its deletion
materially and adversely changes the position of either of the parties, the
affected party may terminate the Agreement by giving thirty (30) days written
notice.
9.14 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior discussions, understandings and
agreements with respect thereto.
<PAGE>
ARTICLE X: DEFINITIONS
10.1 Technology. The term "Technology" shall mean any and all existing
or future information, technical data, inventions, discoveries or know-how, and
materials whether or not patented or patentable, related to or useful for the
identification, Isolation, purification, propagation or use of mesenchymal
stem cells and/or cells or products derived from or produced by mesenchymal
stem cells, which are conceived, developed or reduced to practice by an
Investigator during the term of this Agreement while performing research at
CWRU.
10.2 Product(s). The term "Product(s)" shall mean any article,
composition, apparatus, substance, chemical, material, method or service which
is, incorporates or utilizes Technology or the use, manufacture, import or sale
of which is covered by a claim of any patent licensed hereunder.
10.3 Process(es). The term "Process(es)" shall mean any process or
method for the production, manufacture or use of any Product or which is
covered by any patent licensed hereunder.
10.4 The term "Affiliate" as applied to OSIRIS shall mean any company
or other legal entity other than OSIRIS in whatever country organized,
controlling, or controlled by or under common control with OSIRIS. The term
"control" means possession, direct or indirect, of the powers to direct or
cause the direction of the management and policies whether through the
ownership of voting securities, by contract or otherwise.
10.5 Principal Investigator. The term "Principal Investigator" shall
mean either or both of Drs. Arnold I. Caplan and Stephen E Haynesworth
<PAGE>
10.6 Material. The term "Material(s)" shall mean any material,
biologic, or substance, which is Technology, including but not limited to,
cells, cell lines, vectors, antibodies, DNA (RNA) sequences, libraries,
plasmids, cytokines, peptides, and proteins, which is discovered, produced or
derived by an Investigator during the term of this Agreement.
10.7 Investigator. The term "Investigator" shall mean Principal
Investigators, any other member of CWRU staff, graduate student, undergraduate
student or employee of CWRU who works with or under the direction of a
Principal Investigator.
10.8 "Existing Patent Rights" shall mean (I) A Method for Isolating,
Purifying and Culturally Expanding Marrow-Derived Mesenchymal Cells (U.S.
Patent Application No. 615,430) ; (II) Monoclonal Antibodies Specific for
Marrow-Derived Mesenchymal Cells (U.S. Patent Application No. 718,917); (III)
A Method and Device for Enhancing the Implantation and Differentiation of
Marrow-Derived Mesenchymal Cells (U.S. Patent Application No. 614,915); and
(IV) A Method and Device for Treating Connective Tissue Disorders (U.S. Patent
Application No. 614,912); any division, continuation, or continuation-in-part
thereof and any foreign patent application or equivalent corresponding thereto
and any Letters Patent or the equivalent thereof in any country of the world
issuing thereon or reissue or reexamination or extension thereof.
10.9 "Developed Patent Rights" shall mean any and all patents and
patent applications anywhere in the world which contains one or more claims
directed to Technology, which is not an Existing Patent Right.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
on the dates indicated below:
CWRU: OSIRIS:
FOR CASE WESTERN RESERVE FOR OSIRIS THERAPEUTICS, INC.
UNIVERSITY:
_/s/ R. James Hendersen__________ _/s/ James S. Burns________________
Name: R. James Hedersen Name: James S. Burns
Title: VP Finance & Administration Title: President
Date: March 25, 1993 Date: March 30, 1993
<PAGE>
Appendix A
OSIRIS THERAPEUTICS, INC.
Founders & Case Western Reserve University Capitalization
FOUNDING SCIENTISTS* FOUNDERS
Shareholder Shares % Shareholder Shares %
Arnold I. Caplan 15,600 65.0 Arnold I. Caplan 15,600 55.7
Victor M. Goldberg 6,720 28.0 Victor M. Goldberg 6,720 24.0
S. E. Haynesworth 1,660 7.0 S. E. Haynesworth 1,680 6.0
Case Western R. U. 1,200 4.3
James S. Burns ** 2,800 10.0
________ _____ ______ _____
TOTAL 24,000 100.0 28,000 100.0
* Case Western Reserve University ("CWRU") purchases 1,200 shares of
Osiris Therapeutics, Inc. Common Stock at a price of $0.10 per share,
equivalent to 5.0% of the Common Stock issued to the Company's three
founding scientists (the "Founding Scientists"). Upon issuance of shares
of Osiris Common Stock to Case Western Reserve University, the
Founding Scientists and CWRU will together constitute the Company's
founders (collectively, the "Founders")
** James S. Burns, the Company's Chairman, President & Chief Executive
Officer has purchased 2,800 shares of Osiris Common Stock on the same
basis as the Founders in exchange for funding the Company's initial
working capital requirements. The CEO's and Founders' Common Stock
will together constitute the Company's founding shareholders prior to the
sale of additional shares to key employees, adivsors, or investors in the
Company's Initial Capitalization.
<PAGE>
RESEARCH AND LICENSE AGREEMENT
This Agreement dated 23rd day of December, 1994 is between The Johns
Hopkins University, a corporation of the State of Maryland, having a principal
place of business at 720 Rutland Avenue, Baltimore, Maryland 21205 (hereinafter
referred to as "JHU" and Gryphon Pharmaceuticals, Inc., a Delaware corporation
(hereinafter the "Company") having an initial address at 1629 Thames Street,
Suite 400, Baltimore, MD 21231.
WITNESSETH:
WHEREAS, as a center for research and education, JHU is interested in
licensing PATENT RIGHTS (hereinafter defined) in a manner that will benefit
the public by facilitating the distribution of useful products and the
utilization of new methods, but is without capacity to commercially develop,
manufacture and distribute any such products or methods; and
WHEREAS, Company desires to commercially develop, manufacture, use and
distribute such products and processes covered by PATENT RIGHTS throughout the
world;
ARTICLE 1 - DEFINITIONS
1.1 "AFFILIATED COMPANY" or "AFFILIATED COMPANIES" shall mean any
corporation, company, partnership, joint venture or other entity which
controls, is controlled by or is under common control with the Company. For
purposes of this Paragraph 1.1, control shall mean the direct or indirect
ownership of at least fifty percent (50 %). In addition, for purposes of this
Agreement, Company and Osiris Therapeutics, Inc. ("OSIRIS") are not AFFILIATED
COMPANIES.
1.2 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on the EFFECTIVE DATE, and each subsequent twelve (12) month period
thereafter.
1.3 The term "BACKGROUND MATERIALS" shall mean the following biological
materials currently existing in the JHU laboratories of PRINCIPAL
INVESTIGATORS: (i) CD34+ cell fractions and (ii) cDNA and other libraries
derived from CD34+ mRNA.
<PAGE>
1.4 The term "PATENT RIGHT(s)" shall mean (i) any patent application or
patent or equivalent thereof, anywhere in the world including, but not limited
to any division, continuation, or continuation-in-part re-examination, reissue
or extension issuing thereon, which is owned by JHU and it contains one or
more claims to any RESEARCH TECHNOLOGY and/or BACKGROUND MATERIALS, and (ii)
the patents and patent applications tabulated in Exhibit B.
1.5 "EFFECTIVE DATE" of this License Agreement shall mean the date the
last party hereto has executed this Agreement.
1.6 "EXCLUSIVE LICENSE" shall mean a grant by JHU to Company of its
entire right and interest in the PATENT RIGHTS, subject to rights retained by
the United States government in accordance with P.L. 96-517, as amended by P.L.
98-620, and subject to the retained right of JHU to make, have made, provide
and use LICENSED PRODUCT(S) and LICENSED SERVICES, for its and The Johns
Hopkins Health Systems' non-profit, noncommercial research purposes or with
LICENSED PRODUCT obtained from LICENSEE for the treatment or diagnosis of
patients by JHU or the Johns Hopkins Health System and in such case Company
will exert reasonable efforts to make such LICENSED PRODUCT available to
JHU or in the alternative JHU may produce same if not available from the
Company.
1.7 The term "FIELD OF RESEARCH" shall mean the isolation,
purification and identification of novel hematopoietic and/or mesenchymal
stem/progenitor cell populations, their genes and gene products and other
materials, reagents and biologics (such as, for example, growth factor
receptors, protein kinases and other signal transduction molecules) involved
in the self renewal, proliferation, inhibition or differentiation of
hematopoietic and/or mesenchymal stem/progenitor cells.
1.8 "FOUNDING SCIENTISTS" shall mean, collectively, Drs. Curt l. Civin
and Donald Small.
1.9 The term "INVESTIGATOR" shall mean PRINCIPAL INVESTIGATORS, JHU
faculty members, graduate students, undergraduate students, fellows or
employees of JHU who shall work under the direction of PRINCIPAL INVESTIGATORS
on the research funded in whole or part by the Company pursuant to this
Agreement.
<PAGE>
1.10 The term "LICENSED PRODUCT" shall mean any article, composition,
apparatus, substance, chemical, material, method, process or service the
manufacture, import, sale or use of which is covered by PATENT RIGHTS.
1.11 "LICENSED SERVICE(S)" means the performance on behalf of a third
party of any method or the use of any product or composition, the manufacture,
use or sale of which is covered by PATENT RIGHTS.
1.12 The term "LICENSED TERRITORY" shall mean all countries of the
world.
1.13 "NET SALES" subject to Paragraph 4.9 shall mean gross sales
revenues received by the Company or an AFFILIATED COMPANY from the sale of
LICENSED PRODUCT(S) less trade discounts allowed, refunds, returns and recalls,
rebates, transportation and transportation-related insurance costs, itemized
on a bill or invoice, and sales taxes.
In the event that Company, AFFILIATED COMPANY or SUBLICENSEE sells a
LICENSED PRODUCT in combination with other ingredients or components which are
not LICENSED PRODUCT(S) (such other ingredients or components being "Other
Items"), then the NET SALES for purposes of royalty payments on the
combination shall be calculated as follows:
(a) If all LICENSED PRODUCT(S) and Other Items contained in the
combination are available separately, the NET SALES for purposes of royalty
payments will be calculated by multiplying the NET SALES of the combination by
the fraction M(A+B), where A is the separately available price of all LICENSED
PRODUCT(S) in the combination, and B is the separately available price for all
Other Items in the combination.
(b) If the combination includes Other Items which are not sold
separately (but all LICENSED PRODUCT(S) contained in the combination are
available separately), the NET SALES of the combination multiplied by the
fraction A/C, where A is as defined above and C is the invoiced price of the
combination.
(c) If the LICENSED PRODUCTS contained in the combination are
not sold separately, the NET SALES for such combination shall be NET SALES
multiplied by D/C where C is as defined above and D is the fair market value of
LICENSED PRODUCTS in the combination. The fair market value will be determined
by negotiation between the
<PAGE>
parties; should the parties fail to reach an agreement, the issue will be
brought to binding arbitration in accordance with the rules of the American
Arbitration Association, as set forth in Paragraph 7.5.
The term "Other Items" does not include solvents, diluents, carriers,
excipients, or the like used in formulating a product.
1.14 "NET SERVICE REVENUES" shall mean actual revenues received for
the performance of LICENSED SERVICE less sales and/or use taxes imposed upon
and with specific reference to the LICENSED SERVICE, trade discounts allowed,
refunds and rebates.
If a LICENSED SERVICE is offered in combination with another service or
services, NET SERVICE REVENUES for purposes of determining royalties on the
LICENSED SERVICE shall be calculated by multiplying the NET SERVICE REVENUES
[as defined above, but applied to the combination services], by the fraction
A/(A+B), where A is the invoice price of the LICENSED SERVICE and B is the
invoice price of the other service or services in the combination if sold
separately.
1.15 The term "PRINCIPAL INVESTIGATOR(S)" shall mean Dr. Curt Civin and
Dr. Donald Small.
1.16 The term "RESEARCH TECHNOLOGY" shall mean any data, formulas,
process information or other information, material, substance, invention or
discovery, whether or not patentable, conceived or first actually or
constructively reduced to practice during the period when research is being
supported under this Agreement solely or jointly by at least one INVESTIGATOR
while acting as an INVESTIGATOR and in his capacity as a JHU faculty member,
graduate student, undergraduate student, fellow or employee of JHU, which is in
the FIELD OF RESEARCH or which is the direct result of research funded in whole
or in part by the Company pursuant to Paragraph 5.1 of this Agreement.
1.17 The term "SUBLICENSEE" shall mean any non-AFFILIATED COMPANY
licensed by Company to make, have made, import, use or sell any LICENSED
PRODUCT.
1.18 "VALID CLAIM" shall mean a claim of an issued patent which has not
lapsed or become abandoned or been declared invalid or unenforceable by a
court of competent jurisdiction or an administrative agency from which no
appeal can be or is taken.
<PAGE>
ARTICLE 2- GRANTS
2.1 Subject to the terms and conditions of this Agreement JHU hereby
grants to the Company an EXCLUSIVE LICENSE under the PATENT RIGHTS and a non-
exclusive license under RESEARCH TECHNOLOGY and BACKGROUND MATERIAL to make,
have made, use and sell the LICENSED PRODUCT(S) and to provide the LICENSED
SERVICE(S) in the LICENSED TERRITORY.
2.2 Company may sublicense others under this Agreement and shall
provide a copy of each such sublicense agreement to JHU promptly after it is
executed. Each sublicense shall be consistent with the non-financial terms of
this Agreement.
2.3 Company shall have the right to extend its license rights granted
under Paragraph 2.1 to its AFFILIATED COMPANIES; however, such AFFILIATED
COMPANIES must agree in writing to be bound by the terms of this Agreement with
a copy of such agreement promptly sent to JHU after it is executed.
ARTICLE 3- PATENT INFRINGEMENT
3.1 Each party will notify the other promptly in writing when any
infringement of the PATENT RIGHTS by another is uncovered or suspected.
3.2 Company shall have the first right to enforce any patent within
PATENT RIGHTS against any infringement or alleged infringement thereof, and
shall at all times keep JHU informed as to the status thereof. Company may, in
its sole judgment and at its own expense, institute suit against any such
infringer or alleged infringer and control, settle, and defend such suit in a
manner consistent with the terms and provisions hereof and recover, for its
account, any damages, awards or settlements resulting therefrom, subject to
Paragraph 3.4. This right to sue for infringement shall not be used in an
arbitrary or capricious manner. JHU shall reasonably cooperate in any such
litigation at Company's expense.
3.3 If Company elects not to enforce any patent within the PATENT
RIGHTS, then it shall so notify JHU in writing within six (6) months of
receiving notice that an infringement exists, and JHU may, in its sole judgment
and at its own expense, take steps to enforce any patent and control, settle,
and defend such suit in a manner consistent with the terms
<PAGE>
and provisions hereof, and recover, for its own account, any damages, awards
or settlements resulting therefrom.
3.4 Any recovery by Company under Paragraph 3.2 shall be deemed to
reflect loss of commercial sales, and Company after reimbursing JHU out of the
recovery for amounts credited pursuant to the next sentence shall pay to JHU
fifteen percent (15 %) of the recovery net of all reasonable costs and
expenses associated with each suit or settlement. One-half (1/2) of the costs
and expenses incurred by the Company pursuant to Paragraph 3.2 shall be
credited against royalties payable by Company to JHU hereunder in connection
with sales in the country of such legal proceedings, provided, however, that
any such credit under this Paragraph 3.4 shall not exceed fifty percent (50 %)
of the royalties otherwise payable to JHU with regard to sales in the country
of such action in any one calendar year, with any excess credit being carried
forward to future calendar years.
3.5 In the event that litigation against Company is initiated by a
third party charging Company with infringement of a patent of the third party
in a country as a result of the manufacture, use or sale by Company of a
LICENSED PRODUCT or LICENSED SERVICE in that country Company shall promptly
notify JHU in writing thereof. Company's costs as to any such defense in that
country shall be creditable against any and all payments due and payable to
JHU under Paragraph 4.5 of this Agreement with respect to that LICENSED PRODUCT
and/or LICENSED SERVICE in that country. No royalty payment after taking into
consideration any such credit under this Paragraph 3.5 shall be reduced by
more than fifty percent (50%).
3.6 In the event of a judgment in any suit in which a court of
competent jurisdiction rules that the manufacture, use or sale by Company in
a country of a LICENSED PRODUCT or LICENSED SERVICE covered by a PATENT RIGHT,
in that country has infringed on a third party's patent requiring Company to
pay damages or a royalty to said third party in that country, or in the event
of a settlement of such suit requiring damages or back royalty payments to be
made, payments due to JHU under Paragraph 4.5 of this Agreement arising from
the applicable LICENSED PRODUCT or LICENSED SERVICE shall be correspondingly
reduced in that country by the amounts due under the requirement of such
judgment or under the terms of such settlement. The royalty payment after
taking into
<PAGE>
consideration any such reduction under this Paragraph 3.6 shall not be
reduced by more than fifty percent (50%).
3.7 In any infringement suit against a third party, either party hereto
may institute to enforce the PATENT RIGHTS pursuant to this Agreement, the
other party hereto shall, at the request of the party initiating such suit,
cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available relevant records, papers,
information, samples, specimens, and the like. All reasonable out-of-pocket
costs incurred in connection with rendering cooperation requested hereunder
shall be paid by the party requesting cooperation.
ARTICLE 4- PAYMENTS. ROYALTY. RESEARCH SUPPORT AND EQUITY
4.1 Company shall reimburse JHU for JHU's past and future costs
associated with preparing, filing, maintaining and prosecuting PATENT RIGHTS in
accordance with Article 6.
4.2 The Company shall reimburse JHU for its costs in outside legal fees
to review the corporate formation and shareholder documents; such reimbursement
shall not exceed [*CONFIDENTIALITY REQUESTED*].
4.3 The Company shall pay to JHU an up front processing fee of
[*CONFIDENTIALITY REQUESTED*]; of which [*CONFIDENTIALITY REQUESTED*] is
due within thirty (30) days from the EFFECTIVE DATE of this Agreement, and
[*CONFIDENTIALITY REQUESTED*] is due on May 30, 1995. For each new invention
in RESEARCH TECHNOLOGY for which an original (i.e., not continuational or
divisional) U.S. Patent application is filed, Company shall pay JHU an
additional [*CONFIDENTIALITY REQUESTED*] processing fee at the time of such
filing.
4.4 The Company shall pay to JHU a [*CONFIDENTIALITY REQUESTED*] annual
maintenance fee due within thirty (30) days of each anniversary of the
EFFECTIVE DATE of this Agreement.
4.5 The Company shall pay to JHU one of the following royalties which
shall be due and payable sixty (60) days after June 30 and December 31 for
LICENSED PRODUCTS sold or LICENSED SERVICES provided in the respective half-
year period:
<PAGE>
a. [*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED PRODUCTS or
NET SERVICE REVENUE of LICENSED SERVICES which are therapeutics,
and [*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED PRODUCTS
or NET SERVICE REVENUE of LICENSED SERVICES in the case of
diagnostics, sold or provided by the Company or an AFFILIATED
COMPANY licensed under this Agreement which in the country where
made, sold or provided are covered by a VALID CLAIM included in
PATENT RIGHTS.
b. The higher of (i) [*CONFIDENTIALITY REQUESTED*] of royalties
received by the Company from a SUBLICENSEE other than Osiris
Therapeutics, Inc. or its affiliates hereunder for LICENSED PRODUCTS
sold or LICENSED SERVICES provided by such SUBLICENSEE which in the
country where made, sold or provided is covered by a VALID CLAIM
included in PATENT RIGHTS or (ii) an amount equal to
[*CONFIDENTIALITY REQUESTED*] of such SUBLICENSEE'S NET SALES from
LICENSED PRODUCTS sold or NET SERVICE REVENUE of LICENSED SERVICES
provided by such SUBLICENSEES and covered by a VALID CLAIM included
in PATENT RIGHTS. However, if Osiris Therapeutics, Inc. or its
affiliates are the SUBLICENSEE, Company shall pay [*CONFIDENTIALITY
REQUESTED*] of NET SALES of LICENSED PRODUCTS or NET SERVICE REVENUE
of LICENSED SERVICES sold or produced by Osiris Therapeutics, Inc.
which in the country where made, sold or provided is covered by a
VALID CLAIM included in PATENT RIGHTS.
4.6 In the event royalties are due hereunder with respect to a LICENSED
SERVICE solely because such service, involves the use of a LICENSED PRODUCT,
for the purposes of calculating royalties hereunder, NET SALES for the
LICENSED PRODUCT and/or NET SERVICE REVENUES for the LICENSED SERVICE shall be
based on the price of the LICENSED PRODUCT, respectively in arm's length
transactions. If no such transactions have taken place, such price shall be
determined by mutual agreement of the parties and if such agreement is not
reached within sixty (60) days, either party shall have the right to submit a
<PAGE>
determination of price to binding arbitration according to the rules of the
American Arbitration Association as set forth in Paragraph 7.5.
4.7 The Company shall provide to JHU within sixty (60) days of the end
of each June 30 and December 31, after the EFFECTIVE DATE of this Agreement, a
written report to JHU of the amount of LICENSED PRODUCTS sold, and LICENSED
SERVICES sold, the total NET SALES and NET SERVICE REVENUES of such LICENSED
PRODUCTS and LICENSED SERVICES, and the running royalties due to JHU as a
result of NET SALES and NET SERVICE REVENUES by Company, AFFILIATED COMPANIES
and SUBLICENSEES. Payment of any such royalties due shall accompany such
report. So long as Company, an AFFILIATED COMPANY or a SUBLICENSEE is
developing a LICENSED PRODUCT under this Agreement, a report shall be
submitted at the end of every June 30 and December 31 after the EFFECTIVE
DATE of this Agreement and will include a full written report describing the
Company's, AFFILIATED COMPANIES or SUBLICENSEE'S technical efforts under
Article 7.
4.8 The Company shall make and retain, for a period of three (3) years
following the period of each royalty report required by Paragraph 4.7, true
and accurate records, files and books of account containing all the data
reasonably required for the full computation and verification of sales and
other royalty related information required in Paragraph 4.7. Such books and
records shall be in accordance with generally accepted accounting principles
consistently applied. The Company shall permit the inspection and copying of
such records, files and books of account by JHU or its agents during regular
business hours upon ten (10) business days' written notice to the Company.
Such inspection shall not be made more than once each calendar year. All costs
of such inspection and copying shall be paid by JHU, provided that if any
such inspection shall reveal that an underpayment error has been made in the
amount equal to ten percent (10%) or more of such payments in a calendar year,
such costs shall be borne by the Company. The Company shall include in any
agreement with its AFFILIATED COMPANIES or SUBLICENSEES which permits
such party to make, use or sell the LICENSED PRODUCT(S) or provide LICENSED
SERVICES, a provision requiring such party to retain records of sales of
LICENSED PRODUCT(S) and records of LICENSED
<PAGE>
SERVICES and other information as required in Paragraph 4.7 and permit JHU to
inspect such records as required by this Paragraph 4.8.
4.9 In order to insure JHU the full royalty payments contemplated
hereunder, the Company agrees that in the event any LICENSED PRODUCT shall be
sold to an AFFILIATED COMPANY, then the royalty due hereunder shall be based on
the higher of (i) NET SALES of the LICENSED PRODUCT to the AFFILIATED COMPANY
or (ii) the NET SALES of the AFFILIATED COMPANY from the resale of such
LICENSED PRODUCT.
4.10 In order to insure JHU the full royalty payments contemplated
hereunder, the Company agrees that in the event any LICENSED PRODUCT or
LICENSED SERVICE shall be sold to other than an AFFILIATED COMPANY for partial
or full future compensation then such future compensation when received shall
be included in NET SALES for the purpose of paying royalties hereunder. In
addition, if Company sells LICENSED PRODUCT or LICENSED SERVICES to a person or
entity in whom Company has an ownership interest other than an AFFILIATED
COMPANY and JHU can demonstrate that such sale was other than an arms length
transaction, then NET SALES shall include any additional amount that would have
been paid in an arms length transaction.
4.11 All payments under this Agreement shall be made in U.S. Dollars.
4.12 To the extent royalty is owed to a third party for patents held by
that party covering the making, using or selling of a LICENSED PRODUCT or
LICENSED SERVICE in a particular country, the royalty due to JHU under
Paragraph 4.5 for such LICENSED PRODUCT or LICENSED SERVICE in such country
will be reduced by one-half (1/2) such royalty paid to such third party;
however, in no event shall such royalty due to JHU for such LICENSED PRODUCT or
LICENSED SERVICE be less that [*CONFIDENTIALITY REQUESTED*] of NET SALES or NET
SERVICE REVENUES.
4.13 Any tax required to be withheld by Company under the laws of any
foreign country for the account of JHU, shall be promptly paid by Company for
and on behalf of JHU to the appropriate governmental authority, and Company
shall use its best efforts to furnish JHU with proof of payment of such tax.
Any such tax actually paid on JHU's behalf shall be deducted dollar for dollar
from royalty payments due JHU.
<PAGE>
4.14 Only one royalty shall be due and payable for the manufacture, use
and sale of a LICENSED PRODUCT or a LICENSED SERVICE irrespective of the number
of patents or claims thereof which cover {he manufacture, use or sale of such
LICENSED PRODUCT or LICENSED SERVICE.
4.15 The Company shall pay to JHU the following payments which are due
on the occurrence of each of the following milestones:
[*CONFIDENTIALITY REQUESTED*] upon completion of Phase II
or J/II FDA trial for each LICENSED PRODUCT
[*CONFIDENTIALITY REQUESTED*] upon issuance of NDA or PLA
for each LICENSED PRODUCT
ARTICLE 5 - SPONSORED BASIC RESEARCH
5.1 Company shall provide the following research support (full direct
and normal JHU indirect expenses) to JHU to support research in the JHU
laboratories of PRINCIPAL INVESTIGATORS pursuant to Paragraph 5.2; the
research support (full direct and normal JHU indirect expenses) for each
annual period shall be paid quarterly on July 1st, October 1st, January 1st,
April 1st:
Annual Support Period
[*CONFIDENTIALITY REQUESTED*] July 1, 1994 - June 30, 1995
[*CONFIDENTIALITY REQUESTED*] July 1, 1995 - June 30, 1996
[*CONFIDENTIALITY REQUESTED*] July 1, 1996 - June 30, 1997
[*CONFIDENTIALITY REQUESTED*] July 1, 1997 - June 30, 1998
[*CONFIDENTIALITY REQUESTED*] July 1, 1998 - June 30, 1999
Failure to make any of the above quarterly research payments will be a
material breach of this License Agreement.
<PAGE>
The parties acknowledge that Company has already advanced
[*CONFIDENTIALITY REQUESTED*] towards the first years payment. Accordingly, it
is agreed that [*CONFIDENTIALITY REQUESTED*] will be paid by Company to JHU on
January 1, 1995 and [*CONFIDENTIALITY REQUESTED*] on April 1, 1995.
5.2 (a) Each quarterly amount provided under Paragraph 5.1 will be
equally ivided between PRINCIPAL INVESTIGATORS and used for basic research
activities in identifying natural or synthesized molecules involved in the
proliferation, commitment differentiation and regulation of hematopoietic stem/
progenitor cells and their progeny. JHU, based on the recommendation of the
Founding Scientists, will prepare a budget for the upcoming year and a
statement of work. The budget and work statement for the first year will be
completed within ninety (90) days after the effective date of this Agreement
and attached hereto as Exhibit D.
(b) If a PRINCIPAL INVESTIGATOR ceases to be employed by JHU, the
research specified above will be reduced one half (1/2) and applied to the
laboratory of the remaining PRINCIPAL INVESTIGATOR; however, if both PRINCIPAL
INVESTIGATOR(S) leave the employment of JHU, the research funding will be
reduced by one hundred percent (100%). The Company agrees to enter into a
written agreement substantially in the form of this Agreement with such
PRINCIPAL INVESTIGATOR'(S) new employing institution relative to continuing
the research funding and licensing of technology provided that such
institution is willing to enter into such agreement, PRINCIPAL INVESTIGATORS
are a third party beneficiary of Company's obligations under this Paragraph
5.2(b).
(c) Within sixty (60) days after the end of each AGREEMENT YEAR,
JHU shall provide Company with an accounting of the expenditure of research
funds for such year in accordance with JHU's standard procedures for such
accounting. Any funds granted hereunder which have not been expended by JHU
within the year shall be continued to be used to fund research under this
Agreement. Any funds which have not been expended upon any termination of the
research funding shall be returned to the Company.
(d) During the period during which Company is funding research
under this Agreement, neither PRINCIPAL INVESTIGATOR may seek or accept funding
from a commercial sponsor in the FIELD OF RESEARCH but may accept funding from
the
<PAGE>
government, not-for-profit organizations and other universities. Company
acknowledges that the PRINCIPAL INVESTIGATORS can continue to receive funding
from Ceilco Incorporated, pursuant to a Research Agreement signed March 23,
1994 and that research conducted under such Research Agreement will not be in
violation of any terms and conditions of this Agreement; provided that the
scope of the work currently being performed under that Research Agreement will
not be expanded nor will that Research Agreement be amended without the prior
approval of Company.
(e) Beginning on the effective date of this Agreement and
thereafter unless sooner terminated, JHU shall:
(i) through the PRINCIPAL INVESTIGATORS conduct research, and
apply the funds paid by Company to support the expenses of research and shall
use reasonable efforts and diligence consistent with JHU's professional
standards to achieve the goals for such research;
(ii) promptly and systematically disclose to Company, RESEARCH
TECHNOLOGY and Company shall be entitled to use such RESEARCH TECHNOLOGY
pursuant to Paragraph 2.1;
(iii) for the purpose of facilitating disclosure to Company of
RESEARCH TECHNOLOGY, permit duly authorized employees of or representatives of
Company to visit the PRINCIPAL INVESTIGATORS' laboratories at JHU or other JHU
facilities where research is conducted at reasonable times and with reasonable
notice;
(iv) promptly advise Company of any Invention and adequate
advance notice of the intent to file, filing, allowance and issuance of any
PATENT RIGHT;
(v) at Company's request provide Company with BACKGROUND
MATERIALS and reasonable research quantities of materials produced or derived
from the research conducted herein ("MATERIALS"); and
(vi) JHU shall, on a continuing basis, advise Company of the
results of the research sponsored hereunder and at least once every twelve (12)
months provide Company with written progress reports concerning such research.
A final written report setting forth in detail the results achieved under and
pursuant to such research shall be submitted by JHU to Company within ninety
(90) days of termination of the research. Such final report shall
<PAGE>
include (1) a complete summary of the research carried out; (2) a scientific
assessment by the PRINCIPAL INVESTIGATORS of the research; and (3) detailed
experimental protocols of the assays performed in the course of the research.
5.3 The PRINCIPAL INVESTIGATORS will assure that all faculty, students,
fellows or other employees of JHU working in their laboratories on the
research project or collaborating with them on the research funded by Company
hereunder sign the Invention Agreement (Exhibit A).
5.4 (a) During the period in which Company holds a license, JHU and
PRINCIPAL INVESTIGATORS shall not, without Company's prior written approval,
distribute or knowingly allow any materials which are RESEARCH TECHNOLOGY to
be distributed to for-profit entities or persons known to be employed thereby
or consulting or performing research therefor other than under a license
permitted under this Agreement.
(b) JHU and PRINCIPAL INVESTIGATORS shall have the right to
transfer materials which are RESEARCH TECHNOLOGY to (i) not-for-profit entities
or persons known to be affiliated therewith, or (ii) to any person or entity,
if required by a journal in connection with a publication or if required by
Government rules and/or regulations, provided that such entities or persons
sign the Material Transfer Agreement set forth in Exhibit C or a modification
thereto agreeable to JHU and Company. The PRINCIPAL INVESTIGATORS shall notify
Company before any such distribution is made.
(c) Prior to any such distribution of any such MATERIALS, JHU and
Company shall use reasonable efforts to consider the patentability of such
MATERIALS and cooperate to file, where appropriate, PATENT RIGHTS protecting
such MATERIALS prior to their distribution.
5.5 Notwithstanding anything else to the contrary, JHU and PRINCIPAL
INVESTIGATORS agree not to publish or disclose to third parties RESEARCH
TECHNOLOGY without supplying Company with a copy of the material to be
disclosed or published to third parties at time of submission for publication
or disclosure so that Company may evaluate such material to determine whether
the material contains patentable subject matter on which a patent application
should be filed, Company shall review the material within fifteen (15) days of
submission to Company. At Company's request, JHU initially will delay
<PAGE>
publication and/or disclosure for an additional thirty (30) days in order to
enable the preparation and filing of a patent application on any such
patentable subject matter. Notwithstanding anything to the contrary, JHU will
not be required to withhold publication of such material for a period which is
more than forty-five (45) days after Company is first provided with the
material to be disclosed or published.
ARTICLE 6 - PATENT RIGHTS AND CONFIDENTIAL INFORMATION
6.1 (a) JHU, at the Company's expense, shall file, prosecute and
maintain all patents and patent applications specified under PATENT RIGHTS upon
authorization of the Company and the Company shall be licensed thereunder.
Tide to all such patents and patent applications shall reside in JHU. JHU
shall have full and complete control over all patent matters in connection
therewith under the PATENT RIGHTS. The Company will provide payment
authorization to JHU at least one (1) month before an action is due, provided
that the Company has received timely notice of such action from JHU. Failure
to provide authorization can be considered by JHU as a Company decision not to
authorize an action. In any country where the Company elects not to have a
patent application filed or to pay expenses associated with filing,
prosecuting, or maintaining a patent application or patent, JHU may file,
prosecute, and/or maintain a patent application or patent at its own expense
and for its own exclusive benefit and the Company thereafter shall not be
licensed under such patent or patent application.
(b) For patent applications in PATENT RIGHTS that are jointly
owned by JHU and the Company, the Company shall file, prosecute and maintain
all such patents and patent applications and the Company shall be licensed
thereunder. Title to all such patents and patent applications shall reside
jointly in JHU and the Company.
(c) The parties shall first consult with each other as to the
preparation, filing, prosecution and maintenance of such applications and
patents. Each party shall keep the other advised as to all developments with
respect to all patent applications and patents included in PATENT RIGHTS and
shall promptly supply the other: (i) copies of all official correspondence from
the U.S. Patent Office or from a patent office in any other country within a
reasonable time after receipt; and (ii) copies of all substantive papers to be
filed in the U.S. Patent Office or a patent office in any other country a
reasonable time prior to filing to provide
<PAGE>
sufficient time to comment thereon. In any country where a party elects not
to file a patent application or to pay expenses associated with filing,
prosecuting, or maintaining a patent application or patent, the other party
may file, prosecute, and/or maintain a patent application or patent at
its own expense and for its own exclusive benefit and thereafter the party so
electing shall not have tide to or be licensed under such patent or patent
application.
6.2 Company agrees that all packaging containing individual LICENSED
PRODUCT(S) sold by Company, AFFILIATED COMPANIES and SUBLICENSEES will be
marked with the number of the applicable patent(s) licensed hereunder in
accordance with each country's patent laws.
6.3 If necessary, the parties will exchange information which they
consider to be confidential. The recipient of such information agrees to accept
the disclosure of said information which is marked as confidential at the time
it is sent to the recipient, and to employ all reasonable efforts to maintain
the information secret and confidential, such efforts to be no less than the
degree' of care employed by the recipient to preserve and safeguard its own
confidential information. The information shall not be disclosed or revealed
to anyone except employees of the recipient who have a need to know the
information and who have entered into a secrecy agreement with the recipient
under which such employees are required to maintain confidential the
proprietary information of the recipient and such employees shall be advised
by the recipient of the confidential nature of the information and that the
information shall be treated accordingly. The recipient's obligations under
this Paragraph 6.3 shall not extend to any part of the information:
a. that can be demonstrated to have been in the public domain or publicly
known and readily available to the trade or the public prior to the
date of the disclosure; or
b. that can be demonstrated, from written records to have been in the
recipient's possession or readily available to the recipient from
another source not under obligation of secrecy to the disclosing party
prior to the disclosure; or
c. that becomes part of the public domain or publicly known by
publication or otherwise, not due to any unauthorized act by the
recipient.
<PAGE>
d. that can be demonstrated, from written records, to have been developed
by the recipient independently of the disclosed information.
The obligations of this Paragraph 6.3 shall also apply to AFFILIATED COMPANIES
and/or SUBLICENSEES provided such information by Company. JHU's, the
Company's, AFFILIATED COMPANIES, and SUBLICENSEES' obligations under this
Paragraph 6.3 shall extend until three (3) years after the termination of this
Agreement. Notwithstanding the foregoing, Company, AFFILIATED COMPANIES and/or
SUBLICENSEES shall have the right to disclose Confidential Information of JHU
to a third party who undertakes an obligation of confidentiality and non-use
with respect to such information at least as restrictive as the obligations
under this Paragraph 6.3
ARTICLE 7- TERM. MILESTONES AND TERMINATION
7.1 This Agreement shall expire in each country on the date of
expiration of the last to expire patent included within PATENT RIGHTS in that
country or if no patents issue seventeen (17) years from the EFFECTIVE DATE of
this Agreement at which time Company shall have a fully paid up noncancellable
license.
7.2 For each PATENT RIGHT Company agrees to exercise reasonable efforts
and to take effective steps, within a reasonable time to (i) identify product
candidate(s) which are LICENSED PRODUCT(S) (ii) perform pre-clinical animal
and toxicological studies for each identified product candidate, (iii) conduct
clinical studies aimed at obtaining FDA regulatory approval for each
identified product candidate and (iv) develop and commercialize each such
product, provided however, a LICENSED PRODUCT need not be identified and
developed for a PATENT RIGHT if a similar product is being developed under
another PATENT RIGHT. Company's obligations under this paragraph shall take
into account the stage of development thereof and regulatory consideration and
requirements. The efforts of a SUBLICENSEE, an AFFILIATE, a collaborator and
research funded under this Agreement shall be considered as efforts of the
Company.
7.3 (a) As part of the efforts under Paragraph 7.2, Company shall
exercise reasonable efforts to meet the following milestones within the time
set forth below:
<PAGE>
(i) within four (4) years from the earlier of (i) the closing
of the Second Round Financing (as defined in the Stock Purchase Agreement
between the parties), or (ii) October 1, 1997 initiate Phase I clinical trials
of a LICENSED PRODUCT.
(ii) within three (3) years from the identification of a
product candidate as set forth in Paragraph 7.2, start the Phase I clinical
study of such LICENSED PRODUCT.
(iii) within seven (7) years from the start of the Phase I
Study of each product candidate, obtain FDA commercial approval (NDA/PLA) of
such LICENSED PRODUCT
(b) JHU will; not unreasonably withhold its consent to Company's
request for a reasonable extension of any of the above milestones if the
Company can demonstrate that its inability to meet such milestone occurred as a
result of reasons beyond the control of Company (including scientific or
regulatory reasons beyond the control of Company).
(c) If, as to a specific LICENSED PRODUCT, Company fails to
exercise reasonable efforts as required by Paragraphs 7.2 or meet milestones
required by 7.3, as its sole and exclusive remedy JHU may terminate Company's
license with respect thereto, provided however, if in good faith Company has
pursued research and development of such LICENSED PRODUCT and in good faith
Company intends to pursue research and development of such LICENSED PRODUCT and
reasonably appears to have the ability to do so and thereafter in good faith
does continue to do so, JHU's sole and exclusive remedy shall be conversion
of the exclusive rights and license for such specifically defined LICENSED
PRODUCT to non-exclusive rights and licenses.
7.4 Company can market and sell LICENSED PRODUCT(S) and LICENSED
SERVICE(S) to third parties at a sales price determined by Company in its sole
discretion.
7.5 Any matter or disagreement arising under Paragraphs 1.13(c), 4.6,
7.2 or 7.3 shall be submitted to a mutually selected single arbitrator to so
decide any such matter or disagreement. The arbitrator shall conduct the
arbitration in accordance with the Rules of the American Arbitration
Association, unless the parties agree otherwise. If the parties are unable to
mutually select an arbitrator, the arbitrator shall be selected in accordance
with the procedures of the American Arbitration Association. The decision by
the arbitrator shall be final and
<PAGE>
binding and may be enforced in any court of competent jurisdiction. Any
arbitration pursuant to this section shall be held in Washington, D.C., or
such other place as may be mutually agreed upon in writing by the parties.
7.6 After NDA or PLA has been obtained from the FDA, Company shall
exercise commercially reasonable efforts to market a product included in
LICENSED PRODUCTS in the U.S. and worldwide, provided that Company has obtained
regulatory approval in a particular foreign nation or region.
7.7 In the event that a third party notifies JHU that it desires to
develop and market a LICENSED PRODUCT which is not being researched and/or
developed and/or marketed by Company, an AFFILIATED COMPANY or SUBLICENSEE, JHU
shall notify Company in writing thereof. If Company does not notify JHU within
ninety (90) days of such written notice that Company or an AFFILIATED
COMPANY or SUBLICENSEE intends to research and develop such LICENSED PRODUCT
and does not initiate such research and development in accordance with the
provisions of paragraph 7.2 hereof with a reasonable time thereafter, Company
shall enter into good faith negotiations with such third party for granting a
sublicense for such LICENSED PRODUCT unless the granting of such sublicense
would have a potential adverse commercial effect upon marketing and/or selling
of a LICENSED PRODUCT which is being researched, developed, or sold pursuant
to this Agreement.
7.8 Except as provided in Paragraphs 7.2 and 7.3, upon breach or
default of any of the terms and conditions of this Agreement, the defaulting
patty shall be given written notice of such default in writing and a period of
sixty (60) days after receipt of such notice to correct the default or breach.
If the default or breach is not corrected within said sixty (60) day period,
the party not in default shall have the right to terminate this Agreement.
7.9 Company may terminate this Agreement or any of the licenses granted
herein under any PATENT RIGHT in any country, for any reason, upon giving JHU
sixty (60) days written notice.
7.10 Termination shall not affect JHU's right to recover unpaid
royalties or fees or reimbursement for patent expenses incurred pursuant to
Paragraph 6.1 prior to termination. Upon termination all rights in and to the
licensed technology (including PATENT RIGHTS) shall revert to JHU at no cost to
JHU.
<PAGE>
7.11 Upon any termination of this Agreement Company, at its option,
shall be entitled to finish any work-in-progress which is completed within six
(6) months of termination of this Agreement and to sell any completed inventory
of a LICENSED PRODUCT covered by this Agreement which remains on hand as of the
date of the termination, so long as Company pays to JHU the royalties
applicable to said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
7.12 In the event that this Agreement and/or the rights and licenses
granted under this Agreement to Company are terminated, any sublicense granted
under this Agreement shall remain in full force and effect as a direct license
between JHU and the SUBLICENSEE under the terms and conditions of the
sublicense agreement, subject to the SUBLICENSEE agreeing to be bound directly
to JHU under such terms and conditions of the sublicense as well as all the
relevant duties and obligations of a licensee under this Agreement (other
than royalty and other payment obligations which shall be paid in accordance
with the sublicense provided the JHU receives a royalty of at least two
percent of the SUBLICENSEE's NET SALES) within thirty (30) days after JHU
provides written notice to the SUBLICENSEE of the termination of Company's
rights and licenses under this Agreement, provided further that JHU's
obligations under such sublicense are no greater than currently existing
under this Agreement. At the request of the Company, JHU will acknowledge to a
SUBLICENSEE, JHU's obligations to the SUBLICENSEE under this paragraph.
ARTICLE 8- MISCELLANEOUS
8.1 All notices pertaining to this Agreement shall be in writing and
sent certified mail, return receipt requested, to the parties at the following
addresses or such other address as such party shall have furnished in writing
to the other party in accordance with this Paragraph 8.1:
FOR JHU: Dr. Francis J. Meyer
Assistant Dean for Technology Licensing
The Johns Hopkins University
School of Medicine
2024 East Monument Street
Suite 2-100
<PAGE>
Baltimore, MD 21205
FOR COMPANY: Mr. James S Burns
President and CEO
Gryphon Pharmaceuticals, Inc.
1629 Thomas Street
Suite 400
Baltimore, MD 21231
CC: Carella, Byrne, Bain, Gilfillan,
Ceechi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Attn: Elliot M. Olstein, Esq.
8.2 All written progress reports, royalty and other payments, and any
other related correspondence shall be in writing and sent to:
FOR JHU: Francis 3. Meyer, Ph.D.
Assistant Dean for Technology Licensing
The Johns Hopkins University
School of Medicine
2024 East Monument Street
Suite 2-100
Baltimore, MD 21205
or such other addressee which JHU may designate in writing from time to time.
Checks are to be made payable to "The Johns Hopkins University".
8.3 This Agreement is binding upon and shall inure to the benefit of
Company, its successors and assignees and shall not be assignable to another
party without the written consent of JHU, which consent shall not be reasonably
withheld, except that the Company shall have the right to assign this
Agreement to another party without the consent of JHU in the case of the sale
or transfer or merger or consolidation of the Company or sale or transfer by
the Company to that party of all, or substantially all, of its assets or all
or substantially all of the portion of its assets to which this Agreement
relates, provided the assignee undertakes to be bound by and perform the
obligations of the assignor under this Agreement.
8.4 In the event that any one or more of the provisions of this
Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement,
<PAGE>
or over any of the parties hereto to be invalid, illegal or unenforceable,
such provision or provisions shall be reformed to approximate as nearly as
possible the intent of the parties, and if unreformable, shall be divisible
and deleted in such jurisdictions; elsewhere, this Agreement shall not be
affected.
8.5 The construction, performance, and execution of this Agreement
shall be governed by the laws of the State of Maryland.
8.6 (a) The Company and its AFFILIATED COMPANIES and its SUBLICENSEES
shall not use the names, likenesses, or logos of JHU or any of its schools or
divisions or The Johns Hopkins Health Systems or any of its constituent parts
and affiliated hospitals and companies, such as The Johns Hopkins Hospital or
any contraction or derivative thereof or the names of JHU's faculty members,
employees, and students in any press releases, general publications,
advertising, marketing, promotional or sales literature without prior written
consent from an authorized official of JHU which consent shall not be
unreasonably withheld. It should be understood that JHU does not allow any
use of its name for the endorsement of products.
(b) Notwithstanding Paragraph 8.6(a), the Company shall have the
right to use the name of JHU in agreements between Company and OSIRIS and in
any SEC filing (including but not limited to 8K statements), fundraising
documents and the like and in any case where such use is required by law, rule
or regulation provided that the Company shall provide JHU with the appropriate
documents and papers which use the name of JHU for JHU's review and comment no
less than three (3) business days prior to the anticipated date of submission
of such documents or papers.
(c) All notifications relating to the use of JHU's name as
required herein shall be made to the person listed below:
Francis J. Meyer, Ph.D.
Assistant Dean of Technology Licensing
Johns Hopkins University
Office of Technology Licensing
2024 East Monument Street
Suite 2-100
Baltimore, MD 21205
<PAGE>
8.7 JHU warrants that it has good and valid title to its interest in
the inventions claimed under PATENT RIGHTS with the exception of certain
retained rights of the United States government. In addition, JHU warrants that
it has not licensed or assigned any right or interest in or to PATENT RIGHTS to
any third party, and the granting of such rights to Company hereunder does not
require the consent of a third party; and JHU is not aware as of the
EFFECTIVE DATE of this Agreement of any legal or contractual restriction which
would inhibit its ability to perform the terms and conditions imposed on it by
this Agreement. JHU does not warrant the validity of any patents or that
practice under such patents shall be free of infringement. EXCEPT AS EXPRESSLY
SET FORTH IN THIS PARAGRAPH 8.7, Company, AFFILIATED COMPANIES AND
SUBLICENSEES AGREE THAT THE PATENT RIGHTS ARE PROVIDED "AS IS", AND THAT JHU
MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF
LICENSED PRODUCT(S) AND LICENSED SERVICES INCLUDING THEIR SAFETY,
EFFECTIVENESS, OR COMMERCIAL VIABILITY. JHU DISCLAIMS ALL WARRANTIES WITH
REGARD TO PRODUCT(S) AND SERVICES LICENSED UNDER THIS AGREEMENT, INCLUDING,
BUT NOT LIMITED TO, ALL WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. NOTWITHSTANDING ANY OTHER P
MENT, JHU ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON THE PART
OF JHU AND INVESTIGATORS, FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT,
INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS' AND EXPERTS' FEES,
AND COURT COSTS (EVEN IF JHU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, FEES OR COSTS), WHICH DAMAGES ARISE OUT OF OR RESULT FROM THE
MANUFACTURE, USE, OR SALE OF THE PRODUCT(S) AND SERVICES LICENSED UNDER THIS
AGREEMENT. Company, AFFILIATED COMPANIES AND SUBLICENSEES A AS DEFINED IN
THIS AGREEMENT.
<PAGE>
8.8 The Company shall defend and hold JHU, The Johns Hopkins Health
Systems, their present and former trustees, officers, inventors of PATENT
RIGHTS, agents, faculty, employees and students harmless as against any third-
party judgments, fees, expenses, or other costs arising from or incidental to
any product liability or other lawsuit, claim, demand or other action brought
as a consequence of the practice of the inventions of LICENSED PRODUCTS or
LICENSED SERVICES by Company or its AFFILIATED COMPANIES or its SUBLICENSEES
or those operating for its account or third parties who purchase LICENSED
PRODUCT(S) or LICENSED SERVICES from any of the foregoing entities whether
or not JHU or said inventors, either jointly or severally, is named as a party
defendant in any such lawsuit, except those which arise from the gross
negligence or willful misconduct of any of parties indemnified hereunder.
Practice of the inventions covered by LICENSED PRODUCT(S) and LICENSED
SERVICES, by an AFFILIATED COMPANY or an agent or a SUBLICENSEE or a third
party on behalf of or for the account of the Company or by a third party who
purchases LICENSED PRODUCT(S) and LICENSED SERVICES from the Company, shall
be considered the Company's practice of said inventions for purposes of this
Paragraph 8.8. The obligation of the Company to defend and indemnify as set
out in this Paragraph 8.8 shall survive the termination of this Agreement.
8.9 Prior to initiating first commercial sale of any LICENSED PRODUCT
or LICENSED SERVICE as the case may be in any particular county, the Company
shall establish and maintain, or in the alternative maintain for JHU in each
country in which Company, an AFFILIATED COMPANY or SUBLICENSEE shall test
or sell LICENSED PRODUCT(S) and LICENSED SERVICES, product liability
or other appropriate insurance coverage with respect to LICENSED PRODUCT(S)
and LICENSED SERVICES which coverage shall be similar to that maintained by
Companies at a stage of development similar to Company for similar products
provided that such insurance is available at terms, conditions and costs which
are commercially reasonable and prudent under the circumstances. Upon JHU's
request, the Company will furnish JHU with a Certificate of Insurance of each
product liability insurance policy obtained. JHU shall be listed as an
additional insured in Company's said insurance policies.
8.11 This Agreement constitutes the entire understanding between the
parties with respect to the obligations of the parties with respect to the
subject matter hereof, and
<PAGE>
supersedes and replaces all prior agreements, understandings, writings, and
discussions between the parties relating to said subject matter.
8.12 This Agreement may be amended and any of its terms or conditions
may be waived only by a written instrument executed by the authorized officials
of the parties or, in the case of a waiver, by the party waiving compliance.
The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its right at a later time to
enforce the same. No waiver by either party of any condition or term in any
one or more instances shall be construed as a further or continuing waiver of
such condition or term or of any other condition or term.
8.13 This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
8.14 Upon termination of this Agreement for any reason, Paragraphs 6.3,
7.1, 7.10, 8.6, 8.7, 8.8, 8.9 (to the extent Company, AFFILIATED COMPANIES and/
or SUBLICENSEES are selling or providing LICENSED PRODUCTS or LICENSED SERVICES
under the licenses granted under this agreement) and 8.14 shall survive
termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF the respective parties hereto have executed this
Agreement by their duly authorized officers on the date appearing below their
signatures.
THE JOHNS HOPKINS UNIVERSITY GRYPHON PHARMACEUTICALS, INC.
By: _/s/ David A. Blake____________ By: _/s/ James S. Burns_______________
David A. Blake, Ph.D. James S. Burns
Executive Vice Dean President and CEO
Date: _12/29/94___________________ Date: _12/23/94____________________
I have read, understand and agree to abide by the terms of this Agreement
By: _/s/ Curt I. Civin____ By: _/s/ Donald Small________
Curt I. Civin, M.D. Donald Small, M.D., Ph.D.
Date: _12/23/94 Date: _12/23/94
<PAGE>
EXHIBIT A
INVENTION AGREEMENT
The following individuals who are employees or students of THE JOHNS
HOPKINS UNIVERSITY (hereinafter ?'JHU") hereby agree to assign to JHU all their
right and title to all inventions, mprovements and applicable patent rights
conceived and/or made by them during the course of their research at JHU with
respect to which Gryphon Pharmaceuticals, Inc. ("Gryphon") has rights under a
Research and License Agreement with JHU. The following individuals further
acknowledge that the invention will be licensed pursuant to the JHU/Gryphon
Research and License Agreement and that, only if listed as an inventor on an
issued patent, will he or she be entitled to participate in the running
royalties if any received, for such invention as allocated pursuant to
University policy.
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
<PAGE>
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT B
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
EXHIBIT C
Dear :
John Hopkins University (JHU) agrees to provide you the material(s)
indicated below, which you requested from __________________________ for your
nonclinical research studies as such studies are described in Appendix A
attached hereto. In order to protect JHU's proprietary rights in the
material(s) or its (their) progeny portions, and derivatives thereof
(hereinafter "Materials"), we request that you and an authorized official of
your institution sign, date, and return this letter agreement to us.
Material(s) identification:
Acceptance of the Material(s) by your institution confirms your agreement
to the following conditions:
1. This agreement and the resulting transfer of the Material(s)
constitute a nonexclusive license to use the Material(s) for
nonprofit, nonclinical research purposes only as described in
Appendix A. The Material(s) will not be used in humans and will be
stored, used, and disposed of in accordance with applicable law and
regulations. The Material(s) will not be used for research for any
commercial purpose or in research sponsored by a commercial entity.
This agreement is not assignable and the Material(s) may not be
transferred to another party.
2. You are free to publish your work involving this Material(s). You
agree to provide JHU with a copy of any publication which contains
results obtained from use of the Material(s).
3. JHU makes no representations whatsoever as to the Material(s). They
are experimental in nature and are provided WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. JHU MAKES NO REPRESENTATION OR
WARRANTY THAT THE USE OF THE MATERIAL(S) WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHT.
4. Except where precluded by Federal law and to the extent allowed by
State law, you and your institution agree to defend, indemnify, and
hold harmless JHU, its trustees, officers, employees, and agents
from any loss, claim, damage, or liability, of any kind whatsoever,
which may arise from you or your institution's use, storage, or
disposal of the Material(s) or any other material that could not
have been made but for the Material(s), except to the extent such
arise due to the gross negligence of JHU.
<PAGE>
To indicate you and your institution's agreement to these conditions,
you and an authorized official should sign and date this letter in the spaces
indicated below and return it to me. If you have any questions concerning
this agreement, you may call me at 410-955-4666.
Sincerely,
Francis J. Meyer, Ph.D.
Assistant Dean for Technology Licensing
FJM:
Signature: ____________________________________
(Recipient Investigator Signature)
Name:
Title:
Date:
RECIPIENT INSTITUTION'S AUTHORIZED OFFICIAL
An Authorized Signature is that of an Institutional Official or Company
Officer specifically authorized to execute documents of this type on behalf
of the Institution.
Institution/Company: ________________________
Signature: __________________________________
Name:
Title:
Date:
<PAGE>
LICENSE AGREEMENT
This Agreement dated _23rd_ day of December, 1994 is between Osiris
Therapeutics, Inc., a corporation of the State of Delaware, having a principal
place of business at 11000 Euclid Avenue, Wearn Building, 4th Floor,
Cleveland, Ohio 44106 (hereinafter referred to as "OSIRIS" if and Gryphon
Pharmaceuticals, Inc., a Delaware corporation (hereinafter "GRYPHON") having
an initial address at 1629 Thames Street, Suite 400, Baltimore, MD 21231.
WITNESSETH:
WHEREAS, OSIRIS desires to obtain an exclusive license in and to certain
patents owned by or licensed to GRYPHON.
WHEREAS, GRYPHON is willing to grant the exclusive license desired by
OSIRIS.
NOW THEREFORE in consideration of the mutual promises and other good and
valuable consideration, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "AFFILIATED COMPANY" or "AFFILIATED COMPANIES" shall mean any
corporation, company, partnership, joint venture or other entity which
controls, is controlled by or is under common control with OSIRIS. For
purposes of this Paragraph 1.1, control shall mean the direct or indirect
ownership of at least fifty percent (50 %). For the purposes of this
Agreement, GRYPHON and OSIRIS are not AFFILIATED COMPANIES.
1.2 The term "PATENT RIGHT(s)" shall mean (i) any patent application or
patent or equivalent thereof, anywhere in the world including, but not limited
to any division, continuation, or continuation-in-part, re-examination,
reissue or extension issuing thereon, which is owned by GRYPHON or which is
licensed to GRYPHON by Johns Hopkins University ("JHU") or which is licensed
to GRYPHON by an entity other than JHU and as to which GRYPHON has a
transferable interest in each case prior to or during the term of this
Agreement insofar as it contains one or more claims to any TECHNOLOGY.
PATENT RIGHTS shall not include JOINT PATENT RIGHTS.
<PAGE>
1.3 "EFFECTIVE DATE" of this License Agreement shall mean the date the
last party hereto has executed this Agreement.
1.4 The term "HEMATOPOIETIC FIELD" shall mean making, using or selling
of hematopoietic stem cells, hematopoietic progenitor cells, their progeny and
any other hematopoietic cells and/or tissue, and the making, using and selling
of products, processes and compositions for the isolation, proliferation,
purification, differentiation, inhibition, growth, repair or renewal of such
cells and/or tissue and shall include cross-signaling molecules for regulating
hematopoietic stem and progenitor cells.
1.5 The term "JOINT PATENT RIGHTS" shall mean patents and patent
applications anywhere in the world jointly owned by GRYPHON and OSIRIS and
including, but not limited to, any division, continuation or continuation-in-
part, re-examination, reissue or extension thereof.
1.6 The term "LICENSED FIELD" shall mean making, using or selling of
mesenchymal stem cells, mesenchymal progenitor cells, their progeny and any
other mesenchymal cells and/or tissue (including, but not limited to, stroma,
bone, tendon, muscle and cartilage), and the making, using and selling of
products, processes and compositions for the isolation, proliferation,
purification, differentiation, inhibition, growth, repair or renewal of such
mesenchymal cells and/or tissue and shall include cross-signaling molecules
for regulating mesenchymal stem and progenitor cells.
1.7 The term "LICENSED PRODUCT" shall mean any article, composition,
apparatus, substance, chemical, material, method, process or service in the
LICENSED FIELD, the manufacture, import, sale or use of which is covered by
PATENT RIGHTS.
1.8 "LICENSED SERVICE(S)" means the performance on behalf of a third
party of any method or the use of any product or composition in the LICENSED
FIELD, the manufacture, use or sale of which is covered by PATENT RIGHTS.
1.9 The term "LICENSED TERIIITORY" shall mean all countries of the
world.
1.10 "NET SALES" shall mean gross sales revenues received by OSIRIS or
an AFFILIATED COMPANY from the sale of LICENSED PRODUCT(S) less trade discounts
<PAGE>
allowed, refunds, returns and recalls, rebates, disallowed reimbursements,
transportation and transportation related insurance costs, itemized on a bill
or invoice, and sales taxes.
In the event that OSIRIS, AFFILIATED COMPANY or SUBLICENSEE sells a
LICENSED PRODUCT in combination with other ingredients or components which are
not LICENSED PRODUCT(S) (such other ingredients or components being "Other
Items"), then the NET SALES for purposes of royalty payments on the
combination shall be calculated as follows:
(a) If all LICENSED PRODUCT(S) and Other Items contained in the
combination are available separately, the NET SALES for purposes of royalty
payments will be calculated by multiplying the NET SALES of the combination by
the fraction A(A+B), where A is the separately available price of all LICENSED
PRODUCT(S) in the combination, and B is the separately available price for all
Other Items in the combination.
(b) If the combination includes Other Items which are not sold
separately (but all LICENSED PRODUCT(S) contained in the combination are
available separately), the NET SALES of the combination multiplied by the
fraction A/C, where A is as defined above and C is the invoiced price of the
combination.
(c) If the LICENSED PRODUCTS contained in the combination are not
sold separately, the NET SALES for such combination shall be NET SALES
multiplied by D/C where C is as defined above and D is the fair market value of
LICENSED PRODUCTS in the combination. The fair market value will be determined
by negotiation between the parties; should the parties fail to reach an
agreement the issue will be brought to binding arbitration in accordance to the
Rules of The American Arbitration Association pursuant to Paragraph 6.5.
The term "Other Items" does not include solvents, diluents, carriers,
excipients, or the like used in formulating a product.
1.11 "NET SERVICE REVENUES" shall mean actual revenues received for the
performance of LICENSED SERVICE less sales and/or use taxes imposed upon and
with specific reference to the LICENSED SERVICE, trade discounts allowed,
refunds and rebates.
If a LICENSED SERVICE is offered in combination with another service
or services, NET SERVICE REVENUES for purposes of determining royalties on the
LICENSED
<PAGE>
SERVICE shall be calculated by multiplying the NET SERVICE REVENUES [as
defined. above, but applied to the combination services], by the fraction
A/(A+B), where A is the invoice price of the LICENSED SERVICE and B is the
invoice price of the other service or services in the combination if sold
separately.
1.12 The term "TECHNOLOGY" shall mean any data, formulas, process
information or other information, material, substance, invention or discovery
in the LICENSED FIELD, whether or not patentable, owned by GRYPHON prior to or
during the term of this Agreement or which is licensed to GRYPHON by JHU
prior to or during the term of this Agreement or which is licensed to GRYPHON
by an entity other than JHU and as to which GRYPHON has a transferable right
on the EFFECTIVE DATE or during the term of this Agreement. TECHNOLOGY
includes all of the foregoing even if same is also applicable outside the
LICENSED FIELD. In the event a compound has clinical utility both within and
outside the LICENSED FIELD, the parties will discuss, in good faith, how such
compound will be developed and commercialized.
1.13 The term "SUBLICENSEE" shall mean any non-AFFILIATED COMPANY
licensed by OSIRIS to make, have made, import, use or sell any LICENSED PRODUCT.
1.14 "VALID CLAIM" shall mean a claim of an issued patent which has not
lapsed or become abandoned or been declared invalid or unenforceable by a
court of competent jurisdiction or an administrative agency from which no
appeal can be or is taken.
ARTICLE 2- GRANTS
2.1 Subject to the terms and conditions of this Agreement GRYPHON
hereby grants to OSIRIS a sole and exclusive license under the PATENT RIGHTS
and a non-exclusive license under TECHNOLOGY to make, have made, use and sell
the LICENSED PRODUCT(S) and to provide the LICENSED SERVICE(S) in the LICENSED
TERRITORY.
2.2 OSIRIS may sublicense others the rights and licenses granted under
this Agreement and shall provide a copy of each such sublicense agreement to
GRYPHON promptly after it is executed. Except as to royalties and other
payments, each sublicense shall be consistent with the terms of this Agreement.
<PAGE>
2.3 OSIRIS shall have the right to extend its license rights granted
under Paragraph 2.1 to its AFFILIATED COMPANIES; however, such AFFILIATED
COMPANIES must agree in writing to be bound by the terms of this Agreement with
a copy of such agreement promptly sent to GRYPHON after it is executed.
2.4 OSIRIS acknowledges that GRYPHON retains the exclusive right and
title to TECHNOLOGY and PATENT RIGHTS directed to cross-signaling materials for
use in the HEMATOPOIETIC FIELD.
2.5 OSIRIS hereby grants to GRYPHON a [*CONFIDENTIALITY REQUESTED*]
worldwide, sole and exclusive, sublicenseable license under OSIRIS' interest
in JOINT PATENT RIGHTS in the HEMATOPOIETIC FIELD. GRYPHON hereby grants to
OSIRIS a royalty free, worldwide, sole and exclusive sublicensable license
under GRYPHON's interest in JOINT PATENT RIGHTS in the LICENSED FIELD.
ARTICLE 3 - PATENT INFRINGEMENT
3.1 Each party will notify the other promptly in writing when any
infringement of the PATENT RIGHTS by another is uncovered or suspected.
3.2 OSIRIS shall have the first right to enforce any patent within
PATENT RIGHTS against any infringement or alleged infringement thereof in the
LICENSED FIELD, and shall at all times keep GRYPHON and JHU informed as to the
status thereof. OSIRIS may, in its sole judgment and at its own expense,
institute suit against any such infringer or alleged infringer and control,
settle, and defend such suit
<PAGE>
in a manner consistent with the terms and provisions hereof and recover, for
its account, any damages, awards or settlements resulting therefrom, subject
to Paragraph 3.4. This right to sue for infringement shall not be used in an
arbitrary or capricious manner. GRYPHON shall reasonably cooperate in any such
litigation at OSIRIS's expense.
3.3 If OSIRIS elects not to enforce any patent within the PATENT
RIGHTS, under Paragraph 3.2, then it shall so notify GRYPHON in writing within
six (6) months of receiving notice that an infringement exists, and GRYPHON or
JHU may, in its sole judgment and at its own expense, take steps to enforce any
patent and control, settle, and defend such suit in a manner consistent with
the terms and provisions hereof, and recover, for its own account, any
damages, awards or settlements resulting therefrom.
3.4 Any recovery by OSIRIS under Paragraph 3.2 shall be deemed to
reflect loss of commercial sales, and OSIRIS after reimbursing GRYPHON out of
the recovery for amounts credited pursuant to the next sentence shall pay to
GRYPHON fifteen percent (15 %) of the recovery net of all reasonable costs and
expenses associated with each suit or settlement. One-half (1/2) of the costs
and expenses incurred by OSIRIS pursuant to Paragraph 3.2 shall be credited
against royalties payable by OSIRIS to GRYPHON hereunder in connection with
sales in the country of such legal proceedings, provided, however, that any
such credit under this Paragraph 3.4 shall not exceed fifty percent (50%) of
the royalties otherwise payable to GRYPHON with regard to sales in the country
of such action in any one calendar year, with any excess credit being carried
forward to future calendar years.
3.5 In the event that litigation against OSIRIS is initiated by a third
party charging OSIRIS with infringement of a patent of the third party in a
country as a result of the manufacture, use or sale by OSIRIS of a LICENSED
PRODUCT or LICENSED SERVICE in that country OSIRIS shall promptly notify
GRYPHON in writing thereof. OSIRIS's costs as to any such defense in that
country shall be creditable against any and all payments due and payable to
GRYPHON under Paragraph 4.2 of this Agreement with respect to that LICENSED
PRODUCT and/or LICENSED SERVICE in that country. No royalty payment after
taking into consideration any such credit under this Paragraph 3.5 shall be
reduced by more than fifty percent (50%).
3.6 In the event of a judgment in any suit in which a court of
competent jurisdiction rules that the manufacture, use or sale by OSIRIS in a
country of a LICENSED PRODUCT or LICENSED SERVICE covered by a PATENT RIGHT, in
that country has infringed on a third party's patent requiring OSIRIS to pay
damages or a royalty to said third party in that country, or in the event of a
settlement of such suit requiring damages or back royalty payments to be made,
payments due to GRYPHON under Paragraph 4.2 of this Agreement arising from the
applicable LICENSED PRODUCT or LICENSED SERVICE shall be correspondingly
reduced in that country by the amounts due under the requirement of such
judgment or under the terms of such settlement. The royalty payment after
taking into
<PAGE>
consideration any such reduction under this Paragraph 3.6 shall not be reduced
by more than fifty percent (50%).
3.7 In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like. All reasonable out of-pocked costs incurred in connection with rendering
cooperation requested hereunder shall be paid by the party requesting
cooperation.
ARTICLE 4 - PAYMENTS. ROYALTY RESEARCH SUPPORT AND EQUITY
4.1 OSIRIS shall reimburse GRYPHON for future costs associated with
preparing, filing, maintaining and prosecuting such PATENT RIGHTS as specified
in Paragraph 5.1.
4.2 OSIRIS shall pay to GRYPHON one of the following royalties which
shall be due and payable sixty (60) days after June 30 and December 31 for
LICENSED PRODUCTS sold or LICENSED SERVICES provided in the respective half-
year period:
a. [*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED PRODUCTS or
LICENSED SERVICE sold or provided by OSIRIS or an AFFILIATED COMPANY
licensed under this Agreement which in the country where made, sold or
provided is covered by a VALID CLAIM included in PATENT RIGHTS.
b. [*CONFIDENTIALITY REQUESTED*] of royalties received by OSIRIS from a
SUBLICENSEE hereunder for LICENSED PRODUCTS sold or LICENSED SERVICES
provided by such sublicensee which in the country where made, sold or
provided is covered by a VALID CLAIM included in PATENT RIGHTS but in
no event shall royalties paid hereunder be less than [*CONFIDENTIALITY
REQUESTED*] of such SUBLICENSEE'S NET SALES from LICENSED PRODUCTS
sold or LICENSED SERVICES provided by such SUBLICENSES and covered by
a VALID CLAIM included in PATENT RIGHTS.
<PAGE>
4.3 In the event royalties are due hereunder with respect to a LICENSED
SERVICE solely because such service involves the use of a LICENSED PRODUCT,
for the purposes of calculating royalties hereunder, NET SALES for the
LICENSED PRODUCT and/or NET SERVICE REVENUES for the LICENSED SERVICE shall be
based on the price of the LICENSED PRODUCT in arm's length transactions. If no
such transactions have taken place, such price shall be determined by mutual
agreement of the parties and if such agreement is not reached within sixty
(60) days, either party shall have the right to submit a determination of
price to binding arbitration according to the Rules of American Arbitration
Association as set forth in Paragraph 6.5.
4.4 OSIRIS shall provide to GRYPHON within sixty (60) days of the end
of June and December after the EFFECTIVE DATE of this Agreement, a written
report to GRYPHON of the amount of LICENSED PRODUCTS sold, and LICENSED
SERVICES sold, the total NET SALES and NET SERVICE REVENUES of such LICENSED
PRODUCTS and LICENSED SERVICES, and the running royalties due to GRYPHON as a
result of NET SALES and NET SERVICE REVENUES by OSIRIS, AFFILIATED COMPANIES
and SUBLICENSEES thereof. Payment of any such royalties due shall accompany
such report. Until OSIRIS, an AFFILIATED COMPANY or a SUBLICENSEE has achieved
a first commercial sale of a LICENSED PRODUCT and received FDA market approval,
a report shall be submitted at the end of every June and December after the
EFFECTIVE DATE of this Agreement and will include a full written report
describing OSIRIS, AFFILIATED COMPANIES or SUBLICENSEE's technical efforts
under Article 6.
4.5 OSIRIS shall make an retain, for a period of three (3) years
following the period of each royalty report required by Paragraph 4.4, true and
accurate records, files and books of account containing all the data reasonably
required for the full computation and verification of sales and other royalty
related information required in Paragraph 4.4. Such books and records shall
be in accordance with generally accepted accounting principles consistently
applied. OSIRIS shall permit the inspection and copying of such records, files
and books of account by GRYPHON or JHU or its agents during regular business
hours upon ten (10) business days' written notice to OSIRIS. Such inspection
shall not be made more than once each calendar year. All costs of such
inspection and copying shall be paid by GRYPHON or JHU,
<PAGE>
as the case may be, provided that if any such inspection shall reveal that an
error has been made in the amount equal to ten percent (10%) or more of such
payments in a calendar year, such costs shall be borne by OSIRIS. OSIRIS shall
include in any agreement with its AFFILIATED COMPANIES or its SUBLICENSEES
which permits such party to make, use or sell the LICENSED PRODUCT(S) or
provide LICENSED SERVICES, a provision requiring such party to retain records
of sales of LICENSED PRODUCT(S) and records of LICENSED SERVICES and other
information as required in Paragraph 4.4 and permit GRYPHON to inspect such
records as required by this Paragraph 4.5.
4.6 In order to insure GRYPHON the full royalty payments contemplated
hereunder, OSIRIS agrees that in the event any LICENSED PRODUCT shall be sold
to an AFFILIATED COMPANY then the royalty due hereunder shall be based on the
higher of (i) NET SALES of the LICENSED PRODUCT to the AFFILIATED COMPANY or
(ii) the NET SALES of the AFFILIATED COMPANY from the re-sale of such LICENSED
PRODUCT.
4.7 In order to insure GRYPHON the full royalty payments contemplated
hereunder, OSIRIS agrees that in the event any LICENSED PRODUCT or LICENSED
SERVICE shall be sold to other than an AFFILIATED COMPANY for partial or full
future compensation then such future compensation shall be included in NET
SALES for the purpose of paying royalties hereunder. In addition, if OSIRIS
sells LICENSED PRODUCT or LICENSED SERVICES to a person or entity in whom
OSIRIS has an ownership interest other than an AFFILIATED COMPANY and GRYPHON
can demonstrate that such sale was other than an arms length transaction, then
NET SALES shall include any additional amount that would have been paid in an
arms length transaction.
4.8 All payments under this Agreement shall be made in U.S. Dollars.
4.9 To the extent royalty is owed to a third party for patents held by
that party covering the making, using or selling of a LICENSED PRODUCT or
LICENSED SERVICE in a particular country, the royalty due to GRYPHON under
Paragraph 4.2 for such LICENSED PRODUCT or LICENSED SERVICE in such country
will be reduced by [*CONFIDENTIALITY REQUESTED*] such royalty paid to such
third party, however, in no event shall such royalty for such LICENSED PRODUCT
or LICENSED SERVICE be less than [*CONFIDENTIALITY REQUESTED*] of NET SALES or
NET SERVICES REVENUES.
<PAGE>
4.10 Any tax required to be withheld by OSIRIS under the laws of any
foreign country for the account of GRYPHON, shall be promptly paid by OSIRIS
for and on behalf of GRYPHON to the appropriate governmental authority, and
OSIRIS shall use its best efforts to furnish GRYPHON with proof of payment of
such tax. Any such tax actually paid on GRYPHON's behalf shall be deducted
dollar for dollar from royalty payments due GRYPHON.
4.11 Only one royalty shall' be due and payable for the manufacture,
use and sale of a LICENSED PRODUCT or a LICENSED SERVICE irrespective of the
number of patents or claims thereof which cover the manufacture, use or sale of
such LICENSED PRODUCT or LICENSED SERVICE.
ARTICLE 5 - PATENT RIGHTS AND CONFIDENTIAL INFORMTION
5.1 (a) Except as provided in Paragraph 5.1(1)) and (d) GRYPHON, at
OSIRIS' expense, shall file or cause to be filed, prosecute and maintain all
patents and patent applications specified under PATENT RIGHTS licensed to
OSIRIS hereunder upon authorization of OSIRIS and OSIRIS shall be licensed
thereunder. Title to all such patents and patent applications (other than
those licensed to GRYPHON) shall reside in GRYPHON. GRYPHON shall have full
and complete control over all patent matters in connection therewith under the
PATENT RIGHTS (other than those licensed to GRYPHON). OSIRIS will provide
payment authorization to GRYPHON at least one (1) month before an action is
due, provided that OSIRIS has received timely notice of such action from
GRYPHON. Failure to provide authorization can be considered by GRYPHON as an
OSIRIS decision not to authorize an action. In any country where OSIRIS elects
not to have a patent application filed or to pay expenses associated with
filing, prosecuting, or maintaining a patent application or patent, GRYPHON
may file, prosecute, and/or maintain a patent application or patent at its own
expense and for its own exclusive benefit and OSIRIS thereafter shall not be
licensed under such patent or patent application.
(b) For patent applications in JOINT PATENT RIGHTS OSIRIS shall
file, prosecute and maintain all such patents and patent applications and
GRYPHON and OSIRIS shall equally share the cost and expense thereof. Title to
all such patents and patent applications shall reside jointly in GRYPHON and
OSIRIS
<PAGE>
(c) The parties shall first consult with each other as to the
preparation, filing, prosecution and maintenance of such applications and
patents. Each party shall keep the other advised as to all developments with
respect to all patent applications and patents included in PATENT RIGHTS and
shall promptly supply to the other: (i) copies of all official correspondence
from the U.S. Patent Office or from a patent office in any other country within
a reasonable time of receipt; and (ii) copies of all substantive papers to be
filed in the U.S. Patent Office or a patent office in any other country a
reasonable time prior to filing to provide sufficient time to comment thereon.
The costs of filing, prosecuting and maintaining jointly owned patent
applications and patents shall be borne equally by the parties hereto. In any
country where a party elects not to file a patent application or to pay
expenses associated with filing, prosecuting, or maintaining a patent
application or patent, the other party may file, prosecute, and/or maintain a
patent application or patent at its own expense and for its own exclusive
benefit and thereafter the party so electing shall not have title to or be
licensed under such patent or patent application.
(d) To the extent PATENT RIGHTS licensed hereunder are related
both to the LICENSED FIELD and the HEMATOPOIETIC FIELD and OSIRIS is licensed
exclusively in the LICENSED FIELD hereunder, OSIRIS shall reimburse GRYPHON for
fifty percent (50 %) of future costs associated with preparing filing,
maintaining and prosecuting such PATENT RIGHTS. OSIRIS shall directly
reimburse GRYPHON, as aforesaid, within thirty (30) days of receipt of each
invoice.
5.2 OSIRIS agrees that all packaging containing individual LICENSED
PRODUCT(S) sold by OSIRIS, AFFILIATED COMPANIES and SUBLICENSEES of OSIRIS
will be marked with the number of the applicable patent(s) licensed hereunder
in accordance with each country's patent laws.
5.3 If necessary, the parties will exchange information which they
consider to be confidential. The recipient of such information agrees to accept
the disclosure of said information which is marked as confidential at the time
it is sent to the recipient, and to employ all reasonable efforts to maintain
the information secret and confidential, such efforts to be no less than the
degree of care employed by the recipient to preserve and safeguard its own
confidential information. The information shall not be disclosed or revealed
to anyone except
<PAGE>
employees of the recipient who have a need to know the information and who
have entered into a secrecy agreement with the recipient under which such
employees are required to maintain confidential the proprietary information of
the recipient and such employees shall be advised by the recipient of the
confidential nature of the information and that the information shall be
treated accordingly. The recipient's obligations under this Paragraph 5.3
shall not extend to any part of the information:
a. that can be demonstrated to have been in the public domain or
publicly known and readily available to the trade or the public
prior to the date of the disclosure; or
b. that can be demonstrated, from written records to have been in the
recipient's possession or readily available to the recipient from
another source not under obligation of secrecy to the disclosing
party prior to the disclosure; or
c. that becomes part of the public domain or publicly known by
publication or otherwise, not due to any unauthorized act by the
recipient.
d. that can be demonstrated, from written records, to have been
developed by the recipient independently of the disclosed
information.
The obligations of this Paragraph 5.3 shall also apply to AFFILIATED COMPANIES
and/or SUBLICENSEES provided such information by OSIRIS. GRYPHON's, the
OSIRIS's, AFFILIATED COMPANIES, and SUBLICENSEES' obligations under this
Paragraph 5.3 shall extend until three (3) years after the termination of this
Agreement.
Notwithstanding the foregoing, OSIRIS, AFFILIATED COMPANIES and
SUBLICENSEE shall have the right to disclose Confidential Information of
GRYPHON to a third party who undertakes an obligation of confidentiality and
non-use with respect to such information, at least as restrictive as the
obligation under this Paragraph 5.3.
<PAGE>
ARTICLE 6 - TERM. MILESTONES AND TERMINATION
6.1 This Agreement shall expire in each country on the date of expiration
of the last to expire patent included within PATENT RIGHTS in that country or
if no patents issue seventeen (17) years from the EFFECTIVE DATE of this
Agreement at which time OSIRIS shall have a fully paid up noncancellable
license.
6.2 For each PATENT RIGHT, OSIRIS agrees to exercise reasonable efforts
and to take effective steps, within a reasonable time to (i) identify product
candidate(s) which are LICENSED PRODUCT(S) (ii) perform pre-clinical animal and
toxicological studies for an identified product candidate, (iii) conduct
clinical studies aimed at obtaining FDA regulatory approval for each
identified product candidate and (iv) develop and commercialize each such
product, provided however, a LICENSED PRODUCT need not be identified and
developed for a PATENT RIGHT if a similar product is being developed under
another PATENT RIGHT. OSIRIS' obligations under this paragraph shall take into
account the stage of development thereof and regulatory consideration and
requirements. The efforts of a SUBLICENSEE, an AFFILIATE, a collaborator
and research funded under the Research and License Agreement between JHU and
GRYPHON shall be considered as efforts of OSIRIS.
6.3 (a) As part of the efforts under Paragraph 6.2, Company shall
exercise reasonable efforts to meet the following milestones within the time
set forth below:
(i) within three (3) years from the identification of a
product candidate as set forth in Paragraph 6.2, start the Phase I clinical
study of such LICENSED PRODUCT.
(ii) within seven (7) years from the start of the Phase I
Study, obtain FDA commercial approval (NDA/PLA) of such LICENSED PRODUCT
(b) GRYPHON will not unreasonably withhold its consent to OSIRIS'
request for a reasonable extension of any of the above milestones if OSIRIS can
demonstrate that its inability to meet such milestone occurred as a result of
reasons beyond the control of OSIRIS (including scientific or regulatory
reasons beyond the control of the OSIRIS).
(c) If, as to a specific LICENSED PRODUCT, OSIRIS fails to exercise
reasonable efforts as required by Paragraphs 6.2 or 6.3, as its sole and
exclusive remedy GRYPHON may terminate OSIRIS' license with respect thereto,
provided however, if in good faith OSIRIS has pursued research and development
of such LICENSED PRODUCT and in good
<PAGE>
faith OSIRIS intends to pursue research and development of such LICENSED
PRODUCT and reasonably appears to have the ability to do so and thereafter in
good faith does continue to do so, GRYPHON's sole and exclusive remedy shall
be conversion of the exclusive rights and license for such specifically
defined LICENSED PRODUCT to non-exclusive rights and licenses.
6.4 (a) GRYPHON acknowledges that OSIRIS is in the business of
developing, manufacturing and selling of medical processes and products and
nothing in this Agreement shal1 be construed as restricting such business or
restricting the research, development, marketing and sale of product(s) other
than LICENSED PRODUCT(S) and LICENSED SERVICE(S).
(b) OSIRIS can market and sell LICENSED PRODUCT(S) and LICENSED
SERVICE(S) to third parties at a sales price determined by OSIRIS in its sole
discretion.
6.5 Any matter or disagreement arising under Paragraphs 1.11, 4.3, 6.2
and 6.3 shall be submitted to a mutually selected single arbitrator to so
decide any such matter or disagreement. The arbitrator shall conduct the
arbitration in accordance with the Rules of the American Arbitration
Association, unless the parties agree otherwise. If the parties are unable to
mutually select an arbitrator, the arbitrator shall be selected in accordance
with the procedures of the American Arbitration Association. The decision by
the arbitrator shall be final and binding and may be enforced in any court of
competent jurisdiction. Any arbitration pursuant to this section shall be held
in Washington, D.C., or such other place as maybe mutually agreed upon in
writing by the parties.
6.6 In the event GRYPHON is notified by JHU that a third party desires
to develop and market a LICENSED PRODUCT which is not being researched and/or
developed and/or marketed by OSIRIS, an AFFILIATED COMPANY or SUBLICENSEE,
GRYPHON shall notify OSIRIS in writing thereof. If OS IRIS does not notify
GRYPHON within ninety (90) days of such written notice that OSIRIS or its
sublicensee intends to research and develop such LICENSED PRODUCT and does
not initiate such research and development in accordance with the provisions
of paragraph 6.2 hereof within a reasonable time thereafter, OSIRIS shall
enter into good faith negotiations with such third party for granting a
sublicense for such LICENSED PRODUCT unless the granting of such sublicense
would have a potential adverse commercial effect upon marketing and/or selling
of a LICENSED PRODUCT which is being researched, developed, or sold pursuant
to this Agreement.
<PAGE>
6.7 Except as provided in Paragraph 6.2 and 6.3, upon breach or default
of any of the terms and conditions of this Agreement, the defaulting party
shall be given written notice of such default in writing and a period of sixty
(60) days after receipt of such notice to correct the default or breach. If the
default or breach is not corrected within said sixty (60) day period, the
party not in default shall have the right to terminate this Agreement.
6.8 OSIRIS may terminate this Agreement or any of the licenses granted
herein under any PATENT RIGHT in any country, for any reason, upon giving
GRYPHON sixty (60) days written notice.
6.9 Termination shall not affect GRYPHON's right to recover unpaid
royalties or fees or reimbursement for patent expenses incurred pursuant to
Paragraph 5.1 prior to termination. Upon termination all rights in and to the
licensed technology (including PATENT RIGHTS) shall revert to GRYPHON at no
cost to GRYPHON.
6.10 Upon any termination of this Agreement OSIRIS, at its option,
shall be entitled to finish any work-in-progress which is completed within six
(6) months of termination of this Agreement and to sell any completed inventory
of a LICENSED PRODUCT covered by this Agreement which remains on hand as of
the date of the termination, so long as OSIRIS pays to GRYPHON the royalties
applicable to said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
6.11 In the event that this Agreement and/or the rights and licenses
granted under this Agreement to OSIRIS are terminated, any sublicense granted
under this Agreement shall remain in full force and effect as a direct license
between GRYPHON and the SUBLICENSEE under the terms and conditions of the
sublicense agreement, subject to the SUBLICENSEE agreeing to be bound directly
to GRYPHON under such terms and conditions as well as the relevant duties and
obligations under this License Agreement (other than royalty and other payment
obligations which shall be paid in accordance with the sublicense provided
GRYPHON receives a royalty of at least two percent of the SUBLICENSEE's
NET SALES) within thirty (30) days after GRYPHON provides written notice to
the SUBLICENSEE of the termination of OSIRIS's rights and licenses under this
Agreement, provided further that GRYPHON's obligations under such sublicense
are no greater than currently existing under this
<PAGE>
Agreement. At the request of the OSIRIS, GRYPHON will acknowledge to a
SUBLICENSEE, GRYPHON's obligations to the SUBLICENSEE under this paragraph.
ARTICLE 7- MISCELLANEOUS
7.1 All notices pertaining to this Agreement shall be in writing and
sent certified mail, return receipt requested, to the parties at the following
addresses or such other address as such party shall have furnished in writing
to the other party in accordance with this Paragraph 7.1:
FOR GRYPHON: Gryphon Pharmaceuticals, Inc.
1629 Thomas Street
Suite 400
Baltimore, MD 21231
Attn: CEO
FOR OSIRIS: Osiris Pharmaceuticals, Inc.
11000 Euclid Avenue
Wearn Building, 4th Floor
Cleveland, Ohio 44106
Attn: CEO
cc: Carella, Byrne, Bain, Gilfilian,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, NJ 07068
Attn: Elliot M. Olstein, Esq.
7.2 All written progress reports, royalty and other payments, and any
other related correspondence shall be in writing and sent to GRYPHON at the
above address or such other addressee which GRYPHON may designate in writing
from time to time.
7.3 This Agreement is binding upon and shall inure to the benefit of
OSIRIS and GRYPHON, their successors and assignees and shall not be assignable
to a third party without the written consent of the other party hereto, which
consent shall not be reasonably withheld, except that either party shall have
the right to assign this Agreement to another parry without consent of the
other party in the case of the sale or transfer or merger or consolidation of
such party or sale or transfer by such party of all, or substantially all, of
its assets or
<PAGE>
all or substantially all of the portion of its assets to which this agreement
relates, provided the assignee undertakes to be bound by and perform the
obligations of the assignor under this Agreement.
7.4 In the event that any one or more of the provisions of this
Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement, or over any of the parties hereto to be
invalid, illegal or unenforceable, such provision or provisions shall be
reformed to approximate as nearly as possible the intent of the parties, and if
unreformable, shall be divisible and deleted in such jurisdictions; elsewhere,
this Agreement shall not be affected.
7.5 The construction, performance, and execution of this Agreement
shall be governed by the laws of the State of Maryland.
7.6 (a) GRYPHON warrants that it has good and valid title to its
interest in the inventions claimed under PATENT RIGHTS with the exception of
certain retained rights of the United States government. In addition, GRYPHON
warrants that it has not licensed or assigned any right or interest in or to
PATENT RIGHTS licensed hereunder to any third party; that the granting of such
rights to OSIRIS does not require the consent of a third party; and GRYPHON is
not aware of any legal or contractual restriction which would inhibit its
ability to perform the terms and conditions imposed on it by this Agreement.
GRYPHON does not warrant the validity of any patents or that practice under
such patents shall be free of infringement. EXCEPT AS EXPRESSLY SET FORTH
HEREIN GRYPHON MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE
PERFORMANCE OF LICENSED PRODUCT(S) AND LICENSED SERVICES INCLUDING THEIR SAFETY,
EFFECTIVENESS, OR COMMERCIAL VIABILITY. GRYPHON DISCLAIMS ALL WARRANTIES
WITH REGARD TO PRODUCT(S) AND SERVICES LICENSED UNDER THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO, ALL WARRANTIES, EXPRESS OR IMPLIED, OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE.
(b) OSIRIS acknowledges and agrees to the extent that any rights
or licenses granted to OSIRIS hereunder are in the form of a sublicense,
OSIRIS' rights and licenses are limited to those rights and licenses licensed
to GRYPHON and are subject to the terms and conditions of the Agreement by and
between GRYPHON and its licensor.
<PAGE>
7.7 OSIRIS shall defend and hold GRYPON and JHU, The Johns Hopkins
Health Systems, their present and former trustees, directors, officers,
inventors of PATENT RIGHTS, agents, faculty, employees and students harmless as
against any third-party judgments, fees, expenses, or other costs arising from
or incidental to any product liability or other lawsuit, claim, demand or other
action brought as a consequence of the practice of the inventions of LICENSED
PRODUCTS or LICENSED SERVICES by OSIRIS or its AFFILIATED COMPANIES or its
SUBLICENSEES or those operating for its account or third parties who purchase
LICENSED PRODUCT(S) or LICENSED SERVICES from any of the foregoing entities
whether or not GRYPHON, JHU or said inventors, either jointly or severally, is
named as a party defendant in any such lawsuit, except those which arise from
the gross negligence or willful misconduct of any of the indemnified parties.
Practice of the inventions covered by LICENSED PRODUCT(S) and LICENSED
SERVICES, by an AFFILIATED COMPANY or an agent or a SUBLICENSEE or a third
party on behalf of or for the account of OSIRIS or by a third party who
purchases LICENSED PRODUCT(S) and LICENSED SERVICES from OSIRIS, shall be
considered OSIRIS' practice of said inventions for purposes of this Paragraph
7.7. The obligation of OSIRIS to defend and indemnify as set out in this
Paragraph 7.7 shall survive the termination of this Agreement.
7.8 Prior to initiating first commercial sale of any LICENSED PRODUCT
or LICENSED SERVICE as the case may be in any particular county, OSIRIS shall
establish and maintain, or in the alternative maintain for GRYPHON and JHU
where there is a sublicense under JHU rights, in each country in which OSIRIS,
an AFFILIATED COMPANY or SUBLICENSEE shall test or sell LICENSED PRODUCT(S)
and LICENSED SERVICES, product liability or other appropriate insurance
coverage with respect to LICENSED PRODUCT(S) and LICENSED SERVICES which
coverage shall be similar to that maintained by Companies at a stage of
development similar to OSIRIS for similar products provided that such
insurance is available at terms, conditions and costs which are commercially
reasonable and prudent under the circumstances. Upon GRYPHON's request, OSIRIS
will furnish GRYPHON and, if applicable, JHU with a Certificate of Insurance
of each product liability insurance policy obtained. GRYPHON and, if
applicable, JHU shall be listed as an additional insured in OSIRIS's said
insurance policies.
<PAGE>
7.9 This Agreement constitutes the entire understanding between the
parties with respect to the obligations of the parties with respect to the
subject matter hereof, and supersedes and replaces all prior agreements,
understandings, writings, and discussions between the parties relating to said
subject matter.
7.10 This Agreement may be amended and any of its terms or conditions
may be waived only by a written instrument executed by the authorized officials
of the parties or, in the case of a waiver, by the party waiving compliance.
The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its right at a later time to
enforce the same. No waiver by either party of any condition or term in any
one or more instances shall be construed as a further or continuing waiver of
such condition or term or of any other condition or term.
7.11 This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
7.12 Upon termination of this Agreement for any reason, Paragraphs 5.3,
6.9, 7.6, 7.7, 7.8 (to the extent OSIRIS, AFFILIATED COMPANIES or SUBLICENSEES
are selling or providing LICENSED PRODUCT or LICENSED SERVICES under the
LICENSES granted under this Agreement), 7.12 and 7.13 shall survive termination
of this Agreement.
7.13 (a) OSIRIS and its AFFILIATED COMPANIES and its SUBLICENSEES
shall not use the names, likeness', or logos of JHU or any of its schools or
divisions or The Johns Hopkins Health Systems or any of its constituent parts
and affiliated hospitals and companies, such as The Johns Hopkins Hospital or
any contraction or derivative thereof or the names of JHU's faculty members,
employees, and students in any press releases, general publications,
advertising, marketing, promotional or sales literature without prior written
consent from an authorized official of JHU which consent shall not be
unreasonably withheld. It should be understood that JHU does not allow any
use of its name for the endorsement of products.
(b) Notwithstanding Paragraph 17.3(a), OSIRIS shall have the
right to use the name of JHU in agreements between GRYPHON and OSIRIS and in
any SEC filing (including, but not limited to 8K statements) fundraising
documents and the like and in any case where such use is required by law, rule
or regulation provided that OSIRIS shall provide JHU with the appropriate
documents and papers which use the name of JHU for JHU's review and comment
<PAGE>
no less than three (3) business days prior to the anticipated date of
submission of such documents or papers.
(c) All notifications relating to the use of JHU's name as required
herein shall be made to the person listed below:
Francis J. Meyer, Ph.D.
Assistant Dean of Technology Licensing
Johns Hopkins University
Office of Technology Licensing
2024 East Monument Street
Suite 2-100
Baltimore, MD 21205
IN WITNESS WHEREOF the respective parties hereto have executed this
Agreement by their duly authorized officers on the date appearing below their
signatures
OSIRIS THERAPEUTICS, INC. GRYPHON PHARMACEUTICALS, INC.
By: _/s/ James S. Burns_______ By: _/s/ James S. Burns_______________
Date: _12/23/94_______________ Date: _12/23/94_______________________
<PAGE>
RESEARCH AGREEMENT
This Agreement is effective February, 1995 ("the EFFECTIVE DATE") by and
between Case Western Reserve University, an Ohio non-profit corporation
("UNIVERSITY"), having its principal address at 2040 Adelbert Road, Cleveland,
Ohio 44106, and Osiris Therapeutics, Inc. and its wholly-owned subsidiary
Osiris Research, Inc., Corporations having offices at 11100 Euclid Avenue,
Wearn Building, 4th Floor, Cleveland, Ohio 44106 (herein Individually and
collectively referred to as "OSIRIS").
WHEREAS, on January 1, 1993 OSIRIS and the UNIVERSITY entered into a
Technology Transfer and License Agreement (the "LICENSE AGREEMENT") whereby
OSIRIS was granted rights to future technology relative to mesenchymal stem
cells; and
WHEREAS, OSIRIS desires to fund certain work to be performed at
UNIVERSITY, the rights to which will be granted to OSIRIS under the LICENSE
AGREEMENT; and
WHEREAS, UNIVERSITY desires to receive such funding and recognizes that
the rights to the work to be performed hereunder will be granted to OSIRIS
under the LICENSE AGREEMENT.
NOW THEREFORE in consideration of the mutual promises and other good and
valuable consideration, the parties agree as follows:
SECTION 1 - Definitions.
The terms used in this Agreement have the following meaning:
1.1 The term "AFFILIATE" as applied to OSIRIS, shall mean any company
or other legal entity other than OSIRIS, in whatever country organized,
controlling or controlled by OSIRIS. The
<PAGE>
term "control" means possession, of the power to direct or cause the direction
of the management and policies whether through the ownership of voting
securities, by contract or otherwise.
1.2 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on the EFFECTIVE DATE, and each subsequent twelve (12) month
period thereafter.
1.3 The term "FIELD OF RESEARCH" shall mean the identification,
isolation, purification, propagation or use of mesenchymal stem cells and/or
products derived from or produced by mesenchymal stem cells.
1.4 The term "INVESTIGATOR" shall mean PRINCIPAL INVESTIGATORS, any
other member of the UNIVERSITY professional Staff, graduate student,
undergraduate student, or employee of UNIVERSITY who shall perform or shall
work on RESEARCH.
1.5 The term "PRINCIPAL INVESTIGATOR" shall mean any or all of the
following: Drs. Arnold l. Caplan, Stephen E. Haynesworth and Victor M.
Goldberg.
1.6 The term "INFORMATION" shall mean any data, formulas, process
information or other information produced solely or jointly by at least one
INVESTIGATOR which is in, by or through any research funded in whole or in
part by OSIRIS pursuant to this Agreement.
1.7 The term "INVENTION" shall mean any process, use, article of
manufacture, composition of matter conceived or first actually or
constructively reduced to practice, solely or jointly by at least one
INVESTIGATOR which is in, by or through any research funded in whole or in
part by OSIRIS pursuant to this Agreement.
1.8 The term "MATERIAL" shall mean any material or substance which is
discovered, produced or derived during the RESEARCH solely or jointly by at
least one INVESTIGATOR which is in, by or through any research funded in whole
or in part by OSIRIS pursuant to this Agreement.
<PAGE>
1.9 The term "PATENT RIGHT(S)" shall mean any United States patent
application, including any division, continuation, or continuation-in-part
thereof and any foreign patent application or equivalent corresponding thereto
and any Letters Patent or the equivalent thereof issuing thereon or reissue
or extension thereof, insofar as it contains one or more claims to an
INVENTION, INFORMATION, or MATERIAL.
1.10 The term "RESEARCH" shall mean research in the FIELD of RESEARCH
conducted with respect to the RESEARCH PLAN attached hereto as Appendix A,
including a budget that details the equipment, materials and the personnel to
be provided by use of the funds to be supplied by OSIRIS to support the
research described therein or with respect to any SPECIAL PROJECTS or any
other written description of research attached hereto by agreement of the
parties pursuant to Paragraph 2.2.
1.11 The term "RESEARCH PLAN" shall mean the written description of
RESEARCH.
1.12 The term "SPECIAL PROJECTS" shall mean one or more of the research
projects selected by OSIRIS from the summary of research projects attached
hereto and made a part hereof as Appendix B.
1.13 The use herein of the plural shall include the singular, and the
use of the masculine shall include the feminine.
SECTION 2- Funding.
2.1 (A) In consideration of the undertaking of RESEARCH by UNIVERSITY,
during the period in which RESEARCH is being conducted:
<PAGE>
(i) subject to Paragraphs 9.1, 9.3 and 9.4, OSIRIS shall make research
grants to UNIVERSITY annually for three (3) AGREEMENT YEARS for the
support of and to be used for RESEARCH as follows:
Agreement Research
Year Grant per year
___________ ______________
One (1) $480,000
Two (2) $480,000
Three (3) $480,000
(ii) each annual grant shall be paid in four equal quarterly payments.
The first payment shall be paid within thirty (30) days of the
execution of this Agreement by OSIRIS; provided that any monies
already provided by OSIRIS to UNIVERSITY for RESEARCH in calendar
year 1994 shall be credited against the first payment and/or
carried over as a credit against future quarterly payments if the
full credit is not fully offset against the first payment;
(iii) the funding set forth above includes direct expenses and indirect
expenses equaling [*CONFIDENTIALITY REQUESTED*] of direct expense
as set forth in the RESEARCH PLAN;
(B) at least sixty (60) days prior to the end of an AGREEMENT YEAR,
UNIVERSITY shall submit to OSIRIS for its approval a plan and
budget for use of the funding for the following AGREEMENT YEAR,
which approval shall not be unreasonably withheld. OSIRIS shall
provide such approval or disapproval within thirty (30) days from
receipt of UNIVERSITY's plan and budget Such approved plan and
budget shall be attached to and made a part hereof.
(C) within sixty (60) days after the end of an AGREEMENT YEAR,
UNIVERSITY shall provide OSIRIS with an accounting of the
expenditure of research funds for such
<PAGE>
AGREEMENT YEAR in accordance with UNIVERSITY standard procedures
for such accounting.
(D) Any funds granted under Paragraph 2.1(A) which have not been
expended by UNIVERSITY pursuant to Paragraph 3.2(a) within the
AGREEMENT YEAR, at the election of OSIRIS, shall be credited
toward funding the following AGREEMENT YEAR, or carried forward as
a credit against future quarterly payments until all such funds
described in Paragraph 2.1(A)(i) have been expended as the parties
shall mutually agree.
2.2 a) During the period during which OSIRIS is funding RESEARCH
under this greement, either party may propose in writing additional research
not previously described in the RESEARCH PLAN. Each such proposal shall include
a description of the additional research proposed and a budget of the costs to
be funded by OSIRIS and a schedule of payment of such costs. When and if such
proposal is accepted by UNIVERSITY and OSIRIS, it shall be appended hereto as
a RESEARCH PLAN and shall be subject to the terms and conditions of this
Agreement unless otherwise specified, and the RESEARCH described therein shall
commence and additional budgeted amounts shall be paid as set forth in the
proposal or as otherwise agreed by the parties in writing.
b) It is the present intention of OSIRIS to continue funding
hereunder for two (2) additional years, at OSIRIS' sole discretion, contingent
on inter alia OSIRIS' financial resources and the status of the RESEARCH and
other obligations of OSIRIS at the expiration of the initial three (3) year
funding period. As a result OSIRIS shall have the right but not the obligation
to fund RESEARCH after the expiration of the initial three (3) year funding
period (including any credited amounts carried forward and any extension of
time necessary to utilize such credits) and in the event
<PAGE>
OSIRIS elects to extend the funding as aforesaid OSIRIS will be charged
indirect expenses at the standard federal rate charged by the UNIVERSITY.
2.3 During the period during which OSIRIS is funding RESEARCH under
this Agreement, the PRINCIPAL INVESTIGATOR may not seek or accept funding from
a commercial sponsor in the FIELD OP RESEARCH without the prior written consent
of OSIRIS.
2.4 OSIRIS has leased equipment for use by UNIVERSITY in the Rushforth
Cell Culture Center to conduct the RESEARCH pursuant to a lease agreement with
Dominion Ventures, Inc. Under such agreement OSIRIS shall provide up to
[*CONFIDENTIALITY REQUESTED*] to fund lease payments for such equipment in
each AGREEMENT YEAR. In addition, OSIRIS shall reimburse UNIVERSITY at the
end of the lease term for the [*CONFIDENTIALITY REQUESTED*] of such equipment
which is purchased by the UNIVERSITY under the purchase option of said lease
agreement.
SECTION 3 - Work of UNIVERSITY.
3.1 On the EFFECTIVE DATE, OSIRIS shall select four (4) SPECIAL
PROJECTS on which UNIVERSITY shall conduct RESEARCH. Each SPECIAL PROJECT shall
be supervised by a PRINCIPAL INVESTIGATOR.
3.2 Beginning on the EFFECTIVE DATE and thereafter unless sooner
terminated, UNIVERSITY shall:
(a) through the PRINCIPAL INVESTIGATORS, conduct RESEARCH on the
SPECIAL PROJECTS, and apply the funds paid by OSIRIS pursuant to
Paragraph 2.1 or 2.2 to support the xpenses of RESEARCH in
accordance with the RESEARCH PLAN and shall use reasonable efforts
and diligence consistent with UNIVERSITY's professional standards
to achieve the goals set forth in such RESEARCH PLAN.
<PAGE>
(b) promptly and systematically disclose to OSIRIS, INFORMATION,
INVENTIONS and MATERIAL, and OSIRIS shall be entitled to use such
INFORMATION, INVENTIONS and MATERIAL.
(c) for the purpose of facilitating disclosure to OSIRIS of
INFORMATION, INVENTIONS, and MATERIAL, permit duly authorized
employees of or representatives of OSIRIS to visit the PRINCIPAL
INVESTIGATORS' laboratories at UNIVERSITY or other UNIVERSITY
facilities where RESEARCH is conducted at reasonable times and
with reasonable notice;
(d) promptly advise OSIRIS of any INVENTION and adequate advance notice
of the intent to file, filing, allowance and issuance of any PATENT
RIGHT; and
(e) at OSIRIS' request provide OSIRIS with samples of MATERIALS.
3.3 UNIVERSITY shall, on a continuing basis, advise OSIRIS of the
results of the RESEARCH and at least once every six (6) months provide OSIRIS
with a written semi-annual progress report concerning the RESEARCH. In
addition, the UNIVERSITY shall provide OSIRIS with a comprehensive annual
report, including, mong other things, preliminary conclusions and plans for the
next AGREEMENT YEAR. A final written report setting forth in detail the results
achieved under and pursuant to the RESEARCH shall be submitted by UNIVERSITY to
OSIRIS ithin ninety (90) days of termination of the RESEARCH. Such final report
shall include: (i) a complete summary. of the research carried out; and (ii) a
scientific assessment by the PRINCIPAL INVESTIGATOR of the RESEARCH.
SECTION 4- MATERIALS
<PAGE>
4.1 (a) During the period in which OSIRIS holds a license under the
LICENSE AGREEMENT, UNIVERSITY and INVESTIGATORS shall not, without OSIRIS'
prior written approval, distribute or knowingly allow MATERIALS to be
distributed to for-profit entities or persons known to be employed thereby or
consulting or performing research therefor. In the event such prior written
approval is obtained from OSIRIS any entity or person receiving such MATERIALS
shall sign the Material Transfer Agreement attached hereto and made a part
hereof as Appendix C prior to receiving such MATERIALS.
(b) UNIVERSITY and PRINCIPAL INVESTIGATORS shall have the right
to transfer MATERIALS to not-for-profit entities or persons known to be
affiliated therewith provided that such entities or persons sign the Material
Transfer Agreement attached hereto and made a part hereof as Appendix C.
(c) Prior to any such distribution of any such MATERIAL,
UNIVERSITY and OSIRIS shall use reasonable efforts to consider the
patentability of such MATERIALS and cooperate to file, where appropriate,
PATENT RIGHTS protecting such MATERIALS prior to their distribution.
4.2 Notwithstanding anything else to the contrary, UNIVERSITY and
INVESTIGATOR agree not to publish or disclose to third parties INVENTIONS,
MATERIAL or INFORMATION without supplying OSIRIS with a copy of the material
to be disclosed or published to third parties at least sixty (60) days prior
to submission for publication or disclosure so that OSIRIS may evaluate such
material to determine whether the material contains patentable subject matter
relating to an INVENTION on which a patent application should be filed or
contains OSIRIS Confidential Information as defined in Paragraph 5.1. OSIRIS
shall review the material within fifteen (15) days of submission to OSIRIS. At
OSIRIS' request, UNIVERSITY initially will delay publication and/or disclosure
for an additional thirty (30) days in order to enable the preparation and
filing of a patent
<PAGE>
such patentable subject matter and will cooperate with OSIRIS in deleting from
any such publication or disclosure OSIRIS Confidential Information the
inclusion of which would contravene Paragraphs 5.1 and 5.2 hereof.
Notwithstanding anything to the contrary, UNIVERSITY will not be required to
withhold submission of such material for a period which is more than ninety
(90) days after OSIRIS is first provided with the material to be disclosed or
published.
4.3 INVENTIONS, INFORMATION and MATERIAL shall be included in the
rights and licenses granted to OSIRIS under the LICENSE AGREEMENT.
SECTION 5 - Confidentiality.
5.1 During the term of this Agreement, it is contemplated that each
party will disclose to the other proprietary and confidential technology,
inventions, technical information, biological materials and the like which are
owned or controlled by the party providing such information or which that
party is obligated to maintain in confidence and which is designated by the
party providing such information as confidential ("Confidential Information").
Each party agrees to use reasonable efforts to retain the other party's
Confidential Information in confidence and not to disclose any such
Confidential Information to a third party without the prior written consent
of the party providing such information and to use the other party's
Confidential Information only for the purposes of this Agreement, which
obligation shall terminate five (5) years after the expiration or termination
of this Agreement.
5.2 The obligations of confidentiality will not apply to Confidential
Information which:
(i) was known to the receiving party or generally known to the
public prior to its disclosure hereunder; or
(ii) subsequently becomes known to the public by some means other
than a breach of this Agreement;
<PAGE>
(iii) is subsequently disclosed to the receiving party by a third
party having a lawful right to make such disclosure;
(iv) is required by law or bona fide legal process to be disclosed,
provided that the party required to make the disclosure takes
all reasonable steps to restrict and maintain confidentiality
of such disclosure and provides reasonable notice to the party
providing the Confidential Information; or
(v) is approved for release by the parties, or
(vi) is independently developed by the employees or agents of
either party without any knowledge of the Confidential
Information provided by the other party.
5.3 Notwithstanding the foregoing, OSIRIS shall have the right to
disclose Confidential Information of UNIVERSITY to a third party who undertakes
an obligation of confidentiality and non-use with respect to such information,
at least as restrictive as OSIRIS' obligation under this Section 5.
SECTION 6 PATENTS.
6.1 (a) Each INVESTIGATOR who shall make an INVENTION, solely or
jointly, ("UNIVERSITY INVENTOR") shall promptly advise UNIVERSITY in writing
of such INVENTION. Each UNIVERSITY INVENTOR shall assign all of his rights,
tide and interest in an INVENTION and PATENT RIGHTS relating thereto to
UNIVERSITY. INVENTION's made solely by employees of OSIRIS shall be assigned
to OSIRIS and shall be solely owned by OSIRIS. Each employee of OSIRIS who
makes an INVENTION jointly with an INVESTIGATOR, shall report such INVENTION
to OSIRIS and shall assign all his rights, tide and interest in such INVENTION
and PATENT RIGHTS relating thereto to OSIRIS. Rights to INVENTIONS made
jointly by one or more
<PAGE>
INVESTIGATORS and one or more OSIRIS employees shall be governed by the
LICENSE AGREEMENT.
In the event any INVENTION results from collaboration with personnel who
are not affiliated with either UNIVERSITY or OSIRIS ("Unaffiliated
Collaborator(s)"), UNIVERSITY shall attempt to obtain the relevant rights from
the institution of such Unaffiliated Collaborators and include same in the
aforesaid rights granted t6 OSIRIS under the LICENSE AGREEMENT.
(b) UNIVERSITY shall promptly advise OSIRIS in writing of each
INVENTION disclosed to UNIVERSITY. The titles, serial numbers and other
identifying data of patent applications claiming an INVENTION filed after the
EFFECTIVE DATE shall become Developed Patent Rights as defined in the LICENSE
AGREEMENT.
OSIRIS shall have the right at its cost and expense to file, prosecute
and maintain patent applications and patents directed to INVENTIONS through
patent counsel selected by OSIRIS who shall consult with and keep UNIVERSITY
advised with respect thereto.
6.2 With respect to any PATENT RIGHTS, each patent application, office
action, response to office action, request for terminal disclaimer, and
request for reissue or reexamination of any patent issuing from such
application shall be provided to UNIVERSITY sufficiently prior to the filing
of such application, response or request to allow for review and comment by
UNIVERSITY.
SECTION 7 - Warranties.
7.1 Each of UNIVERSITY and OSIRIS warrants and represents to the other
that it has the full right and authority to enter into this Agreement, and
that it is not aware of any impediment which would inhibit its ability to
perform the terms and conditions imposed on it by this Agreement.
<PAGE>
7.2 UNIVERSITY warrants and represents that it has not licensed or
assigned any right or interest in or to INVENTIONS and PATENT RIGHTS to any
third party; it has the right to grant the rights granted hereunder; that the
granting of such rights does not require the consent of a third party; that
there are and will be no outstanding agreements, assignments or encumbrances
inconsistent with the provisions of this Agreement, and that all INVESTIGATORS
performing RESEARCH will be obligated to assign to UNIVERSITY, the ownership
of INVENTIONS and corresponding PATENT RIGHTS.
SECTION 8 - Assignment; Successors.
8.1 This Agreement shall not be assignable by either of the parties
without the prior written consent of the other party (which consent shall not
be unreasonably withheld), except that OSIRIS without the consent of
UNIVERSITY may assign this Agreement to an AFFILIATE or to a successor in
interest or transferee of all or substantially all of the portion of the
business to which this Agreement relates.
8.2 Subject to the limitations on assignment herein, this Agreement
shall be binding upon and inure to the benefit of said successors in interest
and assigns of OSIRIS and UNIVERSITY. Any such successor or assignee of a
party's interest shall expressly assume in writing the performance of all the
terms and conditions of this Agreement to be performed by said party and such
Assignment shall not relieve the Assignor of any of its obligations under this
Agreement.
SECTION 9- Termination.
9.1 Except as otherwise specifically provided herein and unless sooner
terminated as provided herein shall remain in full force and effect for three
(3) years; provided however, that all
<PAGE>
rights under this Agreement which become covered under the LICENSE AGREEMENT
shall continue under the terms of that agreement.
9.2 Upon material breach of any material provisions of this Agreement
by either party to this Agreement, in the event the breach is not cured within
sixty (60) days after written notice to the breaching party by the other
party, in addition to any other remedy it may have, the other party at its
sole option may terminate this Agreement, provided that such other party is
not then in breach of this Agreement.
9.3 In the event of an adverse material event involving the financial
condition of OSIRIS, OSIRIS may terminate funding of RESEARCH under Paragraph
2.1 of this Agreement at any time on or after the first anniversary thereof by
giving UNIVERSITY three (3) months prior written notice of OSIRIS' election to
terminate, ensuring that for the AGREEMENT YEAR in which the termination
occurs financial commitments made to students or other associates performing
RESEARCH are either fulfilled or phased out gradually.
9.4 In the event a PRINCIPAL INVESTIGATOR conducting RESEARCH is no
longer available or able to continue direction of RESEARCH, UNIVERSITY shall
promptly notify OSIRIS and may nominate a replacement satisfactory to OSIRIS;
if UNIVERSITY does not nominate a replacement within thirty (30) days or if
that replacement is unsatisfactory to OSIRIS, OSIRIS may initiate orderly
termination of funding of RESEARCH conducted by such PRINCIPAL INVESTIGATOR.
9.5 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.
9.6 The termination of this Agreement for any reason including but not
limited to termination as a result of breach shall have no effect on the
LICENSE AGREEMENT.
<PAGE>
9.7 The obligations of Sections 5 and 6 of this Agreement shall survive
any termination of this Agreement.
SECTION 10- General Provisions.
10.1 The relationship between UNIVERSITY and OSIRIS is that of
independent contractors. UNIVERSITY shall have no power to bind or obligate
OSIRIS in any manner. Likewise, OSIRIS shall have no power to bind or obligate
UNIVERSITY in any manner.
10.2 This Agreement sets-forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all prior
agreements in this respect. There shall be no amendments or modifications to
this Agreement, except by a written document which is signed by both
parties.
10.3 This Agreement shall be construed and enforced in accordance with
the laws of the State of Delaware without reference to its choice of law
principles.
10.4 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.
10.5 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement, excepting only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.
10.6 Notices. Any notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given and delivered upon the earlier
of (i) when received at the address set forth below, or (ii) three (3)
business days after mailed by certified or registered mall postage prepaid and
<PAGE>
properly addressed, with return receipt requested, or (iii) on the day when
sent by facsimile as confirmed by certified or registered mall. Notices shall
be delivered to the respective parties as indicated:
To OSIRIS: Osiris Therapeutics, Inc.
11100 Euclid Avenue
Wearn Building, 4th Floor
Cleveland, Ohio 44106
Attn: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecehi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax no.(201)994-1744
Attn: Elliot M. Olstein, Esq.
To UNIVERSITY Dean of Graduate Studies and Research
Case Western Reserve University
2040 Adelbert Road
Cleveland, Ohio 44106
10.7 OSIRIS shall not use the name of the UNIVERSITY or of any
UNIVERSITY staff member, employee or student or any adaptation thereof in any
advertising, promotional or sales literature with respect to a product without
the prior written approval of UNIVERSITY.
Except that OSIRIS shall be permitted to use the name of the UNIVERSITY
or any UNIVERSITY staff member, employee or student for the following:
(i) as required to obtain regulatory approval for product:
(ii) as required by law or bona fide legal process; and
(iii) in connection with a financing or offering of securities.
(iv) in connection with reports or discussions with shareholders,
prospective investors and potential corporate partners.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
OSIRIS THERAPEUTICS, INC CASE WESTERN RESERVE UNIVERSITY
By: _/s/ James S. Burns______ By: _/s/ Thomas H. Moss_______________
Name: James S. Burns Name: Thomas H. Moss
Title: President & CEO Title: Dean Graduate Studies and Research
<PAGE>
We, Drs. Arnold l. Caplan, Stephan E. Haynesworth and Victor M.
Goldberg, named as PRINCIPAL INVESTIGATORS in this Agreement, attest that we
have read this Agreement in its entirety; and that we consent to and agree to
be bound by the terms herein.
PRINCIPAL INVESTIGATORS
By: _/s/ Arnold I. Caplan______
Arnold I. Caplan
By: _/s/ Stephen E. Haynesworth_
Stephen E. Haynesworth
By: _/s/ Victor M. Goldberg_____
Victor M. Goldberg
<PAGE>
APPENDIX A
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
APPENDIX B
SPECIAL PROJECTS
OSIRIS THERAPEUTICS, INC
CWRU/UH Founders Cleveland, Ohio
ORI-FUNDED MSC RESEARCH PROJECTS
1994-1997
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
APPENDIX C
MATERIALS TRANSFER AGREEMENT
Agreement dated ____________________ by and among (the "Institution"),
_____________________(the "Investigator") and _________________________________
University ("__________") with respect to samples of a
In consideration of the receipt from ________ by the Institution and the
Investigator of the samples, the Institution and the Investigator agree to the
following conditions:
l. These samples, their progeny and derivatives hereof (the "Materials")
remain the property of ______
2. The Investigator will use the Materials solely for academic
noncommercial research conducted by the Investigator at the Institution
for a research program described in Exhibit A hereto (the "Research
Program"). Neither the Investigator nor the Institution will use the
results of the Research Program, including inventions, directly or
indirectly for profit-making purposes without the consent of
3. The Investigator and the Institution understand that ________ has
applied for a patent on the and derivatives thereof.
4. The Investigator will not give access to the Materials to any party not
connected with the Research Program without written permission from _____
5. The Investigator and the Institution accept the Materials with the
knowledge that they are provided without warranty of merchantability of
fitness for a particular purpose or any other warranty, express or
implied. The Institution agrees to defend and indemnify and hold harmless
_______ and its employees and agents from all claims and damages
(including legal fees) arising from the use, storage, handling, or
disposal of the Materials by the Institution and/or the Investigator.
INSTITUTION: INVESTIGATOR:
BY:________________ ______________________
__________UNIVERSITY
BY:______________
<PAGE>
AGREEMENT
BETWEEN
OSIRIS THERAPEUTICS, INC.
2001 Aliceanna Street
Baltimore, MD 21231-2001
AND
DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
3701 NORTH FAIRFAX DRIVE
ARLINGTON, VA 22203-1714
CONCERNING
SEQUENTIAL RELEASE OF VACCINES USING MESENCHYMAL STEM CELLS
TWO-COMPONENT CELL SYSTEMS USING MESENCHYMAL STEM CELLS
Agreement No.: MDA972-96-3-0018
ARPA Order No.: D850/00
Total Amount of the Agreement: $ 3,006,356.00
Total Estimated Government Funding of the Agreement: $2,000,000.00
Funds Obligated: $2,000,000.00
Authority: 10 U.S.C. ~ 2371
Line of Appropriation:
AA 9760400 1320 D850 P6D1O 2525 DPAC 6 5145 503733: $1,359,500.00
AB 9760400 1320 D850 P6Y1O 2525 DPAC 6 5145 503733: $640,500.00
This Agreement is entered into between the United States of America,
hereinafter called the Government, represented by The Defense Advanced
Research Projects Agency (DARPA), and OSIRIS
THERAPEUTICS, INC. pursuant to and under U.S. Federal law.
FOR OSIRIS THERAPEUTICS, INC. FOR THE UNITED STATES OF AMERICA
DEFENSE ADVANCED RESEARCH
PROJECTS AGENCY
/s/ James S. Burns 6/11/96 /s/ Ron G. Register
(Name, Title) RON H. REGISTER
Deputy Director, Management
James S. Burns
President & CEO
<PAGE>
TABLE OF CONTENTS
ARTICLES PAGE
ARTICLE I Scope of the Agreement 3
ARTICLE II Term 8
ARTICLE III Management of the Project 9
ARTICLE IV Agreement Administration 11
ARTICLE V Obligation and Payment 12
ARTICLE VI Disputes 14
ARTICLE VII Patent Rights 16
ARTICLE VIII Data Rights 22
ARTICLE IX Foreign Access to Technology 24
ARTICLE X Civil Rights Act 27
ARTICLE XI Execution 27
ATTACHMENTS
ATTACHMENT 1 Statement of Work
ATTACHMENT 2 Report Requirements
ATTACHMENT 3 Schedule of Payments and Payable Milestones
ATTACHMENT 4 Funding Summary (NOT APPLICABLE)
ATTACHMENT 5 List of OSIRIS Therapeutics, Inc. Representatives
<PAGE>
ARTICLE I: SCOPE OF THE AGREEMENT
[*CONFIDENTIALITY REQUESTED*]
ARTICLE II: TERM
A. The Term of this Agreement
The Program shall commence on the date of the last signature hereon, and shall
continue for thirty-six (36) months, which term, for the purpose of
performance, progress measurement and funding, shall be divisible into three
twelve (12) month periods. For each period, if all funds are expended prior
to the twelve (12)-month duration, the Parties have no obligation to continue
performance and may elect to cease development at that point. Provisions of
this Agreement, which, by their express terms or by necessary implication,
apply for periods of time other than specified herein, shall be given effect,
notwithstanding this Article.
B. Termination Provisions
Subject to a reasonable determination that the program will not produce
beneficial results commensurate with the expenditure of resources, either
Party may terminate this Agreement by written notice to the other Party,
Provided that such written notice is preceded by consultation between the
Parties. In the event of a termination of the Agreement, it is agreed that
disposition of Data developed under this Agreement, shall be in accordance
with the provisions set forth in Article VIII, Data Rights. The Government
and OSIRIS will negotiate in good faith a reasonable and timely adjustment
of all outstanding issues between the Parties as a result of termination.
Failure of the Parties to agree to a reasonable adjustment will be resolved
pursuant to Article VI, Disputes. The Government has no obligation to
reimburse OSIRIS beyond the last completed and paid milestone if OSIRIS
decides to terminate.
C. Extending the Term
The Parties may extend by mutual written agreement the term of this Agreement
if funding availability and research opportunities reasonably warrant. Any
extension shall be formalized through modification of the Agreement by the
Agreements Officer and the OSIRIS' Administrator.
<PAGE>
ARTICLE III: MANAGEMENT OF THE PROJECT
A. Management and Program Structure
OSIRIS shall be responsible for the overall technical and program management
of the Program, and technical planning and execution shall remain with
OSIRIS. The DARPA Program Manager shall provide recommendations to Program
developments and technical collaboration and be responsible for the review and
verification of the Payable Milestones
B. Program Management Planning Process
Program planning will consist of an Annual Program Plan with inputs and review
from OSIRIS and DARPA management, containing the detailed schedule of research
activities and payable milestones. The Annual Program Plan will consolidate
quarterly adjustments in the research schedule, including revisions/
modification to payable milestones.
l. Initial Program Plan: OSIRIS will follow the initial program
plan that is contained in the Statement of Work (Attachment 1), and the
Schedule of Payments and Payable Milestones (Attachment 3).
2. Overall Program Plan Annual Review
(a) OSIRIS, with DARPA Program Manager review, will prepare
an overall Annual Program Plan in the first quarter of each Agreement year.
(For this purpose, each consecutive twelve (12) month period from (and
including) the month of execution of this Agreement during which this
Agreement shall remain in effect shall be considered an "Agreement Year".)
The Annual Program Plan will be presented and reviewed at an annual site
review which will be attended by OSIRIS Management, the DARPA Program Manager,
Senior DARPA management as appropriate, and other DARPA program managers and
personnel as appropriate. OSIRIS, with DARPA participation and review, will
prepare a final Annual Program Plan.
(b) The Annual Program Plan provides a detailed schedule of
research activities, commits OSIRIS to use its best efforts to meet specific
performance objectives, includes forecasted expenditures and describes the
Payable Milestones. The Annual Program Plan will consolidate all prior
adjustments in the research schedule, including revisions/modifications to
payable
<PAGE>
milestones. Recommendations for changes, revisions or modifications to the
Agreement which result from the Annual Review shall be made in accordance
with the provisions of Article III, Section C.
C. Modifications
l. As a result of quarterly meetings, annual reviews, or at
any time during the term of the Agreement, research progress or results may
indicate that a change in the Statement of Work and/or the Payable Milestones,
would be beneficial to program objectives. Recommendations for modifications,
including justifications to support any changes to the Statement of Work
and/or the Payable Milestones, will be documented in a letter and submitted by
OSIRIS to the DARPA Program Manager with a copy to the DARPA Agreements
Officer. This documentation letter will detail the technical, chronological,
and financial impact of the proposed modification to the research program.
OSIRIS shall approve any Agreement modification. The Government is not
obligated to pay for additional or revised Payable Milestones until the
Payable Milestones Schedule (Attachment 3) is formally revised by the DARPA
Agreements Officer and made part of this Agreement.
2. The DARPA Program Manager shall be responsible for the
review and verification of any recommendations to revise or otherwise modify
the Agreement Statement of Work, Schedule of Payments or Payable Milestones,
or other proposed changes to the terms and conditions of this Agreement.
3. For minor or administrative Agreement modifications
(e.g. changes in the paying office or appropriation data, changes to
Government or OSIRIS personnel identified in the Agreement, etc.) no signature
is required by OSIRIS.
<PAGE>
ARTICLE IV: AGREEMENT ADMINISTRATION
Unless otherwise provided in this Agreement, approvals permitted or required
to be made by DARPA may be made only by the DARPA Agreements Officer.
Administrative and contractual matters under this Agreement shall be referred
to the following representatives of the parties:
DARPA: C. Alan Frederick (Agreements Officer)
(703) 696-0047
OSIRIS: Robert J. Walden (Administrator)
(410) 522-5005
Technical matters under this Agreement shall be referred to the following
representatives:
DARPA: CDR Shaun B. Jones, MC, USN (Program Manager)
(703) 696-4427
OSIRIS: Daniel R. Marshak, Ph.D
(410) 522-5005
Each party may change its representatives named in this Article by written
notification to the other party.
<PAGE>
ARTICLE V: OBLIGATION AND PAYMENT
A. Obligation
l. The Government' 5 liability to make payments to OSIRIS
is limited to only those funds obligated under the Agreement or by
modification to the Agreement. DARPA may obligate funds to the Agreement
incrementally.
2. If modification becomes necessary in performance of
this Agreement, pursuant to Article III, paragraph B, the DARPA Agreements
Officer and OSIRIS Administrator shall execute a revised Schedule of Payable
Milestones consistent with the then current Program Plan.
B. Payments
l. OSIRIS has an established and agrees to maintain an
established accounting system which complies with Generally Accepted
Accounting Principles and the requirements of this Agreement, and shall ensure
that appropriate arrangements have been made for receiving, distributing and
accounting for Federal funds. An acceptable accounting system is one in which
all cash receipts and disbursements are controlled and documented properly.
2. OSIRIS shall document the accomplishments of each
Payable Milestone by submitting or otherwise providing the Payable Milestones
Report required by Attachment 2, Part D. OSIRIS shall submit an original and
one (1) copy of all invoices to the Agreements Officer for payment approval. -
After written verification of the accomplishment of the Payable Milestone by
the DARPA Program Manager, and approval by the Agreements Officer, the
invoices will be forwarded to the payment office within fifteen (15) calendar
days of receipt of the invoices at DARPA. Payment approval for the final
Payable Milestone will be made after reconciliation of DARPA funding with
actual OSIRIS contributions. Payments will be made by DAO-DE BOLLING/FS, 110
Luke Avenue, Room 280, Bolling AFB, DC 20332-0112 within fifteen (15) calendar
days of DARPA' s transmittal. Subject to change only through written
Agreement modification, payment shall be made to the address of the OSIRIS
Administrator set forth below.
<PAGE>
3. Address of Payee:
OSIRIS THERAPEUTICS, INC.
2001 Aliceanna Street
Baltimore, MD 21231-2001
4. Limitation of Funds: In no case shall the Government' s
financial liability exceed the amount obligated under this Agreement
5. Financial Records and Reports: OSIRIS shall maintain
adequate records to account for Federal funds received under this Agreement
and shall maintain adequate records to account for OSIRIS funding provided for
under this Agreement. Upon completion or termination of this Agreement,
whichever occurs earlier, the OSIRIS Administrator shall furnish to the
Agreements Officer a copy of the Final Report required by Attachment 2, Part
E. OSIRIS' relevant financial records are subject to examination or audit on
behalf of DARPA by the Government, by an auditing agency mutually agreeable to
both parties, for a period not to exceed three (3) years after expiration of
the term of this Agreement. The Agreements Officer or designee shall have
direct access to sufficient records and information of OSIRIS, to ensure full
accountability for all funding under this Agreement. Such audit, examination,
or access shall be performed during business hours on business days upon prior
written notice and shall be subject to the security requirements of the
audited party.
<PAGE>
ARTICLE VI: DISPUTES
A. General
The Parties shall communicate with one another in good faith and in a timely
and cooperative manner when raising issues under this Article.
B. Dispute Resolution Procedures
l. Any disagreement, claim or dispute between DARPA and
OSIRIS concerning questions of fact or law arising from or in connection with
this Agreement, and, whether or not involving an alleged breach of this
Agreement, may be raised only under this Article.
2. Whenever disputes, disagreements, or misunderstandings
arise, the Parties shall attempt to resolve the issue(s) involved by
discussion and mutual agreement as soon as practicable. In no event shall a
dispute, disagreement or misunderstanding which arose more than three (3)
months prior to the notification made under subparagraph B.3 of this article
constitute the basis for relief under this article unless the Director of
DARPA in the interests of justice waives this requirement.
3. Failing resolution by mutual agreement, the aggrieved
Party shall document the dispute, disagreement, or misunderstanding by
notifying the other Party (through the DARPA Agreements Officer or Consortium
Administrator, as the case may be) in writing of the relevant facts, identify
unresolved issues, and specify the clarification or remedy sought. Within
five (5) working days after providing notice to the other Party, the aggrieved
Party may, in writing, request a joint decision by the DARPA Deputy Director
for Management and James S Burns, President and Chief Executive Officer,
OSIRIS. The other Party shall submit a written position on the matter(s) in
dispute within thirty (39) calendar days after being notified that a decision
has been requested. The Deputy Director for Management and the senior
executive shall conduct a review of the matter(s) in dispute and render a
decision in writing within thirty (30) calendar days of receipt of such
written position. Any such joint decision is final and binding.
4. In the absence of a joint decision, upon written request
to the Director of DARPA, made within thirty (30) calendar days of the
expiration of the time for a decision under subparagraph B.3
<PAGE>
above, the dispute shall be further reviewed. The Director of DARPA may elect
to conduct this review personally or through a designee or jointly with James
S Burns, President and Chief Executive Officer, OSIRIS. Following the review,
the Director of DARPA or designee will resolve the issue(s)and notify the
Parties in writing. Such resolution is not subject to further administrative
review and, to the extent permitted by law, shall be final and binding.
5. Subject only to this article and 41 U.S.C. 321-322, if
not satisfied with the results of completing the above process, either Party
may within thirty (30) calendar days of receipt of the notice in subparagraph
B.4 above pursue any right and remedy in a court of competent jurisdiction.
C. Limitation of Damages
Claims for damages of any nature whatsoever pursued under this Agreement shall
be limited to direct damages only up to the aggregate amount of DARPA funding
disbursed as of the time the dispute arises. In no event shall DARPA be
liable for claims for consequential, punitive, special and incidental damages,
claims for lost profits, or other indirect damages. (OSIRIS disclaims any
liability for consequential, indirect, or special damages, except when such
damages are caused by willful misconduct of OSIRIS personnel In no event
shall OSIRIS's liability under this Agreement exceed the funding it has
received up to the time of incurring such liability.
<PAGE>
ARTICLE VII: PATENT RIGHTS
A. Definitions
l. "Invention" means any invention or discovery which is or
may be patentable or otherwise protectable under Title 35 of the United
States Code.
2. "Made" when used in relation to any invention means the
conception or first actual reduction to practice of such invention.
3. "Practical application" means to manufacture, in the
case of a composition of product; to practice, in the case of a process or
method, or to operate, in the case of a machine or system; and, in each case,
under such conditions as to establish that the invention is capable of being
utilized and that its benefits are, to the extent permitted by law or
Government regulations, available to the public on reasonable terms.
4. "Subject invention" means any invention conceived or
first actually reduced to practice in the performance of work under this
Agreement.
B. Allocation of Principal Rights
Unless OSIRIS shall have notified DARPA (in accordance with subparagraph C.2
below) that OSIRIS does not intend to retain title, OSIRIS shall retain the
entire right, title, and interest throughout the world to each subject
invention consistent with the provisions of this Article and 35 U.S.C. 202.
With respect to any subject invention in which OSIRIS retains title, DARPA
shall have a nonexclusive, nontransferable, irrevocable, paid-up license to
practice or have practiced on behalf of the United States the subject
invention throughout the world.
C. Invention Disclosure, Election of Title, and Filing of Patent Application
l. OSIRIS shall disclose each subject invention to DARPA
within four (4) months after the inventor discloses it in writing to his
company personnel responsible for patent matters. The disclosure to DARPA
shall be in the form of a written report and shall identify the Agreement
under which the invention was made and the identity of the inventor(s). It
shall be sufficiently complete in technical detail to convey a clear
understanding to
<PAGE>
the extent known at the time of the disclosure, of the nature, purpose,
operation, and the physical, chemical, biological, or electrical
characteristics of the invention. The disclosure shall also identify any
publication, sale, or public use of the invention and whether a manuscript
describing the invention has been submitted for publication and, if so,
whether it has been accepted for publication at the time of disclosure.
OSIRIS shall also submit to DARPA an annual listing of subject inventions.
2. If OSIRIS determines that it does not intend to retain
title to any such invention, OSIRIS shall notify DARPA, in writing, within
eight (8) months of disclosure to DARPA. However, in any case where
publication, sale, or public use has initiated the one (1)-year statutory
period wherein valid patent protection can still be obtained in the United
States, the period for such notice may be shortened by DARPA to a date that
is no more than sixty (60) calendar days prior to the end of the statutory
period.
3. OSIRIS shall file its initial patent application on a
subject invention to which it elects to retain title within one (1) year after
election of title or, if earlier, prior to the end of the statutory period
wherein valid patent protection can be obtained in the United States after a
publication, or sale, or public use. OSIRIS may elect to file patent
applications in additional countries (including the European Patent Office and
the Patent Cooperation Treaty) within either ten (10) months of the
corresponding initial patent application or six (6) months from the date
permission is granted by the Commissioner of Patents and Trademarks to file
foreign patent applications, where such filing has been prohibited by a
Secrecy Order.
4. Requests for extension of the time for disclosure
election, and filing under Article VII, paragraph C, may, at the discretion of
DARPA, and after considering the position of OSIRIS, be granted.
D. Conditions When the Government May Obtain Title
Upon DARPA' s written request, OSIRIS shall convey title to any subject
invention to DARPA under any of the following conditions:
l. If OSIRIS fails to disclose or elects not to retain
title to the subject invention within the times specified in paragraph C of
this Article; provided, that DARPA may only request title within sixty (60)
calendar days after learning of the failure of OSIRIS to disclose or elect
within the specified times.
<PAGE>
2. In those countries in which OSIRIS fails to file patent
applications within the times specified in paragraph C of this Article;
provided, that if OSIRIS has filed a patent application in a country after the
times specified in paragraph C of this Article, but prior to its receipt of
the written request by DARPA, OSIRIS shall continue to retain title in that
country; or
3. In any country in which OSIRIS decides not to continue
the prosecution of any application for, to pay the maintenance fees on, or
defend in reexamination or opposition proceedings on, a patent on a subject
invention.
E. Minimum Rights to OSIRIS and Protection of OSIRIS's Right to File
l. OSIRIS shall retain a nonexclusive, royalty-free license
throughout the world in each subject invention to which the Government
obtains title, except if OSIRIS fails to disclose the invention within the
times specified in paragraph C of this Article. The OSIRIS license extends
to the domestic (including Canada) subsidiaries and affiliates, if any, within
the corporate structure of which OSIRIS is a party and includes the right to
grant licenses of the same scope to the extent that OSIRIS was legally
obligated to do so at the time the Agreement was awarded. The license is
transferable only within the approval of DARPA, except when transferred to
the successor of that part of the business to which the invention pertains.
DARPA approval for license transfer shall not be unreasonably withheld.
2. The OSIRIS domestic license may be revoked or modified
by DARPA to the extent necessary to achieve expeditious practical application
of the subject invention pursuant to an application for an exclusive license
submitted consistent with appropriate provisions at 37 CFR Part 404. This
license shall not be revoked in that field of use or the geographical areas in
which OSIRIS has achieved practical application and continues to make the
benefits of the invention reasonably accessible to the public. The license in
any foreign country may be revoked or modified at the discretion of DARPA to
the extent OSIRIS, its licensees, or the subsidiaries or affiliates have
failed to achieve practical application in that foreign country.
3. Before revocation or modification of the license, DARPA
shall furnish OSIRIS a written notice of its intention to revoke or modify the
license, and OSIRIS shall be allowed thirty (30) calendar days (or such other
time as may be authorized for good
<PAGE>
cause shown) after the notice to show cause why the license should not be
revoked or modified.
F. Action to Protect the Government's Interest
l. OSIRIS agrees to execute or to have executed and
promptly deliver to DARPA all instruments necessary to (i) establish or
confirm the rights the Government has throughout the world in those subject
inventions to which OSIRIS elects to retain title, and (ii) convey title to
DARPA when requested under paragraph D of this Article and to enable the
Government to obtain patent protection throughout the world in that subject
invention.
2. OSIRIS agrees to require, by written agreement, its
employees, other than clerical and nontechnical employees, to disclose
promptly in writing to personnel identified as responsible for the
administration of patent matters and in a format suggested by OSIRIS each
subject invention made under this Agreement in order that OSIRIS can comply
with the disclosure provisions of paragraph C of this Article. OSIRIS shall
instruct employees, through employee agreements or other suitable educational
programs, on the importance of reporting inventions in sufficient time to
permit the filing of patent applications prior to U.S. or foreign statutory
bars.
3. OSIRIS shall notify DARPA of any decisions not to
continue the prosecution of a patent application, pay maintenance fees, or
defend in a reexamination or opposition proceedings on a patent, in any
country, not less than thirty (30) calendar days before the expiration of the
response period required by the relevant patent office.
4. OSIRIS shall include, within the specification of any
United States patent application and any patent issuing thereon covering a
subject invention, the following statement: "This invention was made with
Government support under Agreement No. MDA972-96-3-0018 awarded by DARPA.
The Government has certain rights in the invention."
G. Lower Tier Agreements
OSIRIS shall include this Article, suitably modified, to identify the Parties,
in all subcontracts or lower tier agreements, regardless of tier, for
experimental, developmental, or research work.
<PAGE>
H. Reporting on Utilization of Subject Inventions
OSIRIS agrees to submit, during the term of the Agreement, periodic reports no
more frequently than annually on the utilization of a subject invention or on
efforts at obtaining such utilization that are being made by OSIRIS or
licensees or assignees of the inventor. Such reports shall include
information regarding the status of development, date of first commercial sale
or use, gross royalties received by OSIRIS, and such other data and
information as the agency may reasonably specify. OSIRIS also agrees
to provide additional reports as may be requested by DARPA in connection
with any march-in proceedings undertaken by DARPA in accordance with
paragraph J of this Article. Consistent with 35 U.S.C. 202(c) (5), DARPA
agrees it shall not disclose such information to persons outside the
Government without permission of OSIRIS.
I. Preference for American Industry
Notwithstanding any other provision of this clause, OSIRIS agrees that it
shall not grant to any person the exclusive right to use or sell any subject
invention in the United States or Canada unless such person agrees that any
product embodying the subject invention or produced through the use of the
subject invention shall be manufactured substantially in the United States or
Canada. However, in individual cases, the requirements for such an agreement
may be waived by DARPA upon a showing by OSIRIS that reasonable but
unsuccessful efforts have been made to grant licenses on similar terms to
potential licensees that would be likely to manufacture substantially in the
United States or that, under the circumstances, domestic manufacture is not
commercially feasible.
J. March-in Rights
OSIRIS agrees that, with respect to any subject invention in which it has
retained title, DARPA has the right to require OSIRIS, an assignee, or
exclusive licensee of a subject invention to grant a non-exclusive license to
a responsible applicant or applicants, upon terms that are reasonable under
the circumstances, and if OSIRIS, assignee, or exclusive licensee refuses such
a request, DARPA has the right to grant such a license itself if DARPA
determines that:
l. Such action is necessary because OSIRIS or assignee has
not taken effective steps, consistent with the intent of this Agreement, to
achieve practical application of the subject invention;
2. Such action is necessary to alleviate health or safety
needs which are not reasonably satisfied by OSIRIS, assignee, or their
licensees;
3. Such action is necessary to meet requirements for public
use and such requirements are not reasonably satisfied by OSIRIS, assignee,
or licensees; or
4. Such action is necessary because the agreement required
by paragraph (I) of this Article has not been obtained or waived or because a
licensee of the exclusive right to use or sell any subject invention in the
United States is in breach of such Agreement.
<PAGE>
ARTICLE VIII: DATA RIGHTS
A. Definitions
l. "Government Purpose Rights", as used in this article,
means rights to use, duplicate, or disclose Data, in whole or in part and in
any manner, for Government purposes only, and to have or permit others to do
so for Government purposes only.
2. "Unlimited Rights", as used in this article, means
rights to use, duplicate, release, or disclose, Data in whole or in part, in
any manner and for any purposes whatsoever, and to have or permit others to
do so.
3. "Data", as used in this article, means recorded
information, regardless of form or method of recording, which includes but is
not limited to, technical data, software, trade secrets, and mask works. The
term does not include financial, administrative, cost, pricing or management
information and does not include subject inventions included under Article VII.
B. Allocation of Principal Rights
l. This Agreement shall be performed with mixed Government
and OSIRIS funding. The Parties agree that in consideration for Government
funding, OSIRIS intends to reduce to practical application items, components
and processes developed under this Agreement.
2. OSIRIS agrees to retain and maintain in good condition
until five (5) years after completion or termination of this Agreement, all
Data necessary to achieve practical application. In the event of exercise of
the Government's March-in Rights as set forth under Article VII or
subparagraph B.3 of this article, OSIRIS agrees, upon written request from the
Government, to deliver at no additional cost to the Government, all Data
necessary to achieve practical application within sixty (GO) calendar days
from the date of the written request. The Government shall retain Unlimited
Rights, as defined in paragraph A above, to this delivered Data.
3. OSIRIS agrees that, with respect to Data necessary to
achieve practical application, DARPA has the right to require OSIRIS to
deliver all such Data to DARPA in accordance with its reasonable directions if
DARPA determines that:
<PAGE>
(a) Such action is necessary because OSIRIS or
assignee has not taken effective steps, consistent with the intent of this
Agreement, to achieve practical application of the technology developed
during the performance of this Agreement;
(b) Such action is necessary to alleviate health or
safety needs which are not reasonably satisfied by OSIRIS, assignee, or
their licensees; or
(c) Such action is necessary to meet requirements
for public use and such requirements are not reasonably satisfied by OSIRIS,
assignee, or licensees.
4. With respect to Data delivered pursuant to Attachment
2 (and listed below), the Government shall receive Government Purpose Rights,
as defined in paragraph A above. With respect to all Data delivered, in the
event of the Government's exercise of its right under subparagraph B.2 of this
article, the Government shall receive Unlimited Rights.
C. Marking of Data
Pursuant to paragraph B above, any Data delivered under this Agreement shall
be marked with the following legend:
Use, duplication, or disclosure is subject to the restrictions as stated in
Agreement MDA972-96-3-0018 between the Government and OSIRIS.
D. Lower Tier Agreements
OSIRIS shall include this Article, suitably modified to identify the Parties,
in all subcontracts or lower tier agreements, regardless of tier, for
experimental, developmental, or research work.
<PAGE>
ARTICLE IX: FOREIGN ACCESS TO TECHNOLOGY
This Article shall remain in effect during the term of the Agreement and for
five (5) years thereafter.
A. Definition
l. "Foreign Firm or Institution" means a firm or
institution organized or existing under the laws of a country other than the
United States, its territories, or possessions. The term includes, for
purposes of this Agreement, any agency or instrumentality of a foreign
government; and firms, institutions or business organizations which are
owned or substantially controlled by foreign governments, firms,
institutions, or individuals.
2. "Know-How" means all information including, but not
limited to discoveries, formulas, materials, inventions, processes, ideas,
approaches, concepts, techniques, methods software, programs, documentation,
procedures, firmware, hardware, technical data, specifications, devices,
apparatus and machines.
3. "Technology" means discoveries, innovations, Know-How
and inventions, whether patentable or not, including computer software,
recognized under U.S. law as intellectual creations to which rights of
ownership accrue, including, but not limited to, patents, trade secrets,
maskworks, and copyrights developed under this Agreement.
B. General
The Parties agree that research findings and technology developments arising
under this Agreement may constitute a significant enhancement to the national
defense, and to the economic vitality of the United States. Accordingly,
access to important technology developments under this Agreement by Foreign
Firms or Institutions must be carefully controlled. The controls contemplated
in this Article are in addition to, and are not intended to change or
supersede, the provisions of the International Traffic in Arms Regulation
(22 CFR pt. 121 et seq.), the DOD Industrial Security Regulation (DoD
5220.22-R) and the Department of Commerce Export Regulation (15 CFR pt. 770 et
seq.)
<PAGE>
C. Restrictions on Sale or Transfer of Technology to Foreign Firms or
Institutions
l. In order to promote the national security interests of
the United States and to effectuate the policies that underlie the regulations
cited above, the procedures stated in subparagraphs C.2, C.3, and C.4 below
shall apply to any transfer of Technology. For purposes of this paragraph, a
transfer includes a sale of the company, and sales or licensing of
Technology. Transfers do not include:
(a) sales of products or components, or
(b) licenses of software or documentation related to
sales of products or components, or
(c) transfer to foreign subsidiaries of OSIRIS for
purposes related to this Agreement, or
(d) transfer which provides access to Technology to
a Foreign Firm or Institution which is an approved source of supply or
source for the conduct of research under this Agreement provided that such
transfer shall be limited to that necessary to allow the firm or institution
to perform its approved role under this Agreement.
2. OSIRIS shall provide timely notice to DARPA of any
proposed transfers from OSIRIS of Technology developed under this Agreement
to Foreign Firms or Institutions. If DARPA determines that the transfer may
have adverse consequences to the national security interests of the United
States, OSIRIS, its vendors, and DARPA shall jointly endeavor to find
alternatives to the proposed transfer which obviate or mitigate potential
adverse consequences of the transfer but which provide substantially
equivalent benefits to OSIRIS.
3. In any event, OSIRIS shall provide written notice to the
DARPA Program Manager and Agreements Officer of any proposed transfer to a
foreign firm or institution at least sixty (60) calendar days prior to the
proposed date of transfer. Such notice shall cite this Article and shall
state specifically what is to be transferred and the general terms of the
transfer. Within thirty (30) calendar days of receipt of OSIRIS's written
notification, the DARPA Agreements Officer shall advise OSIRIS whether it
consents to the proposed transfer. In cases where DARPA does not concur or
sixty (60) calendar days after receipt
<PAGE>
and DARPA provides no decision, OSIRIS may utilize the procedures under
Article VI, Disputes. No transfer shall take place until a decision is
rendered.
4. Except as provided in subparagraph C.1 above or in the
event the transfer of Technology to Foreign Firms or Institutions is approved
by DARPA, OSIRIS shall (a) refund to DARPA funds paid for the development of
the Technology and (b) negotiate a license with the Government to the
Technology under terms that are reasonable under the circumstances.
D. Lower Tier Agreements
OSIRIS shall include this Article, suitably modified, to identify the Parties,
in all subcontracts or lower tier agreements, regardless of tier, for
experimental, developmental, or research work.
<PAGE>
ARTICLE X: CIVIL RIGHTS ACT
This Agreement is subject to the compliance requirements of Title VI of the
Civil Rights Act of 1964 as amended (42 U.S.C. 2000-d) relating to
nondiscrimination in Federally assisted programs. OSIRIS has signed an
Assurance of Compliance with the nondiscriminatory provisions of the Act.
ARTICLE XI: EXECUTION
This Agreement constitutes the entire agreement of the Parties and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions among the Parties, whether oral or written, with respect to the
subject matter hereof. This Agreement may be revised only by written consent
of OSIRIS and the DARPA Agreements Officer. This Agreement, or modifications
thereto, may be executed in counterparts each of which shall be deemed as
original, but all of which taken together shall constitute one and the same
instrument.
<PAGE>
ATTACHMENT 1
STATEMENT OF WORK
OSIRIS THERAPEUTICS, INC
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
ATTACHMENT 2
REPORT REQUIREMENTS
A. QUARTERLY REPORT
On or before ninety (90) calendar days after the effective date of the
Agreement and quarterly thereafter throughout the term of the Agreement,
OSIRIS shall submit or otherwise provide a quarterly report. Two (2) copies
shall be submitted or otherwise provided to the DARPA Program Manager, one (1)
copy shall be submitted or otherwise provided to the DARPA Agreements Officer
and one (1) copy shall be submitted or otherwise provided to DARPA/Defense
Sciences Office (DSO), Attn: CDR Shaun B. Jones, MC, USN (Program Manager).
The report will have two (2) major sections
l. Technical Status report. The technical status report
will detail technical progress to date and report on all problems, technical
issues, major developments, and the status of external collaborations during
the reporting period.
2. Business Status report. The business status report
shall provide summarized details of the resource status of this Agreement,
including the status of OSIRIS contributions. This report will include a
quarterly accounting of current expenditures as outlined in the Annual Program
Plan. Any major deviations shall be explained along with discussions of the
adjustment actions proposed. This report shall also identify any interest
earned on government funds on account.
B. ANNUAL PROGRAM PLAN DOCUMENT
OSIRIS shall submit or otherwise provide to the DARPA Program Manager one (1)
copy of a report which describes the Annual Program Plan as described in
Article III, Section B. This document shall be submitted not later than thirty
(30) calendar days following the Annual Site Review as described in Article
III, Section B.
<PAGE>
C. SPECIAL TECHNICAL REPORTS
As agreed to by OSIRIS and the DARPA Program Manager, OSIRIS shall submit or
otherwise provide to the DARPA Program Manager one (1) copy of special reports
on significant events such as significant target accomplishments by OSIRIS,
significant tests, experiments, or symposia.
D. PAYABLE MILESTONES REPORTS
OSIRIS shall submit or otherwise provide to the DARPA Program Manager,
documentation describing the extent of accomplishment of Payable Milestones.
This information shall be as required by Article V, paragraph B and shall be
sufficient for the DARPA Program Manager to reasonably verify the
accomplishment of the milestone of the event in accordance with the Statement
of Work.
E. FINAL REPORT
l OSIRIS shall submit or otherwise provide a Final Report
making full disclosure of all major developments by OSIRIS upon completion of
the Agreement or within sixty (60) calendar days of termination of this
Agreement. With the approval of the DARPA Program Manager, reprints of
published articles may be attached to the Final Report. Two (2) copies shall
be submitted or otherwise provided to the DARPA Program Manager and one (1)
copy shall be submitted or otherwise provided to DARPA/Defense Sciences Office
(DSO), Attn: CDR Shaun B. Jones, MC, USN (Program Manager). One (1) copy shall
be submitted to the Defense Technical Information Center (DTIC) addressed to
Bldg. 5/Cameron Station, Alexandria, VA 22314.
2. The Final Report shall be marked with a distribution
statement to denote the extent of its availability for distribution, release,
and disclosure without additional approvals or authorizations. The Final
Report shall be marked on the front-page in a conspicuous place with the
following marking:
<PAGE>
"DISTRIBUTION STATEMENT B Distribution authorized to U.S. Government
agencies only to protect information not owned by the U.S. Government and
protected by a contractor' S "limited rights" statement, or received with
the understanding that it not be routinely transmitted outside the U.S.
Government. Other requests for this document shall be referred to DARPA/
Technical Information Officer.
<PAGE>
ATTACHMENT 3
SCHEDULE OF PAYMENTS AND
PAYABLE MILESTONES
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
ATTACHMENT 5
LIST OF GOVERNMENT
AND
OSIRIS THERAPEUTICS, INC. REPRESENTATIVES
GOVERNMENT: C. Alan Frederick
DARPA/CMO
3701 N. Fairfax Drive
Arlington, VA 22203-1714
phone: (703) 696-0047
FAX: (703) 696-2208
Email: [email protected]
CDR Shaun B. Jones, MC, USN
DARPA/DSO
3701 N. Fairfax Drive
Arlington, VA 22203-1714
phone: (703) 696-4427
FAX: (703) 696-3999
Email: [email protected]
OSIRIS: Daniel R. Marshak, Ph.D
OSIRIS Therapeutics, Inc.
2001 Aliceanna Street
Baltimore, MD 21231-2001
phone: (410) 522-5005
FAX: (410) 522-6999
Email:
Robert J. Walden
Vice President
Finance & Administration
OSIRIS Therapeutics, Inc.
2001 Aliceanna Street
Baltimore, MD 21231-2001
phone: (410) 522-5005
FAX: (410) 522-6999
Email:
<PAGE>
An Agreement Between
OSIRIS THERAPEUTICS, INC.
2001 Aliceanna Street
Baltimore, Maryland 21231-2001
And
DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
3701 North Fairfax Drive
Arlington, Virginia 22203-1714
Concerning
SEQUENTIAL RELEASE OF VACCINES USING MESENCHYMAL STEM CELLS & TWO-
COMPONENT CELLS SYSTEMS USING MESENCHYMAL STEM CELLS
Agreement No: MDA972-96-3-0018
Modification No: 0001
DARPA Order No: N/A (Admin)
Total Amount of Agreement: No Change
Total Estimate, Government Funding: No Change
Funds Obligated: No Change
Authority: 10 U.S.C. 2371
Line(s) of Accounting: N/A (Admin)
l. Purpose. To change the identification of the Paying Office, and
to add information in support of payment by Electronic Funds Transfer (EFT)
2. Paying Office. The identification and address of the Paying
Office that appears in Article V, Paragraph B2, is changed to read: Defense
Accounting Office, DAO/DFAS-IN-AKA, Attn: Vendor Pay, 8899 East 56th Street,
Indianapolis, Indiana 46249-1325.
3. Electronic Funds Transfer. The Contractor shall be paid by EFT.
The data in support of paying the Contractor in this manner is attached
hereto, and made part of this Agreement 5 Exhibit A to Article V.
For the United States: /s/ C. Alan Frederick 11/27/96
C ALAN FREDERICK
AGREEMENTS OFFICER
<PAGE>
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This Agreement made as of ... June 1997 (the "Effective Date"), between OSIRIS
THERAPEUTICS, INC., a company organized under the laws of the State of
Delaware, of 2001 Aliceanna Street, Baltimore, Maryland 21231-2001, USA
(hereinafter "Osiris") and NOVARTIS PHARMACEUTICALS CORPORATION, a corporation
organized under the laws of the State of Delaware, of Route 10, East Hanover,
New Jersey, USA (hereinafter "Novartis").
WITNESSETH
WHEREAS, Osiris owns, or is exclusive licensee with the right to sublicense,
certain patent rights and know-how relating to the isolation and use of
mesenchymal stem cells as hereinafter defined (hereinafter "MSCs "); and
WHEREAS, Novartis desires to obtain a license from Osiris to manufacture, use
and sell products containing MSCs for certain therapeutic uses under such
patent rights and know-how; and
WHEREAS, both Osiris and Novartis desire to enter into a research
collaboration in the Field as hereinafter defined; and
WHEREAS, Novartis' Affiliate Novartis Pharma AG desires to make an equity
investment in Osiris;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
The following terms shall have the following meanings:
1.1 "Affiliate" means 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.
1.2 "Area" means a subdivision of the Field, which is either the
Bone Therapy Area, the Cartilage Therapy Area, or the Gene Therapy Area.
1.3 "Bone Therapy Area" means the systemic or local treatment of
diagnosed osteoporosis (OP), but does not include acute and non-degenerative
bone defects, other degenerative bone defects, and large segmental defects.
1.4 "Cartilage Therapy Area" means the treatment of acute articular
hyaline cartilage injury, other non-degenerative articular hyaline cartilage
defects, and diagnosed osteoarthritis (OA).
<PAGE>
1.5 "E.U. Countries" means the Member States of the European Union
as of the Effective Date, and such other countries as may in the future join
the European Union, in each case for so long as such country remains a member
of the European Union.
1.6 "FDA" means the United States Food and Drug Administration.
1.7 "Field" means all three of the Areas Cartilage Therapy, Bone
Therapy and Gene Therapy, as defined herein, or, to the extent that the Field
has been restricted according to the provisions of Art. 4.7, any one or two of
said Areas.
1.8 "First Commercial Sale" of Product shall mean the first bona
fide sale for use or consumption by the general public of Product in a
country after required marketing and pricing approval has been granted by
the governing health authority of such country.
1.9 "Gene Therapy Area" means the use of transduced MSCs for the
delivery of a gene and/or polypeptide, which becomes part of the Gene
Therapy Area pursuant to any part of Article 4.8.
1.10 "Gene Therapy Product" means a product or process which
comprises or is used for producing transduced MSCs for the delivery of a gene
and/or polypeptide and which is in the Gene Therapy Area.
1.11 "IND" means an Investigational New Drug application, or an
Investigational Device Exemption (IDE), as defined in the US Food, Drug and
Cosmetic Act and the regulations promulgated thereunder for initiating
clinical trials in the USA, or any corresponding application in a country
other than the USA.
1.12 "Joint Patent Rights" means patent rights which are jointly
owned by Novartis and by Osiris under the provisions of Art. 11.1.
1.13 "JSC" means the Joint Steering Committee set up under the
provisions of Art. 5.
1.14 "Making and having made" includes the expansion and/or
differentiation of MSCs in vitro and/or combining such MSCs or differentiated
products thereof with a delivery vehicle.
1.15 "MSCs" means human mesenchymal stem cells which can
differentiate into cells of more than one connective tissue type.
1.16 "MSC Product" means a product, process or service in the
Cartilage Therapy Area or the Bone Therapy Area and containing non-transduced
or transduced MSCs, or cells derived from isolated MSCs which have been
differentiated in vitro into a specific lineage.
1.17 "NDA" means a New Drug Application; a Biologics License
Application; or a Pre-Marketing Approval for a device, as defined in the US
Food, Drug and Cosmetic Act and the regulations promulgated thereunder or any
other governmental approval to market a Product in the USA,
<PAGE>
or any corresponding application for marketing approval in a country other
than the USA.
1.18 "Net Sales" with respect to any Product means the gross invoice
price of such Product sold to Third Parties in bona fide, arms-length
transactions by Novartis or its Affiliates, licensees or sublicensees, less
(i) quantity and/or cash discounts actually allowed or taken; (ii) freight,
postage and insurance; (iii) amounts repaid or credited by reasons of
rejections or return of goods or because of retroactive price reductions
specifically identifiable to Product; (iv) amounts payable resulting from
Governmental (or agency thereof) mandated rebate programs; (v) third-party
rebates to the extent actually allowed; vi) custom duties and taxes (excluding
income, value-added and similar taxes), if any, directly related to the sale;
and (vii) any other specifically identifiable amounts included in Product's
gross sales that will be credited for reasons substantially equivalent to
those listed hereinabove; all as determined in accordance with Novartis'
standard allocation procedure and accountancy methods, which are in accordance
with generally acceptable accountancy principles {GAAP}).
In the event a Product is sold in a combination product with other
pharmacologically active components, Net Sales, for purposes of royalty
payments on the combination product, shall be calculated by multiplying the
Net Sales of that combination product by the fraction A/B, where A is the
gross selling price of the Product sold separately and B is the gross selling
price of the combination product. In the event that no such separate sales
are made by Novartis or an Affiliate, licensee or sublicensee, Net Sales for
royalty determination shall be calculated by multiplying Net Sales of the
combination product by the fraction C/(C+D) where C is the fully allocated
cost of the Product and D is the fully allocated cost of such other
pharmacologically active component. In no event shall Net Sales of any
Product calculated under this provision with respect to any combination
product be less than fifty percent of the Net Sales of such combination
product.
1.19 "North America" means Canada, Mexico and the United States of
America, its territories and possessions, including Puerto Rico.
1.20 "Novartis Know-How" means any and all data, substances,
processes, materials, formulas, inventions (whether or not patentable),
results or information which is useful for the research, development, making,
or using of MSCs or products produced therefrom and which is owned by Novartis
or its Affiliates or as to which Novartis or its Affiliates has transferable
rights.
1.21 "Novartis Patent Rights" means any and all patents and patent
applications owned by Novartis or its Affiliates or including Novartis'
interest in Joint Patent Rights or as to which Novartis or its Affiliates has
transferable rights, in each case to the extent that they claim Novartis
Know-How.
1.22 "Osiris Know-How" means any and all data, substances, processes,
materials, formulas, inventions (whether or not patentable), results or
information which is useful for the research, development, making or using of
Product and which results from Novartis funding and/or is owned by Osiris or
to which Osiris has transferable rights, including rights obtained from Osiris
Affiliates.
1.23 "Osiris Patent Rights" means any and all patents and patent
applications owned by Osiris including Osiris' interest in Joint Patent Rights
or as to which Osiris has a transferable rights in each case to the extent
that they claim Osiris Know-How. The Osiris Patent Rights include the patents
and applications of Schedule B.
<PAGE>
1.24 "Patents and patent applications" includes divisions,
continuations, reissues, provisional applications, continuations-in part,
reexaminations, extensions and supplemental protection certificates.
1.25 "Primary Country" means any of the United States, Canada, Japan,
France, Germany, Italy, the United Kingdom and Switzerland.
1.26 "Product" means an MSC Product or a Gene Therapy Product.
1.27 "Research Program" means the program of research described in
the detailed plan set out in Schedule C of this Agreement for the first two
years of the Research Term, and as subsequently amended or extended as
provided in this Agreement.
1.28 "Research Term" means, with respect to an Area and the Products
in the Area, the period during which research by Osiris in an Area is being
funded by Novartis.
1.29 "Royalty Term" means with respect to each Product in each
country the period of time equal to the longer of (a) ten (10) years from the
date of the First Commercial Sale of such Product in such country or (b) if
after such ten (10) year period the manufacture, use or sale of such Product
in such country is covered by a Valid Patent Claim of an Osiris Patent Right,
the term for which such Valid Patent Claim or any new Valid Patent Claim
remains in effect and would if in a granted patent be infringed but for the
license granted by this Agreement.
1.30 "Start-up Date" means 1 July 1997.
1.31 "Territory" means all countries in the world.
1.32 "Third Party" means any party other than Osiris, Novartis and
their Affiliates.
1.33 "Valid Patent Claim" means either (a) a claim of an issued and
unexpired patent 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
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.
ARTICLE 2. LICENSE GRANT
2.1 License Grant by Osiris: Subject to the terms and conditions of
this Agreement, Osiris hereby grants to Novartis an exclusive license, or
where applicable an exclusive sublicense, under Osiris Patent Rights and
Osiris Know-How to use, import, sell and offer to sell Product in the
Territory; to make and to have made Gene Therapy Product in the Territory; to
make and to have made MSC Product for sale and use in all countries of the
Territory other than North America; and to the extent that Novartis is granted
the right to make or have made MSC Product for sale and use in North America
under the provisions of Article 14.2 or the Supply Agreement entered between
the parties pursuant to Article 14.1, to make and to have made MSC Product
for sale and use in North America. It is expressly
<PAGE>
understood that Novartis shall not have the right to grant a sublicense under
the licenses granted to Novartis hereunder, except as provided in Article 2.5.
2.2 Exclusivity Term in E.U.: Respecting E.U. Countries, the
exclusivity provided by Osiris in respect of a specific Product shall be
limited to a period of ten (10) years from First Commercial Sale of that
Product in an EU Country, provided, however, that in the E.U. Countries in
which Patent Rights relevant to that Product remain valid after expiration of
the ten-year period, the exclusivity will continue until expiration of said
Patent Rights. For avoidance of doubt, Novartis acknowledges that termination
of exclusivity in E.U. Countries pursuant to the preceding sentence shall not
reduce, impair or otherwise affect Novartis' obligation to continue to pay
royalties provided in Article 8 hereof, in such countries.
2.3 DARPA Agreement: It is expressly understood that no rights are
transferred by Osiris with respect to developments under the Agreement between
Defense Advanced Research Projects Agency (DARPA) and Osiris.
2.4 License Grant by Novartis:
2.4.1 Novartis on behalf of itself and its Affiliates grants to Osiris
an exclusive royalty free license in the Field under Novartis Know-How and
under Novartis Patents with respect to any and all Products in any and all
countries as to which Product and country(ies) the license granted to Novartis
by Osiris hereunder has been terminated under the provisions of Art. 4.7, 6.5,
6.6, 17.2, 17.3, or 17.4.
2.4.2 Novartis on behalf of itself and its Affiliates grants to Osiris
a royalty bearing worldwide license under Novartis Know-How and under Novartis
Patents to use, import, sell, offer to sell, make and have made any and all
products outside the Field. The license shall be exclusive except as to
Novartis and its Affiliates. The royalty shall be negotiated in good faith
between the parties and if the parties cannot reach agreement, the royalty
shall be submitted to arbitration pursuant to Schedule A hereto.
2.4.3 The licenses granted under Sections 2.4.1 and 2.4.2 include the
right to grant sublicenses.
2.5 Sublicenses:
2.5.1 Novartis shall have the right to grant a sublicense to any
Novartis Affiliate. Further, Novartis shall have the right to grant a
sublicense to a Third Party with the prior consent of Osiris, which shall not
be unreasonably withheld. In any sublicense granted by Novartis, Novartis
shall require the sublicensee to become bound to the terms and conditions of
Articles 6, 9.5, 16.1, 16.4, 18.2.2, 18.2.3, 18.4 and 18.6 of this Agreement,
with Osiris being made a third party beneficiary of such obligations of the
sublicense. A breach of such terms by the sublicensee shall be a breach by
Novartis under this Agreement. Any such sublicense shall prohibit any further
sublicensing and shall provide that a termination of Novartis' license shall
terminate the sublicensed rights.
2.5.2 To the extent that a party to this Agreement receives a license
under this Agreement which is a sublicense under an agreement with a Third
Party ("Third Party Agreement"), the party receiving such sublicense
understands and agrees as follows:
<PAGE>
(i) The sublicense granted under this Agreement is subject to the
terms, limitations, restrictions and obligations of the Third
Party Agreement; and
(ii) such party will comply with the terms, obligations, limitations
and restrictions of such Third Party Agreement applicable to a
sublicensee, to the extent that such party is advised thereof.
2.5.3 Subject to the rights retained by Case Western Reserve
University (Case Western), Osiris is the exclusive licensee of Case Western to
US Patent 5,591,625 and to US patent applications [*CONFIDENTIALITY REQUESTED*]
and equivalents thereof, which are included in the Patent Rights set out in
Schedule B of this Agreement. Osiris warrants that it has the right to grant
sublicenses under such Patent Rights, and that Novartis shall have no direct
financial or other liability to Case Western as a result of entering into this
Agreement with Osiris.
2.5.4 If Novartis receives a sublicense under Osiris Know-How or
Osiris Patent Rights as to which Osiris has transferable rights under a
license from a Third Party, and said license was obtained from said Third
Party during the Research Term, then no payment additional to those specified
in Articles 7 and 8 shall be required in order for Novartis to make use of
such sublicense, and any royalties due to said Third Party shall be paid by
Osiris. If Novartis receives a sublicense under Osiris Know-How or Osiris
Patent Rights as to which Osiris has transferable rights under a license from
a Third Party, and said license was obtained from said Third Party subsequent
to the Research Term, then if Novartis wishes to make use of such sublicense
any royalties due to said Third Party shall be paid by Novartis in addition to
the royalty payments due to Osiris.
ARTICLE 3. KNOW-HOW
Insofar as this has not already occurred, Osiris shall disclose to
Novartis the existing Osiris Know-how within thirty (30) days of the Effective
Date. Osiris and Novartis shall further disclose to one another all Osiris
Know-how and Novartis Know-how hereinafter developed or acquired by either
party during the term of this Agreement, to the extent that it is licensed to
the other party.
ARTICLE 4. RESEARCH PROGRAM
4.1. Conduct of the Research Program: The conduct of the Research
Program shall be the primary responsibility of Osiris with participation by
Novartis and its Affiliates. The Research Program shall be conducted in
compliance, where required, with Good Laboratory Practice, and in all
material respects with applicable legal requirements, to attempt to achieve
efficiently and expeditiously its objectives described in the work plan set
forth in Schedule C hereto. Osiris and Novartis shall proceed diligently with
the work set out in the Research Program by using their respective good faith
efforts considering, in the case of Osiris, the funding received from Novartis.
4.2. Use of Research Funding: Osiris shall apply the research
funding it receives from Novartis under this Agreement for the purpose of
identification and pre-clinical development of Products, applying the number
of Full Time Equivalents (FTEs) specified in Schedule C. At least 25% (twenty
five percent) of the FTEs specified for each Area shall be assigned to the
Research Program in that Area within one (1) month from the Start-up Date, at
least 60% (sixty percent) within two (2) months from the Start-up Date, and at
least 100% (one hundred percent) within three (3) months from the Start-up
Date, whereby any under-allocation of FTEs during this initial
<PAGE>
three (3) month period shall be made good by the first anniversary of the
Start-up Date. It is also understood and agreed that an FTE may be provided by
one, two or more persons. For each Area, a senior scientist, mutually
acceptable to both parties, shall be appointed as Program Leader for the
Research Program in that Area.
In no event shall Osiris be obligated to perform work under the Research
Program beyond that which is funded by Novartis, except as otherwise provided
in Art. 4.6. It is expressly understood that no representations or warranties
or agreement is made that the objectives set forth in the work plan will in
fact be achieved.
With respect to each Area, during the period which Novartis is
funding research in such Area under this Agreement, Osiris agrees not to
perform any research and development work for any Third Party in such Area.
It is also expressly understood that the research funding may be employed for
research to be performed by Osiris under this Agreement and/or for research to
be performed under a subcontract, as provided in Article 4.3.
4.3. Subcontracts: Subject to the provisions of Art. 16, Osiris and
Novartis may each subcontract portions of the Research Program to be performed
by them in the normal course of their business to a Third Party without the
prior consent of the other; provided, however, that the other party is
informed, and that either such Third Party has entered into an appropriate
confidentiality agreement with Osiris or Novartis, or such subcontracting
would not require the transfer of confidential information to the Third Party.
The use of subcontractors by Osiris shall not add to the financial liabilities
of Novartis under this Agreement, whether in terms of Research Funding, of
royalties, or in any other respect; however, the research funding may be used
for funding any such subcontracts.
4.4. Data: Osiris and Novartis and their respective Affiliates and
subcontractors shall each 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). Osiris and Novartis shall each provide
the other the right to inspect such records, and shall provide copies of all
requested records, to the extent reasonably required for the performance of
the requesting party's obligations under this Agreement; provided, however,
that each party shall maintain such records and the information of the other
contained therein in confidence in accordance with Article 16 below and shall
not use such records or information except to the extent otherwise permitted
by this Agreement.
4.5 Term of Research Funding: The term during which Novartis will
fund the research of Osiris shall be determined independently for each of the
Areas. For each of the Bone Therapy and the Cartilage Therapy Areas,
independently, the term shall be five (5) years from the Start-up Date,
unless earlier terminated by Novartis in its sole discretion. Such notice of
early termination may be given by Novartis no later than twenty four (24)
months from the Start-up Date, to take effect at thirty (30) months from the
Start-up Date; or no later than forty two (42) months from the Start-up Date,
to take effect at forty eight (48) months from the Start-up Date. For the
Gene Therapy Area, the term shall be thirty (30) months from the Start up
Date provided, however, that Novartis shall have the right to extend such
term for an additional thirty (30) months with respect to the Gene Therapy
Area as it exists as of such date upon agreement by the parties to the funding
therefor, which funding shall
<PAGE>
be no less than $500,000 per calendar quarter, and subject to termination by
Novartis, in its sole discretion, eighteen months after the start of such
extended term, by at least six months prior written notice.
4.6 Amount of Research Funding: Novartis will fund the research of
Osiris in the Field, subject to the provisions of Art. 4.5, by quarterly
payments in advance throughout the Research Term, beginning on the Start-up
Date. The amount of each of the first ten quarterly payments shall be
[*CONFIDENTIALITY REQUESTED*]. Thereafter, the amount of each quarterly payment
shall depend upon the agreed budget for those Areas in which research is still
being funded, but shall not be less than [*CONFIDENTIALITY REQUESTED*] if one
of the Cartilage Therapy and Bone Therapy Areas is being funded, and not less
than [*CONFIDENTIALITY REQUESTED*] if both of said Areas are being funded. This
funding shall provide the number of FTEs in each Area as specified in Schedule
C hereto, inclusive of personnel costs, lab materials and supplies, electronic
data processing expenditures, travel expenditures, depreciation, occupancy fees
and all other costs. One FTE shall be provided by Osiris for each
[*CONFIDENTIALITY REQUESTED*] of funding provided by Novartis; in addition,
Osiris shall provide, at its own cost and without further charge to Novartis,
one (1) FTE in the Cartilage Therapy Area and one (1) FTE in the Bone Therapy
Area in each full year of the Research Term for such Area, provided, however,
that Osiris shall not be obligated to provide such FTE in an Area as from the
date of notice of early termination of research funding for such Area according
to Art. 4.5.
4.7 Restriction of Rights on early Termination: If Novartis gives
notice of early termination of research funding for the Bone Therapy Area
and/or the Cartilage Therapy Area under the provisions of Article 4.5, the
Areas for which research funding has been terminated shall no longer be part
of the Field, the license granted to Novartis for MSC Product in each such
Area shall be terminated and Novartis shall have no further rights in respect
of such Area.
4.8 Scope of Gene Therapy Area:
4.8.1 Initial Designation: Within ninety (90) days of the Effective
Date, Novartis shall designate three genes or polypeptides which shall be used
for transducing MSCs for delivery of a gene and/or polypeptide and the use of
such transduced MSCs shall become part of the Gene Therapy Area.
4.8.2 Right of First Refusal: Novartis may at any time up to 31
December 1997 propose to Osiris that the use in transduced MSCs of one or more
of the specific genes or polypeptides in a list given to Osiris within ninety
(90) days of the Effective Date shall be added to the Gene Therapy Area within
this Agreement. The list shall include only those genes and polypeptides the
use of which Novartis in good faith believes may be added to the Gene Therapy
Area. When such genes and polypeptides are proposed, the parties shall then
discuss the financial terms upon which the Gene Therapy Area may be so
extended. Such terms [*CONFIDENTIALITY REQUESTED*] as set out in this
agreement. Non-financial terms of this Agreement shall not be affected. If the
parties have not reached agreement upon such terms within sixty (60) days
from the date of Novartis' proposal, Osiris may offer a license for such
subject matter to a Third Party provided that the financial terms thereof, as
a whole, are no more favorable to such Third Party than those last offered to
Novartis. If Osiris desires to offer a Third Party a license for such subject
matter at terms more favorable, then Osiris shall offer such more favorable
terms to Novartis and if within thirty (30) days of such offer, Novartis
informs Osiris that it is prepared to enter into an agreement with Osiris in
accordance with such terms, Osiris shall conclude such agreement with Novartis
upon such terms. If no such
<PAGE>
statement is made by Novartis within said thirty (30) days, Osiris shall be
free to enter into an agreement in accordance with such terms with a third
party.
4.8.3 Right of First Negotiation: Novartis may at any time up to 31
December 1997 propose to Osiris that the use in transduced MSCs of one or more
genes or polypeptides other than those listed in Art. 4.8.2 above shall be
added to the Gene Therapy Area within this Agreement, and the parties shall
then discuss the financial terms upon which the Gene Therapy Area may be so
extended. Such terms [*CONFIDENTIALITY REQUESTED*] shall not change the
royalty rates as set out in this Agreement. Non-financial terms of this
Agreement shall not be affected. If the parties have not reached agreement
upon such terms within sixty (60) days from the date of Novartis' proposal,
Osiris shall be free to enter into a license agreement for such subject matter
with a Third Party without further reference to Novartis.
4.8.4 Amendment to Schedule C: When the scope of the Gene Therapy
Area is initially defined or extended by the provisions of Art. 4.8.1, 4.8.2
or 4.8.3, Schedule C of this Agreement shall be modified accordingly.
4.9 Visit to Premises: At any time during the Research Term for any
Area, Novartis members of the JSC or other designated employees of Novartis or
its Affiliates may upon reasonable notice visit the premises of Osiris or its
subcontractors in order to inform themselves of the progress of work funded by
Novartis under this Agreement.
ARTICLE 5. JOINT STEERING COMMITTEE
5.1 Membership and Responsibilities: A Joint Steering Committee
("JSC") shall be established, consisting of three (3) representatives
appointed by each of Novartis and Osiris. Each party may replace its JSC
representatives at any time, after discussion with the other party, with
subsequent written notice to the other party. Osiris and Novartis shall each
appoint one of their JSC representatives to be responsible for co-ordinating
communications between Osiris and Novartis (the "Primary Contact Person").
The JSC shall be chaired by a research manager appointed by Novartis. The JSC
shall have responsibility, inter alia, for:
(i) monitoring the progress of the parties' research in the Field
and assaying its overall scientific and therapeutic relevance
and competitiveness;
(ii) fostering the collaborative relationship between Osiris and
Novartis
(iii) facilitating all required technology transfer; and
(iv) reviewing and allocating annual FTEs, within the framework of
the contractually agreed funding level. Modifications of the
Research Program and of individual Program budget items within
the contractually agreed overall yearly funding level may be
made only with the approval of the JSC.
(v) clearance of scientific publications relating to the Field,
containing work from either party.
5.2. Quarterly Reports: Within thirty (30) days following the end of
each calendar quarter, Osiris and Novartis shall each provide to the members
of the JSC written reports which shall summarize in reasonable detail the work
each has performed under the Research Program during the preceding calendar
quarter by the parties and any subcontractors of either party, and, in the
case of Osiris, shall give an account of its allocation of FTEs in that
quarter. In addition, Osiris
<PAGE>
shall report on a monthly basis the activities
and results of the FTEs assigned to the Research Program.
5.3 Decision Making: Decisions of the JSC shall be made by
unanimous approval. In the event the parties are unable to agree, the dispute
will be referred to Osiris's President (or designee of similar rank) and
Novartis's CEO (or designee of similar rank), who shall promptly meet in
person or by means of telephone or video conference and endeavour to resolve
the dispute in a timely manner. In the event such individuals are unable to
resolve the dispute, it shall be settled by binding arbitration in accordance
with Schedule A hereto.
5.4 JSC Meetings: During the Research Term, the JSC shall meet at
regular intervals, as agreed by the parties, in person at such locations as
the parties agree, or by means of telephone or video conference. With the
consent of the parties, other representatives of Osiris or Novartis may
attend JSC meetings as nonvoting observers. The party hosting a particular
JSC meeting shall promptly prepare and deliver to the members of the JSC,
within thirty (30) days after the date of each meeting, minutes of such
meeting setting forth, inter alia, all decisions of the JSC, and including a
report on the progress of the research in each Area. In case of telephone and
video conferences, this responsibility will alternate between the parties.
5.5 Voting: Each party shall have one vote at each JSC meeting and
a quorum for such a meeting shall require at least one member appointed by
each party. A failure to establish a quorum for a meeting on which a matter
is to be voted shall be considered a disagreement under Article 5.3.
ARTICLE 6. DEVELOPMENT OF PRODUCT
6.1 Responsibilities: Novartis will plan and execute all clinical
development and registration activities within the Field in the Territory, at
its own expense. Novartis shall own all registration dossiers, INDs and NDAs.
6.2 Reasonable Commercial Efforts: Novartis agrees to use
reasonable commercial efforts, similar to those used for products originating
in Novartis, to obtain NDA approval in all Primary Countries and to market and
sell Product in all Primary Countries as promptly as is reasonably
practicable, and thereafter to use reasonable commercial efforts, as for
products originating in Novartis, to continue to market and sell Product in
all Primary Countries.
6.3 Notification of Lack of Interest: If at any time Novartis does
not have a meaningful interest in developing, marketing and selling and
continuing to develop, market and sell any Product in any country, Novartis
shall notify Osiris promptly thereof.
6.4 Reporting: Novartis shall provide Osiris with written reports
within thirty (30) days after June 30 and December 31 of each year concerning
the efforts being made by Novartis, its Affiliates and licensees to research,
develop, obtain regulatory approval, market and sell Product, and shall
provide Osiris with any other information reasonably requested by Osiris in
this respect. To the extent that Novartis makes reports to the Joint Steering
Committee under Article 5.2, such reports shall satisfy the obligation of this
Article 6.4.
<PAGE>
6.5 Right to Terminate for Primary Countries: In the event that
Novartis does not meet its obligations with respect to a Product in a Primary
Country, or Novartis notifies Osiris that Novartis does not have an interest
in continuing to develop, market or sell a Product in a Primary Country,
Osiris shall have the right to terminate the rights and licenses granted to
Novartis under this Agreement with respect to such Product in such country
or countries by sixty (60) days written notice and such rights and licenses
shall be terminated after sixty (60) days unless such failure is cured prior
thereto.
6.6 Right to Terminate for other Countries: In the event that
Novartis' rights are terminated with respect to a Product in a Primary
Country (other than by reason of Novartis surrendering rights in such Primary
Country) or in the event that Novartis notifies Osiris that Novartis does not
have an interest in developing or marketing or continuing to develop or market
a Product in a country other than a Primary Country, then in the case where
Novartis' rights have been terminated with respect to a Product in a Primary
Country, Osiris will have the right to terminate Novartis' right with respect
to such Product in any country other than a Primary Country for which Novartis
is not exerting reasonable commercial efforts, similar to those used for
products originating in Novartis, to research, develop, obtain regulatory
approval and to market and sell such Product in such a country by written
notice to Novartis and such rights shall be terminated in such country or
countries unless within sixty (60) days after such notice, Novartis cures such
failure; or in the case where Novartis notifies Osiris that it does not have
an interest in a country with respect to a Product, then Osiris shall have the
right to terminate Novartis' rights to such Product in such country by
written notice to Novartis.
ARTICLE 7. UPFRONT AND MILESTONE PAYMENTS
7.1 Upfront Payment: Novartis shall pay Osiris the sum of
$3,000,000 (three million dollars), due upon the Effective Date. This payment
shall be non-refundable and non-creditable against future earned royalties.
7.2 Milestone Payments
7.2.1 Bone Therapy Area: When each separate Product developed in the
Bone Therapy Area shall reach one of the following milestones, Novartis shall
pay the indicated sum to Osiris:
[*CONFIDENTIALITY REQUESTED*]
The total milestone payments made by Novartis in respect of the Bone
Therapy Area shall not [*CONFIDENTIALITY REQUESTED*] for each separate Product
which is commercially introduced.
7.2.2 Cartilage Therapy Area: One the first occasion on which a
Product developed in the Cartilage Therapy Area for the indication acute
articular hyaline cartilage injury shall reach one of the following
milestones, Novartis shall pay the indicated sum to Osiris:
<PAGE>
[*CONFIDENTIALITY REQUESTED*]
For each occasion on which each separate Product developed for any indication
in the Cartilage Therapy Area, (other than the first Product for acute
articular hyaline cartilage injury, for which the milestone payments set out in
this Art. 7.2.2 above shall apply) shall reach one of the said milestones,
Novartis shall pay to Osiris the corresponding sum as set out in Art. 7.2.1
above. The total milestone payments made by Novartis in respect of the
Cartilage Therapy Area shall not exceed (a) [*CONFIDENTIALITY REQUESTED*] in
respect of the first Product to be commercially introduced for the indication
acute articular hyaline cartilage injury, [*CONFIDENTIALITY REQUESTED*] in
respect of the first separate Product which is commercially introduced for any
other indication in the Area, and (c) [*CONFIDENTIALITY REQUESTED*] for each
subsequent separate Product which is commercially introduced for any indication
in the Area.
7.2.3 Gene Therapy Area: When each separate Product developed in the
Gene Therapy Area shall reach one of the following milestones, Novartis shall
pay the indicated sum to Osiris:
[*CONFIDENTIALITY REQUESTED*]
The total milestone payments made by Novartis in respect of the Gene
Therapy Area shall not exceed [*CONFIDENTIALITY REQUESTED*], for each separate
Product which is commercially introduced.
7.2.4 Back-up Products: If a Product is abandoned during development
after one or more of the first three (3) milestone payments according to Art.
7.2.1, 7.2.2 or 7.2.3 above has been made, and if a back-up Product is
developed to replace such abandoned Product, then no milestone payment shall
be made in respect of the back-up Product which milestone payment has already
been made in respect of the abandoned Product.
7.2.5 Separate Products: A later developed or later introduced
Product shall be considered as separate from an earlier Product in the same
Area, and therefore as potentially giving rise to a new set of milestone
payments, if at least one of the following criteria is met:
a) [*CONFIDENTIALITY REQUESTED*]
<PAGE>
b) [*CONFIDENTIALITY REQUESTED*]
c) [*CONFIDENTIALITY REQUESTED*]
In the event of a dispute between the parties as to whether or not a
later developed or later introduced Product is a separate Product according to
this Article 7.2.5, the dispute shall be settled by the arbitration procedure
of Schedule A to this Agreement.
7.2.6 Overlap of Area: If a Gene Therapy Product containing
transduced cells also meets the definition of an MSC Product, it shall be
considered as an MSC Product for the purpose of determining milestone payments
under this Agreement, and only the milestone payments appropriate for the Bone
Therapy Area or the Cartilage Therapy Area, as the case may be, shall be
payable by Novartis.
7.3 Refunds and Credits: The milestone payments made according to
Art. 7.2 above shall be non-refundable, [*CONFIDENTIALITY REQUESTED*], for the
same Product, provided that the total royalties due within any one calendar
year, as adjusted by Art. 8.3 if applicable, [*CONFIDENTIALITY REQUESTED*] as
a result of this provision shall be carried forward for future deduction.
7.4 Reports: Novartis shall promptly report to Osiris the
occurrence of any event which would trigger a milestone payment according to
Art. 7.2 above.
ARTICLE 8. ROYALTIES
8.1 Royalty levels:
8.1.1 MSC Products: Novartis shall pay Osiris, for each separate MSC
Product, the following royalties as a percentage of all Net Sales of that
Product in the Territory by Novartis, its Affiliates, licensees and
sublicensees:
Annual World-wide Net Sales (Million dollars) Applicable royalty
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
For the avoidance of doubt, the above table means, for example, that the
royalty payable upon world-wide Net Sales of a Product of [*CONFIDENTIALITY
REQUESTED*].
If a Product has world-wide Net Sales above [*CONFIDENTIALITY
REQUESTED*], the applicable royalty shall be calculated as a percentage of the
total Net Sales by applying the overall royalty rate shown below:
Annual World-wide Net Sales (Million dollars) Applicable overall royalty
[*CONFIDENTIALITY REQUESTED*]
8.1.2 Gene Therapy Products: Novartis shall pay Osiris, for each
individual Gene Therapy Product, the following royalties as a percentage of
all Net Sales of that Product in the Territory made by Novartis, its
Affiliates, licensees and sublicensees:
Annual world-wide Net Sales (Million dollars) Applicable royalty
[*CONFIDENTIALITY REQUESTED*]
For the avoidance of doubt, the above table means, for example, that
the royalty payable upon world-wide Net Sales of a Gene Therapy Product
of [*CONFIDENTIALITY REQUESTED*]
8.1.3. Overlap of Areas: If a Gene Therapy Product containing
transduced cells also meets the definition of an MSC Product, it shall be
considered as an MSC Product for the purpose of determining royalty payments
under this Agreement, and the applicable royalty rates will be as set out in
Art. 8.1.1.
<PAGE>
In no event shall royalty payments be additive for the same Product.
8.2 Third Party Royalties: If Novartis is required to pay royalties
to any Third Party in order to exercise its rights to sell a Product in a
country, then [*CONFIDENTIALITY REQUESTED*] of the royalties payable to such
Third Party in any calendar quarter for such Product in such country shall be
deductible from the royalties paid to Osiris under this Agreement in respect
of that Product for the same calendar quarter for such Product in such
country, provided that a) such deduction shall not reduce the royalty payment
due under Art. 8.1 in respect of that Product for that quarter in such country
by [*CONFIDENTIALITY REQUESTED*],and b) in no event shall the royalty due
[*CONFIDENTIALITY REQUESTED*] of Net Sales for an MSC Product or
[*CONFIDENTIALITY REQUESTED*]of Net Sales for a Gene Therapy Product. For the
purposes of this Art. 8.2, the royalties payable for a Product in a country
shall be calculated based upon the average worldwide royalty rate for such
Product in the applicable calendar year
8.3 Unlicensed Competition: If in any country a Third Party sells a
Product ("Third Party Product") and such Third Party Product in such country
is not covered by a Valid Patent Claim of an Osiris Patent Right and/or a
patent or patent application owned by or licensed to Novartis and in such
country such Third Party Product directly competes with a Product sold by
Novartis for which Novartis owes royalties to Osiris under this Agreement,
then for the period in which the sales of such Third Party Product in such
country are [*CONFIDENTIALITY REQUESTED*] of the sales of the Product sold
by Novartis in such country, the royalties owed by Novartis for such Product
in such country for such period shall be [*CONFIDENTIALITY REQUESTED*] of the
royalties provided in Section 8.1, but in no event shall the royalties owed
for such Product in such country when combined with [*CONFIDENTIALITY
REQUESTED*] provided under Article 8.2 reduce the royalties for such Product
in such country by [*CONFIDENTIALITY REQUESTED*]. For the purposes of this
Art. 8.3, the royalties payable for a Product in a country shall be calculated
based upon the average worldwide royalty rate for such Product in the
applicable calendar year
8.4 Paid-up License: For each country, following expiration of the
Royalty Term in respect of a Product, Novartis shall have a perpetual
nonexclusive transferable paid-up royalty free license under Osiris Know-How
and under Osiris Patent Rights, in each case which are in existence at the end
of the Royalty Term, to use and sell that Product in that country and to make
Product for use and sale in that country, subject to any Supply Agreement for
North America as contemplated in Article 14.1. Any such transfer shall be
subject to the confidentiality and non-use obligations of this Agreement.
ARTICLE 9. RECORDS AND PAYMENTS
9.1 Research Funding, Upfront and Milestone Payments: Payments to
be made under Articles 4.6, 7.1 and 7.2 shall be paid by Novartis upon
presentation of an invoice by Osiris. Payment shall be made no later than (a)
the due date or (b) thirty (30) days after receipt of the corresponding
invoice, whichever is the later.
9.2 Royalties: Royalties as provided in Article 8 shall be
calculated quarterly on the last day of each calendar quarter during the term
of this Agreement and shall be paid to Osiris within sixty
(60) days after said last day with an accounting report showing the amount of
each Product sold by Novartis and its Affiliates, licensees and sublicensees
during each quarterly period; total receipts for each Product; an accounting
and calculation of Net Sales for each such Product; an accounting for amounts
deductible, if any against royalty; and total royalties payable to Osiris for
each Product. In
<PAGE>
addition, Novartis shall respond to reasonable inquiries by Osiris with
respect to any report made to Osiris under this Agreement.
9.3 Royalty Calculation: Royalties provided to Osiris shall be
determined on the basis of Novartis' monthly standard account of sales
which represents the conversion of all local currency sales to Swiss Francs at
the average monthly exchange rate of sales, as calculated by Novartis in the
ordinary course of business. The royalty report provided under Art. 9.2 shall
provide information as to such calculation for each Product.
9.4 Method of Payment: Royalties and payments provided to Osiris
shall be made in United States dollars by telegraphic transfer to Osiris's
bank account as directed by Osiris. The exchange rate between the Swiss Franc
and US Dollar shall be the rate published in the London Times at the close of
business in London on the last business day of the calendar quarter for which
the royalties are being paid.
9.5 Records: Novartis and its Affiliates shall keep accurate
records and books of accounts in accordance with generally accepted accounting
principles consistently applied and containing all the data reasonably
required for calculation and verification of payments made. During the term of
this Agreement and two (2) years thereafter, Novartis shall retain accounting
records of the previous three (3) years. At Osiris's request, Novartis shall
make records available, no more than twice per year, during reasonable working
hours for review by an independent accounting firm acceptable to both parties,
at Osiris's expense, for the sole purpose of verifying their accuracy. In the
event that any such review indicates an underpayment of royalties by Novartis
in excess of five percent (5%), Novartis shall pay the cost of such review.
Any reported underpayment of royalties shall be immediately due and payable.
9.6 Confidentiality: Osiris agrees that all information subject to
review under Art. 9.5. or under any sublicense agreement is confidential and
that Osiris shall cause its accountant to retain all such information in
confidence.
9.7 Taxes: All royalty amounts required to be paid to Osiris
pursuant to this Agreement shall be paid with deduction for withholding for or
on account of any taxes (other than taxes imposed on or measured by net
income) or similar governmental charge imposed by a jurisdiction other than
the U.S. on Osiris ("Withholding Taxes"). Novartis shall provide Osiris a
certificate evidencing payment of any Withholding Taxes hereunder and provide
reasonable assistance to recover such taxes.
ARTICLE 10. EQUITY INVESTMENT
Novartis or its designate shall make an equity investment of $10 Million in
Osiris according to the terms and conditions set out in the Stock Purchase
Agreement of even date herewith.
ARTICLE 11. INVENTIONS AND PATENTS
11.1. Ownership of Inventions: The entire right, title and interest in
all inventions within the Field, and any patent applications, or patents based
thereon (collectively, the "Inventions") that are made or conceived (i) solely
by employees of Osiris or others acting on behalf of Osiris ("Osiris
Inventions") shall be owned by Osiris (ii) solely by employees of Novartis or
others acting on behalf of Novartis ("Novartis Inventions") shall be owned by
Novartis and (iii) jointly by employees
<PAGE>
or others acting on behalf of Osiris and Novartis ("Joint Inventions") shall
be owned jointly by Novartis and Osiris. Each party shall promptly disclose
to the other party the Inventions made by employees or others acting on behalf
of such party to the extent that the other party has a license thereto under
this Agreement. Each party represents and agrees that all employees and
other persons 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 by such
employee or other person, or in the case of non-employees working for other
companies or institutions on behalf of Osiris or Novartis and using Novartis
research funding, Osiris or Novartis, as applicable, shall have the right to
license all Inventions made by such non-employees on behalf of Osiris or
Novartis, as applicable, in accordance with the policies of said company or
institution. Osiris and Novartis agree to undertake to enforce such
agreements (including, where appropriate, by legal action) considering, among
other things, the commercial value of such Inventions.
11.2. Patent Applications
11.2.1. Priority filings: When an Osiris Invention or a Joint
Invention has been made which may reasonably be considered to be patentable
and as to which Novartis is licensed under this Agreement, a priority patent
application shall be filed by Osiris in the United States as soon as
reasonably possible. Osiris shall give Novartis an opportunity to review the
text of any application for a Joint Invention before filing and shall supply
Novartis with a copy of the application as filed, together with a note of its
filing date and serial number. The costs of such priority filings shall be
borne by Osiris in the case of an Osiris Invention, and by Novartis in the
case of a Joint Invention.
11.2.2. Foreign Filing Decisions: No later than nine (9) months
following the filing date of a priority patent application filed according to
Art. 11.2.1., the parties shall consult together, through the JSC or
otherwise, and agree 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. The same shall
apply to any priority patent application which, as of the Effective Date, is
part of the Osiris Patent Rights and for which no corresponding foreign
applications have been filed.
11.2.3 Osiris Patent Rights: Any patent application filed in any
country in respect of an Osiris Invention as to which Novartis is licensed
under this Agreement shall be added to the Osiris Patent Rights.
11.2.4 Prosecution and Maintenance: Osiris shall bear cost and
responsibility for prosecution and maintenance of the Osiris Patent Rights. At
regular intervals, or upon request, Osiris shall provide Novartis with updated
information on its patent portfolio as to which Novartis is licensed under
this Agreement, and Schedule B hereto shall be amended accordingly. Novartis
shall bear the cost for prosecution and maintenance of the Joint Patent Rights
with Osiris having responsibility therefor in the United States and Novartis
in the rest of the world. Novartis and Osiris shall consult with each other as
to the prosecution and maintenance of such patent applications and patents. If
at any time Novartis or Osiris shall elect not to continue to prosecute or
maintain any patent application or patent included in the Joint Patent Rights
or the Osiris Patent Rights respectively, the party making such election shall
so notify the other party within thirty (30) days of such determination. If
<PAGE>
Novartis shall elect not to continue to prosecute or maintain any patent
application or patent included in the Joint Patent Rights, then that patent
application or patent shall be transferred to the sole ownership of Osiris,
and shall not be included in the licensed Osiris Patent Rights. If Osiris
shall elect not to continue to prosecute or maintain any patent application
or patent included in the Osiris Patent Rights, then Osiris shall give
Novartis the timely opportunity to direct Osiris to continue to prosecute
or maintain the patent application or patent in Osiris' name and at Novartis'
expense.
11.3. Notification of Patent Term: Osiris shall notify Novartis of
the issuance of each patent included within the Osiris Patent Rights as to
which Novartis is licensed under this Agreement, giving the date of issue,
patent number and normal expiry date for each such patent. Osiris shall
notify Novartis of each filing for patent term restoration under the United
States Drug Price Competition and Patent Term Restoration Act of 1984, any
allegations of failure to show due diligence, and all awards of patent term
restoration in the United States and extensions (including the grant of
Supplemental Protection Certificates) in other countries with respect to the
Osiris Patent Rights as to which Novartis is licensed under this Agreement.
Novartis shall make corresponding notifications to Osiris in respect of any
patent included within the Joint Patent Rights, or within the Novartis Patent
Rights licensed to Osiris under this Agreement.
ARTICLE 12. PATENT INFRINGEMENT
12.1 Enforcement: Each party shall promptly notify the other of its
knowledge of any actual or potential infringement of the Osiris Patent Rights
or the Joint Patent Rights (collectively, the "Patent Rights") by a Third
Party with respect to a Product as to which Novartis is licensed under this
Agreement. Novartis shall have the right to enforce the Patent Rights in the
Territory in its discretion with respect to a Product as to which Novartis is
licensed under this Agreement. If within six (6) months following receipt of
notice from Osiris, Novartis fails to take action to halt infringement, Osiris
shall, in its sole discretion, have the right, at its expense, to take such
action in its own name or jointly with Novartis. Each party agrees to
render such reasonable assistance as the prosecuting party may request. Costs
of maintaining any such action therefrom shall be paid by the party or parties
bringing the action. Neither party shall enter into any settlement which
admits or concedes that any aspect of the Patent Rights is invalid or
unenforceable without the prior written consent of the other party.
Notwithstanding the foregoing, in the event either party receives notice of a
Third Party who has filed an Abbreviated NDA ("ANDA") or paper NDA with
respect to a Product as to which Novartis is licensed under this Agreement
containing a certification of patent invalidity or non-infringement of one or
more of the Osiris Patent Rights in the United States, the notified party
shall notify the other party within ten (10) days thereof. Novartis shall have
the right, but not the obligation, to bring an action for infringement within
twenty (20) days from the date it receives notice, or if Novartis fails to
bring such action, Osiris shall, in its sole discretion, have the right, at
its expense, to take such action in its own name or jointly with Novartis.
Any recovery of damages by Novartis with respect to any such suit shall be
applied first to satisfy the expenses and legal fees of Novartis with respect
to such suit. The balance remaining from any such recovery shall be divided
between Novartis and Osiris such that Osiris receives the royalty Osiris would
have received under this Agreement if such sales had been made by Novartis.
With respect to any such suit brought by Novartis, Osiris shall have the right
within its sole discretion to join such suit as a plaintiff at its sole cost
and expense.
<PAGE>
12.2 Infringement Claims: If the manufacture, sale or use of Product
pursuant to this Agreement results in any claim, suit or proceeding lodged by
a Third Party alleging patent infringement by Osiris or Novartis (or its
licensees or sublicensees), or by an Affiliate of Osiris or Novartis, such
party shall promptly notify the other party hereto in writing. The party
subject to such claim shall have the exclusive right to defend and control the
defence of any such claim, suit or proceeding, at its own expense, using
counsel of its own choice; provided, however, that Novartis shall not enter
into any settlement which admits or concedes that any aspect of the Osiris
Patent Rights is invalid or unenforceable without the prior written consent of
Osiris. The party subject to the claim shall keep the other party hereto
reasonably informed of all material developments in connection with any such
claim, suit or proceeding.
12.3 Enforcement by Osiris: The rights and obligations of Article
12.1 shall apply mutatis mutandis with respect to Novartis Patent Rights,
Products and products outside the Field as to which Osiris is licensed under
this Agreement.
ARTICLE 13. TRADEMARKS
Novartis shall be free to use and to register in any trademark office
any trademark for use with Product it desires in its sole discretion.
Novartis shall own all right, title and interest in and to any trademark in
its own name during and after the term of this Agreement. Nothing in this
Article 13 is to be construed as granting any rights to Novartis with respect
to any trademark owned by Osiris.
ARTICLE 14. MANUFACTURING AND SUPPLY
14.1 Supply by Osiris: Novartis shall notify Osiris when any MSC
Product being developed by Novartis or its Affiliates enters into Clinical
Phase 3. Within thirty (30) days of such notification, Osiris may at its
discretion notify Novartis that Osiris wishes to supply Novartis and its
Affiliates with that MSC Product for sale in North America. If Osiris does not
make such notification within said thirty (30) day period, then Novartis'
license under this Agreement shall include a license to make and have made
said MSC Product for sale in North America. If such notification by Osiris is
timely made, then, subject to Art. 14.3 below, Novartis and its Affiliates
agree to purchase exclusively from Osiris, and Osiris agrees to sell
exclusively to Novartis and its Affiliates during the term of the Agreement,
Novartis and its Affiliates' total requirements for said MSC Product for sale
in North America. No later than ninety (90) days after such notification by
Osiris, the parties or their Affiliates shall enter into a separate
Manufacturing, Supply and Distribution Agreement ("Supply Agreement") for such
Product which shall provide, among other matters, for a system of advance
ordering of requirements by Novartis and its Affiliates; for quality control
of Product; and for a system whereby, for autologous MSC products, bone
marrow is collected from patients, dispatched to an Osiris manufacturing
facility for isolation and culture of MSCs and manufacture of Product, and
the Product is returned to the doctor or hospital at which the Product will be
delivered to the patient. If no agreement is reached within the above ninety
(90) day period on the terms of such Supply Agreement, the terms shall be
settled by binding arbitration as described in Schedule A. Such Supply
Agreement shall provide for a full and free mutual exchange of manufacturing
technology for such Product between the parties. Such Supply Agreement shall
terminate no later than the expiry of Novartis' obligation to pay royalties on
sales of said MSC Product in all North American countries. No later than six
(6) months before such date, Novartis shall notify Osiris whether it wishes to
extend the supply period for all or part of Novartis' North American
requirements for Product for a further period, in which case a further
Supply Agreement will be negotiated in good
<PAGE>
faith and entered into by the parties to the first Supply Agreement. If no
such further Supply Agreement is concluded between the parties, then Novartis
or a Novartis Affiliate shall have the right to manufacture Product itself or
have Product manufactured by a Third Party of its choice.
14.2 U.S. Manufacturing Facility: The Supply Agreement shall provide
that Osiris will assume full cost and responsibility for constructing,
operating and maintaining one or more United States manufacturing facilities
together capable of supplying the expected commercial requirements of Novartis
and its Affiliates in North America with respect to MSC Product for which an
NDA has been approved in the United States. Such Supply Agreement shall
provide that if Osiris is unable to supply such MSC Product in accordance with
the forecasting requirements set forth in such Agreement, then to the extent
that Osiris cannot meet such requirements, and for the period for which Osiris
cannot meet such requirements, Novartis or a Novartis Affiliate shall have the
right to manufacture itself or to have a Third Party manufacture such MSC
Product. Such period shall be extended to the extent that a Thirty Party
manufacturer requires Novartis to obligate itself to a longer period of
supply, whereby the Supply Agreement shall define a maximum duration for such
permissible extension. The Supply Agreement shall give a precise definition of
the term "unable to supply". Osiris shall provide Novartis or such Third Party
with sufficient technical information to enable the manufacture of such
Product, all under suitable confidentiality requirements and requirements that
it be used only to the extent necessary to manufacture for Novartis and its
Affiliates the amount of MSC Product which Osiris cannot provide, and for the
period for which Novartis is required to obligate itself to have a Third Party
manufacture such MSC Product.
14.3 Supply Price: The Supply Agreement shall provide that Osiris
shall supply Product to Novartis and its Affiliates at [*CONFIDENTIALITY
REQUESTED*], and shall set out the elements which are to be taken into
account in calculating [*CONFIDENTIALITY REQUESTED*]. It shall further
provide that if a Third Party supplier can manufacture MSC Product in the
United States of a quality which is equivalent to that provided by Osiris,
without using Osiris' proprietary information, under the same terms and
conditions and specifications as that provided in the Supply Agreement, and
the bona fide price which is to be charged by such Third Party to Novartis and
its Affiliates for such MSC Product is [*CONFIDENTIALITY REQUESTED*] of the
price being charged by Osiris, then Novartis and its Affiliates shall have the
right to purchase such MSC Product from such Third Party unless Osiris reduces
the price charged to Novartis and its Affiliates for such MSC Product to the
price charged by such Third Party. In addition, the Supply Agreement shall
also provide that if Novartis itself or by an Affiliate is able to produce
Product in its own manufacturing facility in the United States (after making
allowance for economy of scale adjustments) which is of equivalent quality
and which meets the specifications of the MSC Product to be provided by
Osiris and Novartis' cost for producing such MSC Product is [*CONFIDENTIALITY
REQUESTED*] of Osiris' cost for producing such MSC Product, with such costs
being calculated on an equivalent basis, then Novartis and its Affiliates
shall have the right to manufacture such MSC Product in such facility in the
United States unless Osiris reduces the cost for such MSC Product used
in calculating the price to be charged to Novartis for such MSC Product such
that it is equal to Novartis' cost for producing such MSC Product.
14.4 Gene Therapy Products: Novartis shall have the right to
manufacture Gene Therapy Products for sale in any country of the Territory,
including North America. If Novartis does not intend by itself or by an
Affiliate to manufacture Gene Therapy Products for sale in North America,
Novartis shall obtain its requirements of MSCs for Gene Therapy Products for
sale in North America from Osiris,
<PAGE>
upon the same conditions as set out above for MSC Products, as specified
in a corresponding Supply Agreement. Any vectors for the transformation of
such MSCs shall be manufactured by Novartis or its Affiliate.
14.5 Non-Commercial Supply: All quantities of Product reasonably
required by Novartis for commercial samples and clinical trials shall be
supplied by Osiris at cost price plus [*CONFIDENTIALITY REQUESTED*].
ARTICLE 15. PRODUCT LIABILITY
15.1 Indemnification by Novartis: Novartis shall defend, indemnify
and hold harmless Osiris, Affiliates of Osiris, licensors of Osiris, and their
respective directors, officers, shareholders, agents and employees (each an
"Osiris Indemnified Party"), from and against any and all liability, loss,
damages and expenses (including attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted against any of
them arising out of the manufacture, possession, distribution, use, testing,
sale or other disposition of Products by or through Novartis or its
Affiliates, licensees or sublicensees. Novartis' obligation to defend,
indemnify and hold harmless shall include claims, demands, costs or judgments,
whether for money damages or equitable relief by reason of alleged personal
injury (including death) to any person or alleged property damage, provided,
however, the indemnity shall not extend to any claims against an Osiris
Indemnified Party which result from the gross negligence or willful misconduct
of an Osiris Indemnified Party. Novartis shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by
Novartis hereunder, including the right to select counsel acceptable to Osiris
to defend Osiris, and to settle any claim, provided that, without the written
consent of Osiris (which shall not be unreasonably withheld or delayed),
Novartis shall not agree to settle any claim against Osiris to the extent such
claim has a material adverse effect on Osiris. The provisions of this
paragraph shall survive and remain in full force and effect after any
termination, expiration or cancellation of this Agreement and Novartis'
obligation hereunder shall apply whether or not such claims are rightfully
brought.
15.2 Indemnification by Osiris: Osiris shall defend, indemnify and
hold harmless Novartis and its Affiliates, licensors of Novartis, and their
respective directors, officers, shareholders, agents and employees (each a
"Novartis Indemnified Party"), from and against any and all liability, loss,
damages and expenses (including attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted against any of
them arising out of the manufacture, possession, distribution, use, testing,
sale or other disposition of Product by or through Osiris or its Affiliates
(or their licensees or sublicensees) as to which product Osiris has been
granted a license by Novartis under this Agreement. Osiris' obligation to
defend, indemnify and hold harmless shall include claims, demands, costs or
judgments, whether for money damages or equitable relief by reason of alleged
personal injury (including death) to any person or alleged property damage,
provided, however, the indemnity shall not extend to any claims against an
indemnified party which result from the gross negligence or willful misconduct
of a Novartis Indemnified Party. Osiris shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by
Osiris hereunder, including the right to select counsel acceptable to Novartis
to defend Novartis, and to settle any claim, provided that, without the
written consent of Novartis (which shall not be unreasonably withheld or
delayed), Osiris shall not agree to settle any claim against Novartis to the
extent such claim has a material adverse effect on Novartis. The provisions
of this paragraph shall survive and remain in full force and effect after any
termination,
<PAGE>
expiration or cancellation of this Agreement and Osiris' obligation
hereunder shall apply whether or not such claims are rightfully brought.
15.3 Procedure in Event of Claim: Any Osiris Indemnified Party or
Novartis Indemnified Party that intends to claim indemnification under this
Article 15 (the "Indemnitee") shall 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
Indemnitor does not assume the defense; or, if representation of such
Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other party represented by such counsel in such proceedings. The indemnity
agreement in this Article 15 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 prejudicial to
its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 15, but the omission to
deliver notice to the Indemnitor will not relieve it of any liability
that it may have to the Indemnitee otherwise than under this Article 15. The
Indemnitee under this Article 15, 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 each 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.
15.4 Reporting: Each party hereto agrees to report promptly to the
other party any information concerning serious or unexpected side effects,
injury, toxicity, reactions or any unexpected event associated with clinical,
investigational or commercial use whether or not finally attributable to
Product. Such information shall also include pre-existing diseases, syndromes,
or abnormal diagnostic tests results which re-appear or are exacerbated by use
of Product. Upon receipt of such information by either party hereto, both
parties shall promptly consult each other and use best efforts to arrive at a
mutually acceptable procedure for taking the appropriate actions under the
circumstances; provided, however, that nothing contained herein shall restrict
the right of either party to make a submission to a regulatory authority or
take other actions it deems to be appropriate or necessary.
ARTICLE 16. SECRECY
16.1 Confidential Information: Except as otherwise contemplated by
this Agreement, any information supplied by one party to the other pursuant
to, or in contemplation of, this Agreement shall be retained in confidence and
not used or disclosed by the recipient during the term of this Agreement and
for five (5) years thereafter. The confidentiality obligations provided herein
shall not apply to information which
(i) is or becomes known publicly through no fault of the receiving party;
<PAGE>
(ii) is obtained by the receiving party without duty of non-disclosure from a
Third Party entitled to disclose it;
(iii) was already known by the receiving party at the time of disclosure
hereunder as shown by prior written records of the receiving party; or
(iv) is developed by the receiving party independently of
information obtained or disclosed hereunder.
16.2 Permitted use: Notwithstanding the provisions of the above,
each party shall have a right to use such information for development,
production and marketing of products, processes and services in accordance
with the licenses granted under this Agreement as provided in this Agreement
and further has a right to disclose such information to a governmental agency
or other competent body as and when required by law and regulation, or to an
Affiliate. Notwithstanding the provisions of the above, each party shall have
a right to disclose such information to a Third Party for the purpose of
exercising rights granted to it under this Agreement provided that such Third
Party enters into an agreement of confidentiality and non-use essentially
identical to those set forth in this Agreement and that such Third Party
agrees that the party whose confidential information is being disclosed to
such Third Party shall be a third party beneficiary with respect to such
obligation of confidentiality and non-use.
16.3 Nondisclosure of terms: Each of the parties agrees not to
disclose to any Third Party the terms of this Agreement without the prior
written consent of the other party, except to such party's attorneys,
advisors, investors, potential investors and others on a need to know basis
under circumstances that reasonably ensure the confidentiality thereof, or to
the extent required by law, rules and regulations (including, but not limited
to, disclosure required by U.S. securities laws). Notwithstanding the
foregoing, the parties shall agree upon a press release to announce the
execution of this Agreement, thereafter, Osiris and Novartis may each disclose
to Third Parties the information contained in such press release without the
need for further approval by the other. Other than the above, neither party
nor its officers and employees shall make any public statements as to the
contents of this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
16.4. Publications: During the term of this Agreement, Osiris and
Novartis each acknowledge the other party's interest in publishing certain of
its results to obtain recognition 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 other party (the "Reviewing Party") a copy of
the proposed written publication at least forty-five (45) days prior to
submission for publication; or an abstract for oral disclosure or poster
presentation at least fifteen (15) days prior to submission of the abstract;
or slides or overheads for an oral presentation without abstract at least
fifteen (15) days prior to the oral disclosure. The Reviewing Party shall
have the right (a) to propose modifications to the publication for patent
reasons and (b) to request a delay in publication or presentation in order
to protect patentable information. If the Reviewing Party requests such a
delay, the Publishing Party shall delay submission or presentation of the
publication
<PAGE>
for a period of sixty (60) days to enable patent applications
protecting each party's rights in such information to be filed. Upon the
expiry of forty-five (45) days, in the case of proposed written disclosures,
or fifteen (15) days, in the case of an abstract of proposed oral disclosures,
from transmission of such proposed disclosures to the Reviewing Party, the
Publishing Party shall be free to proceed with the written publication or the
oral presentation, respectively, unless the Reviewing Party has requested the
delay described above. Nothing in this Article 16.4 is to be construed as
permitting a party to disclose or publish confidential information of the
other party without the other party's permission.
ARTICLE 17. TERM AND TERMINATION
17.1 Term: Except as set forth below, the term of this Agreement
shall begin as of the Effective Date and continue in full force and effect, on
a country-by-country basis, unless terminated earlier as provided in this
Article 17, until Novartis has no remaining royalty payment obligations in
any country.
17.2 Termination for Cause: Either party to this Agreement may
terminate this Agreement in the event that the other party shall have
materially breached or defaulted in the performance of any of its material
obligations hereunder, and such breach or default shall have continued for
thirty (30) days with respect to a payment breach or for sixty (60) days with
respect to other breaches after written notice thereof was provided to the
breaching party by the nonbreaching party. Any termination shall become
effective at the end of such thirty (30) or sixty (60) day period unless the
breaching party has cured any such breach or default prior to the expiration
of the thirty (30) or sixty (60) day period. A breach under any Supply
Agreement entered into by the parties pursuant to Article 14.1 shall be a
breach of this Agreement.
17.3 Termination for Insolvency: If voluntary or involuntary
proceedings by or against a party are instituted in bankruptcy under any
insolvency law, or a receiver or custodian is appointed for such party, or
proceedings are instituted by or against such party for corporate
reorganization or the dissolution of such party, which proceedings, if
involuntary, shall not have been dismissed within sixty (60) days after the
date of filing, or if such party makes an assignment for the benefit of
creditors, or substantially all of the assets of such party are seized or
attached and not released within sixty (60) days thereafter, the other party
may immediately terminate this Agreement effective upon notice of such
termination.
17.4 Permissive Termination: At any time after the end of the
Research Term for all Areas, Novartis may terminate this Agreement at its
discretion upon one hundred and eighty (180) days written notice.
17.5 Effect of Termination:
17.5.1: Upon termination of this Agreement by Osiris or Novartis in
accordance with Article 17.2 or 17.3, or by Novartis in accordance with 17.4 ,
the licenses granted to Novartis hereunder shall be forthwith terminated, and
Novartis shall cease to develop and market Product and discontinue the use of,
and return to Osiris within sixty (60) days after termination, all Osiris Know-
how (including INDs and NDAs, if any) and shall assign, free of charge, to
Osiris, any governmental approvals of Novartis with respect to Product to
assure an orderly transfer of rights and transition of responsibility for such
<PAGE>
documentation. Notwithstanding the above, Novartis may sell existing
inventory of Product for up to six (6) months after the date of termination,
provided royalties are paid thereon. The provisions of this Article 17.5.1
shall also be applicable, mutatis mutandis, to the termination of a license
to a Product in a country according to Art. 6.5 or 6.6.
17.5.2: Termination of this Agreement for any reason shall not release
any party hereto from any liability which, at the time of such termination,
has already accrued to the other party or which is attributable to a period
prior to such termination, nor preclude either party from pursuing all rights
and remedies it may have hereunder or at law or in equity with respect to any
breach of this Agreement.
17.6 Survival: Articles 2.4, 9.5, 13, 15, 16, 17.5.2, 17.6 & 18 of
this Agreement shall survive the expiration or termination of this Agreement
for any reason.
ARTICLE 18. MISCELLANEOUS PROVISIONS
18.1 Governing Laws: This Agreement and any dispute arising from
the construction, performance or breach hereof shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without resort to its choice of law principles.
18.2 Warranties & Covenants
18.2.1: Osiris and Novartis each warrants to the other that it has full
right and authority to enter into this Agreement; and that the performance of
this Agreement does not conflict with any obligations under other contracts,
or with obligations under funding schemes from any private or public funding
agency.
18.2.2 Novartis agrees that Novartis will use Novartis Know-How with
respect to MSCs or products produced thereby and Osiris Know-How only for
research, development, making, using and selling of Product for which Novartis
retains a license from Osiris under this Agreement and only with respect to
those countries for which Novartis retains a license under this Agreement.
18.2.3 Osiris and Novartis each warrants, represents and agrees that
each of its Affiliates shall comply with the terms, obligations and conditions
of this Agreement as if they were signatories to this Agreement and Osiris and
Novartis each unconditionally guarantees such compliance and performance by
its Affiliates.
18.2.4 Osiris warrants that, as of the date of this Agreement, to its
knowledge all granted patents within the Osiris Patent Rights were validly
obtained and are enforceable.
18.3 Waiver: It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth
shall be deemed a waiver as to any subsequent and/or similar breach or default.
18.4 Assignment: Subject to Art. 8.4 above, this Agreement shall not
be assignable by either party to any Third Party without the written consent
of the other party hereto except in the case of Novartis to an Affiliate,
except that, subject to Art. 17.5, either party may assign this Agreement,
without such consent, to an entity that acquires all or substantially all of
the business or assets of such
<PAGE>
party, whether by merger, reorganization, acquisition, sale, or otherwise.
This Agreement shall be binding upon and inure to the benefit of any
permitted assignee, and any such assignee shall agree to perform the
obligations of the assignor. Novartis may, without assignment of the entire
Agreement, assign any of its rights and obligations under this Agreement to
a designated Novartis Affiliate.
18.5 Independent Contractors: The relationship of the parties
hereto is that of independent contractors. The parties hereto are not
deemed to be agents, partners or joint venturers of the others for any purpose
as a result of this Agreement or the transactions contemplated thereby.
18.6 Compliance with Laws: In exercising their rights under this
license, the parties shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders
of any governmental body having jurisdiction over the exercise of rights under
this license including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import and export and sale of medical
products pursuant to this Agreement.
18.7 Severability: In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, and the parties shall amend the Agreement to
the extent feasible to lawfully include the substance of the excluded term to
as fully as possible realize the intent of the parties and their commercial
bargain, unless the invalid provision is 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 provision.
18.8 Force Majeure: Non-performance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the non-performing party, provided such
party uses its best efforts to resume performance as promptly as possible.
18.9 No Consequential Damages: In no event shall any party to this
Agreement have any liability to the other for any special, consequential or
incidental damages arising under this Agreement under any theory of liability.
18.10 Complete Agreement: This Agreement with its Schedules,
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and all prior agreements respecting the subject matter
hereof, either written or oral, expressed or implied, shall be null and void
and of no effect. No amendment or addition hereto shall be effective or
binding on either of the parties unless reduced to writing and executed by the
respective duly authorized representatives of Osiris and Novartis.
18.11 Notices: Any notice required, or permitted to be given, under
this Agreement, shall be deemed sufficiently given, if sent to the party to be
notified at its address, shown at the beginning of this Agreement or at such
other address as may be furnished in writing to the notifying party, by
facsimile transmission, confirmed by certified or registered mail, or by an
internationally recognized overnight delivery service. Time of notice or other
communication shall be deemed to be the date of postmark.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
NOVARTIS PHARMACEUTICALS OSIRIS THERAPEUTICS, INC.
CORPORATION
By: /s/ Wayne P. Yetter By: /s/ James S. Burns
Name: Wayne P. Yetter Name: James S. Burns
Title: President & CEO Title: President & CEO
SCHEDULES:
A: Arbitration Provision
B: List of Patent Rights
C: Research Plan
<PAGE>
SCHEDULE A: ARBITRATION PROVISION
In the event tha parties are unable to reach agreement with respect to
any matter which is subject to arbitration in accordance with the Agreement, as
applicable, such will be determined through binding arbitration in New York, NY,
in accordance with the Commercial Rules of Arbitration of the American
Arbitration Association.
The arbitration panel shall be comprised of three (3) arbitrators. Each
party shall be entitled to appoint one arbitrator. The parties shall appoint
their respective arbitrators within thirty (30) days after submission for
arbitration. If either party shall fail to make timely appointment of its
arbitrator, the arbitration shall be heard and decided by the sole arbitrator
duly appointed by the other party. Where both parties have timely appointed
their respective arbitrators, the two arbitrators so appointed shall agree on
the appointment of the third arbitrator from the list of arbitrators maintained
by the American Arbitration Association. If the parties' appointed arbitrators
all fail to agree within thirty (30) days from the date both parties'
arbitrators have been appointed, on the identity of the third arbitrator, then
such arbitrator shall be appointed by the appropriate administrative body of the
American Arbitration Association.
Within ten (10) days of appointment of the full arbitration panel, the
parties shall exchange their final proposed positions with respect to the
matters to be arbitrated, which shall approximate as closely as possible the
closest positions of the parties previously taken in the submit to the
arbitrators a copy of the proposed position which it previously delivered to the
other party, together with a brief or other written memorandum supporting the
merits of its proposed position. The arbitration panel shall promptly convene a
hearing, at which time each party shall have one (1) hour to argue in support of
its proposed posititon. the parties will not call any witnesses in support of
their arguments.
The arbitration panel shall select either of the party's proposed
position on the issue as the binding final decision to be embondied as an
agreement between the parties. In making their selection, the arbitrators
shall not modify the terms or conditions of either party's proposed position;
nor will the arbitrators combine provisions from both proposed positions. In
making their selection, the arbitrators shall consider the terms and conditions
of this Agreement, the relative merits of the proposed position and the written
and oral arguments of the parties. In the event the arbitrators seek the
guidance of the law of any jurisdiction, the law of the State of New York shall
govern.
The arbitrators shall make their decision known to the parties as quickly
as possible by delivering written notice of their decision to both parties.
Such written notice need not justify their decision. The parties will execute
any and all papers necessary to obligate the parties to the positin selected by
the parties to the position selected by the arbitration panel within five (5)
business days of receipt of notice of such selection. The decision of the
arbitrators shall be final and binding on the parties, and specific performance
may be ordered by any court of competent jurisdiction.
The parties will bear their own costs in preparing for the arbitration.
The costs of the arbitrators will be equally dived between the parties.
<PAGE>
Notwithstanding anything to the contraty, prior to initiating
arbitration, the issues shall be submitted to the Chief Executive Officer of
each of the parties in an attmept to resolve the isssues by good faith,
mediation or negotiations by such Chief Executive Officers. If the issues have
not been resolved within thirty (30) days after submission to the Chief
Executive Officers, then either party may initiate arbitration as set forth
herein.
<PAGE>
SCHEDULE B: LIST OF PATENTS AND PATENT APPLICATIONS INCLUDED
WITHIN THE OSIRIS PATENT RIGHTS
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
SCHEDULE C RESEARCH PLAN FOR FIRST TWO YEARS OF RESEARCH TERM
[*CONFIDENTIALITY REQUESTED*
<PAGE>
RESEARCH AGREEMENT
This Agreement is made by and between Osiris Therapeutics, Inc., a
Delaware, U.S.A. Corporation, having its business address at 2001 Aliceanna
Street, Baltimore, Maryland 21231-2001 (hereinafter "OSIRIS") and the
Consorzio per la gestione del Centro Di Biotecnologie Avanzate, having its
principal offices at Largo Rosanna Benzi, 16132 Genova, Italy (hereinafter the
"CBA").
SUBJECT
WHEREAS the parties to this Research Agreement (the "AGREEMENT") wish to
promote the increase of useful knowledge through research relating to tissue
regeneration based on the differentiation of mesenchymal stem and progenitor
cells;
WHEREAS with this aim in mind, the parties have previously signed a
letter of intent between them whereby the parties indicated their intention to
enter into a co-operation agreement with respect to research in the FIELD OF
RESEARCH as defined hereinbelow;
WHEREAS, OSIRIS desires to both fund certain work to be performed at
CBA in the FIELD OF RESEARCH, and to acquire rights to all research carried
out by CBA within the FIELD OF RESEARCH, whether or not funded by OSIRIS, on
the conditions set out under this AGREEMENT, such rights to be granted to
OSIRIS in accordance with a separate standard License Agreement attached
hereto as Exhibit A (the "LICENSE AGREEMENT");
WHEREAS, CBA desires to receive such funding and recognizes that the
right to acquire the rights to the work to be performed hereunder will be
granted to OSIRIS under this
<PAGE>
AGREEMENT and in accordance with the LICENSE AGREEMENT.
WHEREAS, the parties therefore wish to establish in detail to which
specific projects in the FIELD OF RESEARCH Osiris wishes to contribute,
and on what basis CBA shall ensure that the relevant qualified staff shall
work on such specific projects.
WHEREAS, this Agreement is in conformity with Article 12 of the
Convention signed between CBA and the IST, the Istituto Nazionale per la
Ricerca sul Cancro, or, the Institute for Cancer Research, which latter forms
part of the CBA consortium, and CBA shall therefore sign this Agreement both
on its and IST's behalf pursuant to the said Convention.
IT IS AGREED
1.0 DEFINITIONS
1.1 The term "AFFILIATE" as applied to OSIRIS, shall mean any
company or other legal entity other than OSIRIS, in whatever country
organized, controlling or controlled by OSIRIS. The term "control" means
possession of the power to direct or cause the direction of the management and
policies whether through the ownership of voting securities, by contract or
otherwise. The term "CBA AFFILIATE" as applied to CBA, shall mean any
company or other legal entity other than CBA, including by definition the
Institute for Cancer Research (the "INSTITUTE"), in whatever country
organized, controlling or controlled by CBA.
1.2 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on July 1, 1997 (the "EFFECTIVE DATE"), and each subsequent twelve
(12) month period thereafter.
1.3 The term "BACKGROUND TECHNOLOGY" shall mean any data, formulas,
<PAGE>
inventions, process information or other information, materials and substances
belonging to the FIELD OF USE known to CBA through PRINCIPAL INVESTIGATOR on
the EFFECTIVE DATE and in and to which CBA has a transferable right, which
includes but is not limited to: MESENCHYMAL STEM CELLS
1.4 The term "FIELD OF RESEARCH" shall mean the isolation,
purification, expansion, characterization and use of human MESENCHYMAL STEM
CELLS in the laboratories of the PRINCIPAL INVESTIGATOR.
1.5 "FIELD OF USE" means the isolation, purification,
characterization, culture-expansion, clinical use and manufacture of
MESENCHYMAL STEM CELLS in cancer, orthopaedics and other tissue repair and
regeneration indications.
1.6 The term "INVESTIGATOR" shall mean PRINCIPAL INVESTIGATOR, CBA
or CBA AFFILIATE faculty members, graduate students, fellows, consultants or
employees of CBA or a CBA AFFILIATE who shall work under the direction of
PRINCIPAL INVESTIGATOR on the FIELD OF RESEARCH.
1.7 The term "LICENSED PRODUCT" shall mean any article, composition,
apparatus, substance, chemical, material, method, process or service the
manufacture, use or sale of which is covered by PATENT RIGHTS or which
incorporates or uses TECHNOLOGY.
1.8 "LICENSED SERVICE(S)" means the performance on behalf of a
third party of any method or the use of any product or composition, the
manufacture, use or sale of which is covered by PATENT RIGHTS or which
incorporates or uses TECHNOLOGY.
1.9 The term "LICENSED TERRITORY" shall mean all countries of the
world.
1.10 "MATERIAL" shall mean any material or substance which is
TECHNOLOGY.
1.11 [*CONFIDENTIALITY REQUESTED*]
<PAGE>
1.12 The term "PATENT RIGHT(s)" shall mean (i) any patent application
or patent or equivalent thereof, anywhere in the world including, but not
limited to any division, continuation, or continuation-in-part, re-
examination, reissue or extension issuing thereon, which is owned by CBA and
contains one or more claims to any TECHNOLOGY.
1.13 The term "PRINCIPAL INVESTIGATOR" shall mean Dr. Ranieri
Cancedda, a professor of the University of Genoa, at the Faculty of
Medicine, who has been appointed Laboratory Head under an agreement between
the University of Genoa and IST, and who is currently seconded by IST itself
to CBA.
1.14 "RESEARCH" shall mean the specific research in the FIELD OF
RESEARCH set out in more detail in Exhibit B, attached hereto, and such
other research as the parties shall decide, by mutual consent, to add to
Exhibit B hereto.
1.15 The term "RESEARCH TECHNOLOGY" shall mean any data, formulas,
process information or other information, material, substance, invention or
discovery, whether or not patentable, conceived or first actually or
constructively reduced to practice during the period when research is being
supported under this AGREEMENT solely or jointly by at least one INVESTIGATOR
which is in the FIELD OF RESEARCH or which is the direct result of RESEARCH.
<PAGE>
1.16 "RETAINED RIGHTS" shall mean any rights retained by any
government research granting agencies and public bodies, and any retained
right of CBA to make, have made, provide and use LICENSED PRODUCT(S)
and LICENSED SERVICES for its non-profit, non-commercial research purposes, or
with LICENSED PRODUCT obtained from OSIRIS for the treatment or diagnosis of
patients by CBA. In such case, OSIRIS will make such LICENSED PRODUCT
available to CBA at its most favorable academic medical center discount for a
period of five (5) years following EU regulatory approval.
1.17 "TECHNOLOGY" means individually and collectively BACKGROUND
TECHNOLOGY and/or RESEARCH TECHNOLOGY.
2.0 RESEARCH PROJECT
2.1 In accordance with Paragraph 3.1 below, OSIRIS shall provide a
maximum of US: $ 1,000,000 (One million) in total research support (full
direct and indirect costs and expenses) to CBA in the annual installments
described in the detailed budget set out in Exhibit C hereto to support
RESEARCH in the FIELD OF USE from, July 1, 1997 to, June 30, 2000 in the
laboratories of the PRINCIPAL INVESTIGATOR. Subject to Paragraph 2.2 and
Article 3 below, the research support (direct and indirect expenses) for the
1997-1998 period from July 1, 1997 to June 30, 1998 shall be paid quarterly on
July 1st 1997, September 1st 1997, January 1st, 1998 and April 1st 1998, and
shall be paid in similar quarterly installments during each succeeding
AGREEMENT YEAR. OSIRIS and CBA will negotiate the terms and extension, if
any, to the RESEARCH, if applicable, for each one year period following the
initial term of the AGREEMENT as set out above (the "INITIAL TERM").
2.2 If PRINCIPAL INVESTIGATOR ceases to be employed by CBA, then
OSIRIS at
<PAGE>
its option, may elect to continue the research funding so long as CBA provides
a suitable substitute, acceptable to OSIRIS, for the PRINCIPAL INVESTIGATOR
to supervise other INVESTIGATORS with respect to RESEARCH. Conversely,
OSIRIS may elect to terminate RESEARCH according to Paragraph 9.1 below, in
which event neither party shall be due any further sum from the other under
this Agreement. All terms under this AGREEMENT which apply to the PRINCIPAL
INVESTIGATOR shall apply in the same manner to any substitute for the
PRINCIPAL INVESTIGATOR.
2.3 The relationship between OSIRIS and CBA shall be exclusive.
CBA may not furnish MATERIAL under this AGREEMENT or the LICENSE AGREEMENT
attached hereto or enter into discussions with other commercial organizations
without the prior approval of OSIRIS.
2.4 To the extent practicable, OSIRIS shall submit joint research
applications with CBA in the FIELD OF USE for Italian Government and/or EU
research funding.
3.0 OBLIGATIONS OF CBA
3.1 Within sixty (60) days following the end of each AGREEMENT
YEAR, CBA shall provide OSIRIS with an accounting of the expenditure
of research funds for such year in accordance with CBA'S standard procedures
for such accounting. Any funds granted hereunder which have not been expended
by CBA within any such AGREEMENT YEAR shall continue to be used to fund
RESEARCH under this AGREEMENT during the following AGREEMENT YEAR. Any funds
which have not been expended upon termination of this AGREEMENT shall be
returned to OSIRIS.
3.2 During the period in which OSIRIS is funding research under
this AGREEMENT, CBA shall undertake to ensure that PRINCIPAL INVESTIGATOR
shall not seek or accept
<PAGE>
funding from a commercial sponsor in the FIELD OF RESEARCH
without the prior written approval of OSIRIS but may accept funding from the
government, not-for-profit organizations and other universities.
3.3 Beginning on the EFFECTIVE DATE of this AGREEMENT and thereafter
unless sooner terminated, CBA shall:
(i) Through the PRINCIPAL INVESTIGATOR conduct the RESEARCH,
and apply the funds paid by OSIRIS to support the expenses of RESEARCH
including for the employment of INVESTIGATORS hereinafter and shall use
reasonable efforts and diligence consistent with CBA'S professional standards
to achieve the goals for such RESEARCH;
(ii) promptly and systematically disclose TECHNOLOGY to
OSIRIS, and shall promptly advise OSIRIS of any invention which is
TECHNOLOGY in the manner specified in more detail in Article 8 below;
(iii) for the purpose of facilitating disclosure to OSIRIS of
TECHNOLOGY, permit duly authorized employees or representatives of OSIRIS to
visit the PRINCIPAL INVESTIGATOR'S laboratories at CBA where RESEARCH is
conducted at reasonable times and with reasonable notice;
(iv) promptly advise OSIRIS of any invention which is RESEARCH
TECHNOLOGY;
(v) at OSIRIS' request, provide OSIRIS with reasonable
research quantities of MATERIALS; and
(vi) advise, on a continuing basis, OSIRIS of the results of
the RESEARCH and at least once every four (4) months provide OSIRIS with
written progress reports concerning the RESEARCH. A final written report
setting forth in detail the results achieved under and pursuant
<PAGE>
to such RESEARCH shall be submitted by CBA to OSIRIS within ninety (90) days
of termination of each AGREEMENT YEAR and of the RESEARCH. Such final report
shall include (1) a complete summary of all research carried out; (2) a
scientific assessment by the PRINCIPAL INVESTIGATOR of all research carried
out; and (3) detailed experimental protocols for the experiments performed in
the course of the research, it being understood that the latter protocols
shall not be sent to OSIRIS but shall be kept at CBA's premises and shall be
at the disposition of OSIRIS should its representatives wish to examine them
there..
(vii) ensure that all results of RESEARCH shall be the property
of CBA free of any third party rights and shall indemnify and hold OSIRIS
harmless from any claims for damages or of any other nature whatsoever raised
by third parties with respect to such results and shall undertake to ensure
that all non-employees of CBA working in their laboratories on RESEARCH or
collaborating with them on the research funded by OSIRIS hereunder sign the
Invention Agreement attached hereto as Exhibit D.
4.0 FACILITIES
CBA agrees to furnish such laboratory facilities and equipment and
secretarial support as it and OSIRIS shall, by mutual consent, determine
necessary for the RESEARCH and as set out in more detail in Exhibit C
hereto (the "FACILITIES"). Any addition or change to the FACILITIES as
set out in Exhibit C shall be agreed by mutual consent between the parties,
and shall be made by CBA at its own expense. Any equipment provided by
OSIRIS for CBA's use in the RESEARCH shall be subject to CBA's approval.
5.0 EMPLOYMENT OF INVESTIGATORS
5.1 The RESEARCH shall be carried out by those of the
INVESTIGATORS specifically indicated in Exhibit E hereto which shall include,
inter alia, the PRINCIPAL
<PAGE>
INVESTIGATOR or Laboratory Head , other senior research staff,
research staff, research scientists, junior research scientists, graduate
students, a chief technician, junior technicians and technician students more
particularly described in Exhibit E hereto (respectively senior research
staff being referred to as the "Senior Research Staff ", research staff and
the chief technician being referred to as the "Research Staff", research
scientists being referred to as the "Research Scientists", and junior research
scientists, graduate students, junior technicians and technician students
being referred to as the "Fellowship Holders" ). CBA shall ensure that
each of the said INVESTIGATORS shall devote their time and energies to the
RESEARCH in accordance with the specific provisions set out in Exhibit E hereto.
5.2 PRINCIPAL INVESTIGATOR shall continue to be jointly appointed
by the University of Genoa and IST and seconded to CBA from IST, and CBA shall
pay him appropriate incentive payments from the funding provided by OSIRIS
with respect to the RESEARCH in conformity with applicable Italian law
currently in force and on the basis of the conditions provided for by the
entity(ies) by which PRINCIPAL INVESTIGATOR is appointed.
5.3 The Senior Research Staff shall be seconded to CBA in accordance
with certain specific conventions between CBA and IST or such other entity as
they are employed by, and CBA shall pay them appropriate incentive payments
from the funding provided by OSIRIS with respect to the RESEARCH in conformity
with applicable Italian law currently in force and on the basis of the
conditions provided for by the entity(ies) by which the Senior Research Staff
is appointed. They shall be subject to an appropriate non-competition
obligation under such contracts in the RESEARCH FIELD which shall apply
throughout the duration of the contracts and for a period of two years
following the termination of the contracts.
5.4 The Research Staff shall be seconded to CBA in accordance with
certain
<PAGE>
specific conventions between CBA and IST or such other entity as they are
employed by and CBA shall pay them appropriate incentive payments from the
funding provided by OSIRIS with respect to the RESEARCH in conformity with
applicable Italian law currently in force and on the basis of the conditions
provided for by the entity by which the Research Staff is appointed. They
shall be subject to an appropriate non-competition obligation under such
contracts in the RESEARCH FIELD which shall apply throughout the duration of
the contracts and for a period of two years following the termination of the
contracts.
5.5 The Research Scientists shall be directly employed by CBA as
employees on a temporary basis. Under the employment contracts established
between the Research Scientists and CBA, the Research Scientists shall be
subject to an appropriate non-competition obligation in respect of the
restricted field of the specific project of the RESEARCH on which they shall
work. Such non-competition obligation shall apply throughout the duration of
their respective employment contracts, and for a period of one year following
termination of such employment contract, only as regards commercial
organizations conducting work similar to the RESEARCH FIELD, as opposed to
academic posts which they may be offered.
5.6 The Fellowship Holders shall carry out RESEARCH in return for
the award of a fellowship from CBA for the three (3) year duration of the
RESEARCH, which shall be provided from the funding provided by OSIRIS with
respect to the RESEARCH.
6.0 PUBLICATION
6.1 OSIRIS agrees that INVESTIGATORS engaged in the RESEARCH shall
be permitted to present or publish at their own choosing, methods and results
of the RESEARCH; provided, however, that OSIRIS shall have been furnished
copies of any abstract, proposed presentation, or publication thirty (30) days
prior to submission to scientific meeting organizers or
<PAGE>
scientific publications.
6.2 Notwithstanding anything else to the contrary, CBA undertakes
that it shall not, and undertakes to ensure that PRINCIPAL INVESTIGATOR shall
not, publish or disclose to third parties TECHNOLOGY without supplying OSIRIS
with a copy of the material to be disclosed or published to third parties at
the time of submission for publication or disclosure so that OSIRIS may
evaluate such material to determine whether the material contains patentable
subject matter on which a patent application should be filed. OSIRIS shall
review the material within thirty (30) days of submission to OSIRIS.
6.3 At OSIRIS'S request, CBA will delay publication and/or
disclosure of TECHNOLOGY for an additional sixty (60) days in order to
enable the preparation and filing of a patent application in the United
States, Europe or other jurisdiction on any such patentable subject matter.
Notwithstanding anything to the contrary, CBA will not be required to withhold
publication of such material for a period which is more than ninety (90) days
after OSIRIS is first provided with the material to be disclosed or published.
6.4 Nothing in this Agreement shall entitle CBA to disclose to
others or publish any information disclosed to CBA by OSIRIS that is
confidential within the meaning of article 7.0 without the prior written
approval of OSIRIS.
7.0 CONFIDENTIALITY
7.1 The parties agree and undertake to keep confidential all and any
information, whether written or oral, which is imparted to them by the other
in confidence or which is confidential and which is acquired by one party in
connection with this Agreement or the research to be carried out under it
including, for the avoidance of doubt, all such information relating to the
activities, business or affairs or the other party ("CONFIDENTIAL
INFORMATION").
<PAGE>
CONFIDENTIAL INFORMATION shall not be disclosed or revealed to
anyone except employees of the recipient who have a need to know the
information and who have entered into a secrecy agreement with the recipient
under which such employees are required to maintain confidential the
proprietary information of the recipient and such employees shall be advised
by the recipient of the confidential nature of the information and that the
information shall be treated accordingly. The recipient's obligations under
this Paragraph 7.1 shall not extend to any part of the information:
a. that can be demonstrated to have been in the public
domain or publicly known and readily available to the trade
or the public prior to the date of the disclosure; or
b. that can be demonstrated, from written records to have
been in the recipient's possession or readily available to the
recipient from another source not under obligation of secrecy
to the disclosing party prior to the disclosure; or
c. that becomes part of the public domain or publicly
known by publication or otherwise, not due to any unauthorized
act by the recipient.
d. that can be demonstrated, from written records, to have
been developed by the recipient independently of the disclosed
information.
7.2 The obligations of Paragraph 7.1 shall also apply to AFFILIATES
and/or SUBLICENSEES provided such information by OSIRIS. CBA'S, OSIRIS', and
AFFILIATES' obligations under Paragraph 7.1 shall extend until three (3) years
after the termination of this AGREEMENT. Notwithstanding the foregoing,
OSIRIS and AFFILIATES shall, with the prior consent of CBA, have the right to
disclose CONFIDENTIAL INFORMATION of CBA to a third party who undertakes
an obligation of confidentiality and non-use with respect to such information
<PAGE>
at least as restrictive as the obligations under Paragraph 7.1.
8.0 PATENT AND OTHER RIGHTS AND LICENSE OPTIONS
8.1 CBA agrees to promptly notify OSIRIS of any invention, whether
or not patentable, made by or disclosed to CBA which is TECHNOLOGY
(hereinafter an "INVENTION") within thirty (30) days after receipt of an
invention disclosure from the inventor or draft of a manuscript and prior to
its submission for publication, in accordance with article 6 above. The
titles, serial numbers and other identifying data of patent applications
claiming an INVENTION shall become part of the PATENT RIGHTS, it being
understood between the parties, however, that, where such an INVENTION is
patentable, CBA shall decide whether or not to patent it at its discretion.
In the event that it decides not to patent any patentable INVENTION, it shall
grant OSIRIS the right to patent such INVENTION in return for a one-off
payment of US $5,000.
8.2 With respect to any invention made by or disclosed to CBA
referred to in Paragraph 8.1 above and which must be notified to OSIRIS in
accordance with that Paragraph and which is the direct result of RESEARCH,
OSIRIS shall be automatically granted an exclusive license subject to the
RETAINED RIGHTS under the PATENT RIGHTS and under TECHNOLOGY to make, have
made, use and sell the LICENSED PRODUCT(S) and to provide the LICENSED
SERVICE(S) in the LICENSED TERRITORY (collectively, the "RESEARCH RIGHTS").
The relevant RESEARCH RIGHTS shall automatically vest in OSIRIS under the
specific terms and conditions set out in the LICENSE AGREEMENT, in particular,
its clause 2, which shall constitute the entire agreement with respect to the
RESEARCH RIGHTS.
8.3 With respect to any invention made by or disclosed to CBA
referred to in Paragraph 8.1 above and which must be notified to OSIRIS in
accordance with that Paragraph and which is not the direct result of RESEARCH,
OSIRIS shall have an option to obtain an exclusive license
<PAGE>
subject to the RETAINED RIGHTS under the PATENT RIGHTS and under TECHNOLOGY to
make, have made, use and sell the LICENSED PRODUCT(S) and to provide the
LICENSED SERVICE(S) in the LICENSED TERRITORY (collectively, the "RIGHTS").
8.4 Within 30 days of notification of an INVENTION in accordance
with Paragraph 8.1 above, OSIRIS shall notify CBA as to whether it wishes to
exercise the option referred to in Paragraph 8.2 above. Exercise of the
option shall automatically vest the relevant RIGHTS in OSIRIS under the
specific terms and conditions set out in the LICENSE AGREEMENT, which shall
constitute the entire agreement with respect to the RIGHTS.
9.0 TERMINATION
9.1 OSIRIS may terminate this AGREEMENT immediately by giving CBA
simple written notice thereof in the event of any breach of CBA of any of its
obligations under Paragraphs 3.1, 3.3, 6.0 and 8.1 of this AGREEMENT, or in
the event that OSIRIS decides to terminate this AGREEMENT in accordance with
Paragraph 2.2 above..
9.2 Without prejudice to Clause 9.1 above, either of the parties may
terminate this AGREEMENT for its breach by the other party, in the event that
the party in breach does not remedy such breach within sixty (60) days of
receiving written notice of the breach from the party which is not in breach.
9.3 In the event of early termination of this AGREEMENT under
Article 9.2 above, or under Article 9.1 above for breach of CBA, the following
provisions shall apply:-
(i) Where the termination is due to breach of the Agreement
by OSIRIS, OSIRIS shall pay all costs accrued by CBA as of the date of
termination including non-cancelable obligations for the term of this
Agreement, and non-cancelable payment obligations to all INVESTIGATORS
appointed before the effective date of termination specifically to work on the
<PAGE>
RESEARCH funded by OSIRIS for a period of one year;
(ii) Where termination is due to breach of the Agreement by
CBA, CBA shall pay back all sums already paid to it by OSIRIS and not yet used.
10.0 NEGATION OF WARRANTY
10.1 CBA makes no representation other than those specified in this
Agreement. In particular, CBA MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF DATA OR
TECHNICAL INFORMATION DERIVED FROM THIS RESEARCH PROJECT OR OF ANY
TANGIBLE OR INTANGIBLE PROPERTY OR PROPERTY RIGHT.
11.0 ASSIGNMENT
This AGREEMENT shall be binding upon and inure to the benefit of the
respective parties and their permitted successors and assignees.
Notwithstanding the above, in the case of OSIRIS this AGREEMENT shall be
assignable by OSIRIS to any AFFILIATE of OSIRIS or other party with the
prior written consent of CBA, such consent not to be unreasonably withheld.
OSIRIS shall also have the right to assign this AGREEMENT to another party
without the consent of CBA in the case of the sale or transfer or merger or
consolidation of OSIRIS or sale or transfer by OSIRIS to that party of
all, or substantially all, of its assets or all or substantially all of the
portion of its assets to which this AGREEMENT relates, provided the assignee
undertakes to be bound by and perform the obligations of the assignor under
this AGREEMENT.
12.0 PUBLICITY
The COMPANY and CBA and their AFFILIATES and SUBLICENSEES shall not use
the names, likenesses, or logos of CBA or OSIRIS or any of their constituent
parts and affiliated
<PAGE>
hospitals and companies, in any press releases, general publications,
advertising, marketing, promotional or sales literature without
prior written consent from an authorized official of OSIRIS or CBA, which
consent shall not be unreasonably withheld. OSIRIS shall, however, have the
right to use the name of CBA in agreements between OSIRIS and SUBLICENSEES,
in shareholder communications and news releases, and in any US Securities and
Exchange Commission (SEC) or comparable EU filing, fundraising documents and
the like and in any case where such use is required by law, rule or regulation.
13.0 NOTICES
Notices, invoices, payments and other communications hereunder shall be
deemed to have been made when delivered, sent by telex, or when mailed first
class, postage prepaid, or by commercial international courier service and
addressed to the party at the address given below, or such other address as
may hereafter be designated by notice in writing:
OSIRIS THERAPEUTICS, INC. 2001 Aliceanna Street
Baltimore, Maryland 21231-2001
Attention: James S. Burns, President
and Chief Executive Officer
CC: Brosio, Casati E Associati
C.so Vittorio Emanuele II, 68
10121 Torino, Italy
Attn: Jane Golding, Esq. and
Avv. Donatella De Rosa
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Attention: Elliot M. Olstein, Esq.
CENTRO DI BIOTECNOLOGIE AVANZATE:
<PAGE>
If administrative: Leonardo Santi, M.D., Ph.D.
Chief Executive Officer
Consorzio per la gestione
Centro de Biotecnlogie Avanzate
Largo Rosanna Benzi 10
16132 Genova, Italy
If technical: Prof. Ranieri Cancedda, M.D.
Director
Laboratorio di Differenziazione
Cellulare
Centro di Biotecnologie Avanzate
Largo Rosanna Benzi 10
16132 Genova, Italy
14.0 MISCELLANEOUS
14.1 CBA and OSIRIS agree that, in performing their activities as
regards the RESEARCH, INVESTIGATORS are acting as employees of CBA or the
INSTITUTE and nothing contained in this Agreement shall allow the
INVESTIGATORS to be or be deemed to be the agent or the employee of OSIRIS for
any purpose whatsoever.
14.2 This AGREEMENT shall be governed by and construed according to
the laws of Italy.
14.3 The parties shall make reasonable efforts to settle in an
amicable way any dispute that may arise between them in connection with this
AGREEMENT or the carrying out of the transaction contemplated herein.
14.4. Should either party consider it not possible to reach an
amicable settlement, then the dispute shall be resolved through arbitration
with a panel of three arbitrators.
14.5. The first arbitrator shall be appointed by the party initiating
the arbitration proceedings within its demand for arbitration to the other
party; the second arbitrator shall be appointed by the other party within 30
days from the date on which it has received notice of the
<PAGE>
demand for arbitration; and the third arbitrator, as Chairman of the panel,
shall be designated by agreement of the first two arbitrators within 30 days
from the appointment of the second arbitrator or, failing such agreement, by
the President of the Court of Genoa, Italy, upon request of one party. The
President of the Tribunal of Genoa, Italy, upon request of one party, shall
also designate an arbitrator in the same manner if the party required to make
such appointment shall not have done so within the period of time specified
above.
14.6. The appointment of the arbitrator shall be carried out by
formally notifying it to the other party through the judicial officer.
14.7. In the event that more than two parties legitimately are party
to the arbitration proceedings, then the dispute shall be resolved by a panel
of three arbitrators appointed by agreement of the various parties to the
procedure or, failing such agreement, by the President of the Tribunal of
Genoa, Italy, upon request of one party.
14.8. The arbitration procedure shall be held in accordance with the
customary Italian Procedure Law.
14.9. The arbitrators shall come to a decision in accordance with
Italian Law ("arbitrato rituale di diritto") and within a term of 180 days
after their appointment be it by the parties, or by the President of Tribunal
of Genoa, Italy; the arbitrators' award shall not be subject to any form of
appeal or recourse.
14.10. The arbitration proceedings shall take place in Genoa, Italy and
shall be held in English.
14.11 This AGREEMENT includes Exhibits "A" through "E" as an integral
part hereof and it supersedes any prior agreement between the parties hereto
and constitutes the entire agreement of the parties with respect to its
subject matter. Any amendments hereto must be in writing and
<PAGE>
signed by duly authorized representatives of both parties hereto.
The parties hereto have caused this AGREEMENT to be executed by duly
authorized representatives effective as of the later date indicated below.
OSIRIS THERAPEUTICS, INC. CONSORZIO PER LA GESTIONE
CENTRO DI BIOTECNOLOGIE AVANZATE
By:/s/ James S. Burns By: /s/ Leonardo Santi
Name: James S. Burns Name: Leonardo Santi, M.D., Ph.D.
Title: President & Chief Executive Officer Title: Chief Executive Officer
Date: _7/25/97_______________ Date: _7/15/97_________________
I have read, understand and agree to abide by the terms of this AGREEMENT.
By: /s/ Ranieri Cancedda
Name: Ranieri Cancedda, M.D.
Title: Professor Date: 7/15/97
<PAGE>
Exhibit A
LICENSE AGREEMENT
This Agreement is made by and between Osiris Therapeutics, Inc.,
a Delaware, U.S.A. corporation (hereinafter "OSIRIS") having its principal
place of business at 2001 Aliceanna Street, Baltimore, MD 21231-2001, and the
Consorzio per la gestione del Centro Di Biotecnologie Avanzate, having its
principal offices at Largo Rosanna Benzi 10, 16132 Genova, Italy (hereinafter
the "CBA").
SUBJECT
WHEREAS, OSIRIS and CBA have entered into a separate Research Agreement
(the "RESEARCH AGREEMENT"), which grants OSIRIS automatic rights to certain
work, and an option to obtain rights to other research carried out in the
FIELD OF RESEARCH (as defined hereinafter) under this License Agreement (the
"AGREEMENT"); and
WHEREAS, CBA desires to receive such funding and recognizes that the
rights to the work to be performed hereunder will be granted to OSIRIS under
the RESEARCH AGREEMENT and the AGREEMENT.
WHEREAS, CBA is interested in licensing PATENT RIGHTS (hereinafter
defined) to facilitate the distribution of useful products and the utilization
of new clinical methods, but does not intend to commercially develop,
manufacture or distribute any such products or methods; and
WHEREAS, OSIRIS desires to commercially develop, manufacture, use and
distribute such products and processes covered by PATENT RIGHTS throughout the
world;
WHEREAS, this Agreement is in conformity with Article 12 of the
Convention signed between CBA and the IST, the Istituto Nazionale per la
Ricerca sul Cancro, or, the Institute for Cancer Research, which latter forms
part of the CBA consortium, and CBA shall therefore sign this Agreement both
on its and IST's behalf pursuant to the said Convention.
<PAGE>
NOW THEREFORE in consideration of the mutual promises and other good and
valuable consideration, the parties agree as follows:
IT IS AGREED
SECTION 1 - DEFINITIONS
1.1 The term "AFFILIATE" as applied to OSIRIS, shall mean any
company or other legal entity other than OSIRIS, in whatever country
organized, controlling or controlled by OSIRIS. The term "control" means
possession of the power to direct or cause the direction of the management and
policies whether through the ownership of voting securities, by contract or
otherwise. The term "CBA AFFILIATE" as applied to CBA, shall mean any company
or other legal entity other than CBA, including by definition the Institute
for Cancer Research (the "INSTITUTE"), in whatever country organized,
controlling or controlled by CBA.
1.2 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on [July 1, 1997] (the "EFFECTIVE DATE"), and each subsequent twelve
(12) month period thereafter.
1.3 The term "BACKGROUND TECHNOLOGY" shall mean any data, formulas,
inventions, process information or other information, materials and substances
belonging to the FIELD OF USE known to CBA through PRINCIPAL INVESTIGATOR on
the EFFECTIVE DATE and in and to which CBA has a transferable right, which
includes but is not limited to MESENCHYMAL STEM CELLS.
1.4 "EFFECTIVE DATE" of this License Agreement shall mean the later
of the date first appearing on this AGREEMENT or July 1, 1997.
1.5 "FIELD OF RESEARCH" shall mean the isolation, purification,
characterization and use of human MESENCHYMAL STEM CELLS in the laboratories
of the PRINCIPAL INVESTIGATOR.
1.6 "FIELD OF USE" means the isolation, purification,
characterization, culture-expansion, clinical use and manufacture of
MESENCHYMAL STEM CELLS in cancer., orthopaedics and other tissue repair and
regeneration indications.
1.7 The term "INVESTIGATOR" shall mean PRINCIPAL INVESTIGATOR,
CBA or CBA AFFILIATE faculty members, graduate students, fellows, consultants
or employees of
<PAGE>
CBA who shall work under the direction of PRINCIPAL INVESTIGATOR on the FIELD
OF RESEARCH.
1.8 The term "LICENSED PRODUCT" shall mean any article, composition,
apparatus, substance, chemical, material, method, process or service the
manufacture, use or sale of which is covered by PATENT RIGHTS or which
incorporates or uses TECHNOLOGY or which incorporates or uses a MATERIAL.
1.9 "LICENSED SERVICE(S)" means the performance on behalf of a third
party of any method or the use of any product or composition, the manufacture,
use or sale of which is covered by PATENT RIGHTS or which incorporates or uses
TECHNOLOGY or which incorporates or uses a MATERIAL.
1.10 The term "LICENSED TERRITORY" shall mean all countries of the
world.
1.11 The term "MESENCHYMAL STEM CELL" or "MSC" shall mean the:
[*CONFIDENTIALITY REQUESTED*]
1.12 "NET SALES" subject to Paragraph 5.9 shall mean gross sales
revenues received by OSIRIS or an AFFILIATE from the sale of LICENSED
PRODUCT(S) less trade discounts allowed, refunds, returns and recalls,
rebates, transportation and transportation-related insurance costs, itemized
on a bill or invoice, and sales taxes. In the event that OSIRIS, an AFFILIATE
or SUBLICENSEE sells a LICENSED PRODUCT in combination with other ingredients
or components which are not LICENSED PRODUCT(S) (such other ingredients or
components being "Other Items"), then the NET SALES for purposes of royalty
payments on the combination shall be calculated as follows:
(a) If all LICENSED PRODUCT(S) and Other Items contained in
the combination are available separately, the NET SALES for purposes of
royalty payments will be calculated by multiplying the NET SALES of the
combination by the fraction A/(A+B), where A is
<PAGE>
the separately available price of all LICENSED PRODUCT(S) in the combination,
and B is the separately available price for all Other Items in the combination.
(b) If the combination includes Other Items which are not
sold separately (but all LICENSED PRODUCT(S) contained in the combination are
available separately), the NET SALES of the combination multiplied by the
fraction A/C, where A is as defined above and C is the invoiced price of the
combination.
(c) If the LICENSED PRODUCTS contained in the combination are
not sold separately, the NET SALES for such combination shall be NET SALES
multiplied by D/C where C is defined above and D is the fair market value of
LICENSED PRODUCTS in the combination. The fair market value will be
determined by negotiation between the parties; should the parties fail to
reach an agreement, the issue will be brought for a finding to arbitration in
accordance with the rules of customary Italian Procedural Law relating to
arbitrations, as set forth in Clause 8 below.
The term "Other Items" does not include solvents, diluents,
carriers, excipients, or the like used in formulating a product.
1.13 "NET SERVICE REVENUES" shall mean actual revenues received for
the performance of LICENSED SERVICE less sales and/or use taxes imposed upon
and with specific reference to the LICENSED SERVICE, trade discounts allowed,
refunds and rebates. If a LICENSED SERVICE is offered in combination with
another service or services, NET SERVICE REVENUES for purposes of
determining royalties on the LICENSED SERVICE shall be calculated by
multiplying the NET SERVICE REVENUES (as defined above, but
applied to the combination services), by the fraction A/(A+B), where A is the
invoice price of the LICENSED SERVICE and B is the invoice price of the
other service or services in the combination if sold separately.
1.14 "MATERIAL" shall mean any material or substance which is
TECHNOLOGY.
1.15 The term "PATENT RIGHT(s)" shall mean any patent application or
patent or equivalent thereof, anywhere in the world including, but not limited
to any division, continuation, or continuation-in-part, re-examination,
reissue or extension issuing thereon, which is owned by CBA and contains one
or more claims to any TECHNOLOGY.
1.16 The term "PRINCIPAL INVESTIGATOR" shall mean Dr. Ranieri
Cancedda a professor of the University of Genoa, at the Faculty of Medicine,
who has been appointed Laboratory
<PAGE>
Head under an agreement between the University of Genoa and IST, and who is
currently seconded by IST itself to CBA.
1.17 "RETAINED RIGHTS" shall mean any rights retained by any
government research granting agencies and public bodies, and any retained right
of CBA to make, have made, provide and use LICENSED PRODUCT(S) and LICENSED
SERVICES for its non-profit, non-commercial research purposes, or with
LICENSED PRODUCT obtained from OSIRIS for the treatment or diagnosis of
patients by CBA. In such case, OSIRIS will make such LICENSED PRODUCT
available to CBA at its most favorable academic medical center discount for a
period of five (5) years following EU regulatory approval.
1.18 "RESEARCH AGREEMENT" means the Research Agreement by and
between CBA and OSIRIS dated as of the date of this AGREEMENT.
1.19 The term "RESEARCH TECHNOLOGY" shall mean any data, formulas,
process information or other information, material, substance, invention or
discovery, whether or not patentable, conceived or first actually or
constructively reduced to practice during the period when research is being
supported by OSIRIS under the RESEARCH AGREEMENT solely or jointly by at
least one INVESTIGATOR which is in the FIELD of RESEARCH or which is the
direct result of research funded in whole or in part by OSIRIS pursuant to the
RESEARCH AGREEMENT.
1.20 The term "SUBLICENSEE" shall mean any non-AFFILIATE licensed by
OSIRIS to make, have made, import, use or sell any LICENSED PRODUCT or
LICENSED SERVICE.
1.21 "TECHNOLOGY" means individually and collectively BACKGROUND
TECHNOLOGY and/or RESEARCH TECHNOLOGY.
1.22 "VALID CLAIM" shall mean a claim of an issued patent which has
not lapsed or become abandoned or been declared invalid or unenforceable by a
court of competent jurisdiction or an administrative agency from which no
appeal can be or is taken.
SECTION 2 - GRANTS OF LICENSES
2.1 Subject to the terms and conditions of this AGREEMENT, CBA
hereby grants to OSIRIS an exclusive license, subject to any RETAINED RIGHTS
under the PATENT RIGHTS and under TECHNOLOGY to make, have made, use and sell
the LICENSED PRODUCT(S) and to provide the LICENSED SERVICE(S) in the LICENSED
TERRITORY.
<PAGE>
2.2 OSIRIS may sublicense others under this AGREEMENT provided that
it gives prior notice of the fundamental elements of any sub-license which it
may wish to enter into to CBA and CBA does not raise substantial objections to
such proposed sub-license within 60 days of the date of such notice and shall
provide a copy of each sublicense agreement to CBA after it is executed.
2.3 OSIRIS shall have the right to extend its license rights granted
under Paragraph 2.1 above to its AFFILIATES; however, such AFFILIATES must
agree in writing to be bound by the terms of this AGREEMENT with a copy of
such agreement furnished to CBA after it is executed.
SECTION 3 -OBLIGATIONS OF CBA REGARDING MATERIALS
3.1 During the period in which OSIRIS holds a license, CBA, and CBA
shall ensure that the PRINCIPAL INVESTIGATOR shall not, without OSIRIS'S prior
written approval, distribute or knowingly allow any MATERIALS to be
distributed to for-profit entities or persons known to be employed thereby or
consulting or performing research therefor other than under a license
permitted under this AGREEMENT.
3.2 CBA shall have the right, and CBA may allow PRINCIPAL
INVESTIGATOR to transfer MATERIALS to (i) not-for-profit entities or persons
known to be affiliated therewith, or (ii) to any person or entity, if required
by a journal in connection with a publication or if required by Government
rules and/or regulations, provided that such entities or persons sign a
Material Transfer Agreement in accordance with the terms set out in Annex A
hereto. CBA shall ensure that the PRINCIPAL INVESTIGATOR shall notify
OSIRIS before any such distribution is made.
3.3 Prior to distribution of any such MATERIALS, CBA and OSIRIS
shall use reasonable efforts to consider the patentability of such MATERIALS
and cooperate to file, where appropriate, PATENT RIGHTS protecting such
MATERIALS prior to their distribution.
SECTION 4 - DEVELOPMENT OF LICENSED PRODUCTS AND SERVICES
4.1 For each PATENT RIGHT, OSIRIS agrees to exercise reasonable
efforts and to take effective steps, within a reasonable time to (i) identify
product candidate(s) which are LICENSED PRODUCT(S) (ii) perform pre-clinical
animal and toxicological studies for each
<PAGE>
identified product candidate, (iii) conduct clinical studies aimed at
obtaining FDA and/or EU regulatory approval for each identified product
candidate and (iv) develop and commercialize each such product; provided
however, a LICENSED PRODUCT need not be identified and developed for a
PATENT RIGHT if a similar product is being developed under another PATENT
RIGHT. OSIRIS'S obligations under this paragraph shall take into account the
stage of development thereof and regulatory consideration and requirements.
The efforts of a SUBLICENSEE, an AFFILIATE, a collaborator and research
funded under this AGREEMENT shall be considered as efforts of OSIRIS.
4.2 If, as to a specific LICENSED PRODUCT, OSIRIS fails to exercise
reasonable efforts as required by Paragraph 4.1, as its sole and exclusive
remedy CBA may convert OSIRIS'S license with respect thereto to non-exclusive
rights and licenses; provided however that, if in good faith, OSIRIS has
pursued development of such LICENSED PRODUCT and in good faith OSIRIS
intends to pursue development of such LICENSED PRODUCT, and reasonably
appears to have the ability to do so, and thereafter in good faith does
continue to do so, OSIRIS'S performance obligation will have been fulfilled.
4.3 OSIRIS may market and sell LICENSED PRODUCT(S) and LICENSED
SERVICE(S) to third parties at a sales price determined by OSIRIS in its sole
discretion.
4.4 After a NDA, PLA or BLA has been obtained from the FDA, OSIRIS
shall exercise commercially reasonable efforts to market a product included in
LICENSED PRODUCTS in the US and worldwide, provided that OSIRIS has obtained
regulatory approval in a particular foreign country or region.
4.5 In the event that a third party notifies CBA that it desires to
develop and market a LICENSED PRODUCT which is not being researched and/or
developed and/or marketed by OSIRIS, an AFFILIATE or SUBLICENSEE, CBA shall
notify OSIRIS in writing thereof. If OSIRIS does not notify CBA within ninety
(90) days of such written notice that OSIRIS or an AFFILIATE or SUBLICENSEE
intends to develop such LICENSED PRODUCT and does not initiate such
development in accordance with the provisions of Paragraph 4.1 hereof within a
reasonable time thereafter, CBA shall enter into good faith negotiations with
such third party for granting a sublicense for such LICENSED PRODUCT unless
the granting of such sublicense would have a potential adverse commercial
effect upon marketing and/or selling of a LICENSED PRODUCT which is being
researched, developed, or sold pursuant to this AGREEMENT.
<PAGE>
SECTION 5 - LICENSE PAYMENTS, ROYALTIES AND RESEARCH MILESTONES
5.1 For each new invention after the initial AGREEMENT YEAR for
which an original (i.e., not continuational or divisional) US Patent
application is filed, OSIRIS shall pay to [*CONFIDENTIALITY REQUESTED*] within
sixty (60) days following such filing.
5.2 OSIRIS shall pay to CBA one of the following royalties which
shall be due and payable sixty (60) days after June 30 and December 31 for
LICENSED PRODUCTS sold or LICENSED SERVICES provided in the respective
half-year period:
(a) (i) [*CONFIDENTIALITY REQUESTED*] of NET SALES of
LICENSED PRODUCTS or NET SERVICE REVENUE of LICENSED SERVICES which are
[*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED PRODUCTS or NET
SERVICE REVENUE of LICENSED SERVICES in the case of
[*CONFIDENTIALITY REQUESTED*], sold or provided by OSIRIS or an AFFILIATE
licensed under this AGREEMENT which in the country where made, sold or
provided are covered by a VALID CLAIM included in PATENT RIGHTS; (ii)
[*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED PRODUCTS for
therapeutics and [*CONFIDENTIALITY REQUESTED*] of NET SALES of LICENSED
PRODUCTS in case of [*CONFIDENTIALITY REQUESTED*] in all other countries; it
being understood that, in the case of any LICENSED PRODUCTS or LICENSED
SERVICES which shall, in the future, be covered by a VALID CLAIM included in
PATENT RIGHTS for which registration has been requested but not yet granted,
the royalty amounts provided for under (ii) above shall be paid until the
grant of the PATENT RIGHTS, and, if and when such PATENT RIGHTS are granted,
those royalty amounts provided for under (i) above shall apply from the date
of such grant, and shall also be paid retroactively for the period from the
date at which registration of such PATENT RIGHTS was requested to the date of
such grant.
(b) (i) [*CONFIDENTIALITY REQUESTED*] received by OSIRIS
from a SUBLICENSEE for LICENSED PRODUCTS sold or LICENSED SERVICES provided
by such SUBLICENSEE which in the country where made, sold or provided are
covered by a VALID CLAIM included in PATENT RIGHTS; (ii)
[*CONFIDENTIALITY REQUESTED*] received by OSIRIS from a SUBLICENSEE for
LICENSED PRODUCTS sold or LICENSED SERVICES provided by such SUBLICENSEE in
all other countries.
5.3 In the event royalties are due hereunder with respect to a
LICENSED SERVICE solely because such service involves the use of a LICENSED
PRODUCT, for the
<PAGE>
purposes of calculating royalties hereunder, NET SALES for the LICENSED
PRODUCT and/or NET SERVICE REVENUES for the LICENSED SERVICE shall be
based on the price of the LICENSED PRODUCT, respectively, in arm's length
transactions. If no such transactions have taken place, such price shall be
determined by mutual agreement of the parties and if such agreement is not
reached within sixty (60) days, either party shall have the right to submit a
determination of price to binding arbitration in accordance with Section 8
below.
5.4 OSIRIS shall provide to CBA within sixty (60) days of the end
of each June 30 and December 31, after the market introduction of LICENSED
PRODUCTS or LICENSED SERVICES in any country of the LICENSED TERRITORY, a
written report to CBA of the amount of LICENSED PRODUCTS sold, and LICENSED
SERVICES sold, the total NET SALES and NET SERVICE REVENUES of such LICENSED
PRODUCTS and LICENSED SERVICES, and the running royalties due to CBA as a
result of NET SALES and NET SERVICE REVENUES by OSIRIS, AFFILIATES and
SUBLICENSEES. Payment of any such royalties due shall accompany such report.
So long as OSIRIS, an AFFILIATE or a SUBLICENSEE is developing a LICENSED
PRODUCT under this AGREEMENT, a report shall be submitted at the end of every
June 30 and December 31 after the EFFECTIVE DATE of this AGREEMENT and will
include a full written report describing OSIRIS'S, AFFILIATE'S or
SUBLICENSEE'S technical efforts under Section 7.
5.5 OSIRIS shall make and retain, for a period of three (3) years
following the period of each royalty report required by Paragraph 5.4, true
and accurate records, files and books of account containing all the data
reasonably required for the full computation and verification of sales and
other royalty related information required in Paragraph 5.4. Such books and
records shall be in accordance with generally accepted accounting principles
consistently applied. OSIRIS shall permit the inspection and copying of such
records, files and books of account by CBA or its agents during regular
business hours upon ten (10) business days' written notice to OSIRIS. Such
inspection shall not be made more than once each calendar year. All costs of
such inspection and copying shall be paid by CBA, provided that if any such
inspection shall reveal that an underpayment error has been made in the amount
equal to ten percent (10%) or more of such payments in a calendar year, such
costs shall be borne by OSIRIS. OSIRIS shall include in any agreement with its
AFFILIATES or SUBLICENSEES which permits such party to make, use or sell
the LICENSED PRODUCT(S) or provide LICENSED SERVICES, a provision requiring
such party to retain records of sales of LICENSED PRODUCT(S) and records of
LICENSED SERVICES and other information
<PAGE>
as required in Paragraph 5.4 and permit the CBA to inspect such records as
required by this Paragraph 5.5.
5.6 OSIRIS agrees that in the event any LICENSED PRODUCT shall be
sold to an AFFILIATE, then the royalty due hereunder shall be based on the
higher of (i) NET SALES of the LICENSED PRODUCT to the AFFILIATE or (ii) the
NET SALES of the AFFILIATE from the resale of such LICENSED PRODUCT. In the
event any LICENSED PRODUCT or LICENSED SERVICE shall be sold to other than an
AFFILIATE for partial or full future compensation then such future
compensation when received shall be included in NET SALES for the purpose of
paying royalties hereunder.
5.7 All payments under this AGREEMENT shall be made in US Dollars.
5.8 To the extent royalty is owed to a third party for patents held
by that party covering the making, using or selling of a LICENSED PRODUCT or
LICENSED SERVICE in a particular country, the royalty due to CBA under
Paragraph 5.2 for such LICENSED PRODUCT or LICENSED SERVICE in such country
will be[*CONFIDENTIALITY REQUESTED*] such royalty paid to such third party;
however, in no event shall such royalty due to CBA for such LICENSED PRODUCT
or LICENSED SERVICE be [*CONFIDENTIALITY REQUESTED*].
5.9 Any tax required to be withheld by OSIRIS under the laws of any
foreign country for the account of CBA, shall be promptly paid by OSIRIS for
and on behalf of CBA to the appropriate governmental authority, and OSIRIS
shall use its best efforts to furnish CBA with proof of payment of such tax.
Any such tax actually paid on CBA'S behalf shall be deducted dollar for dollar
from royalty payments due CBA.
5.10 Only one royalty shall be due and payable for the manufacture,
use and sale of a LICENSED PRODUCT or a LICENSED SERVICE irrespective of
the number of patents or claims thereof which cover the manufacture, use or
sale of such LICENSED PRODUCT or LICENSED SERVICE.
SECTION 6 - PATENT INFRINGEMENT
6.1 Each party will notify the other promptly in writing when any
infringement of the PATENT RIGHTS by another is uncovered or suspected.
6.2 OSIRIS shall have the first right to enforce any patent within
PATENT RIGHTS against any infringement or alleged infringement thereof, and
shall at all times keep CBA
<PAGE>
informed as to the status thereof. OSIRIS may, in its sole
judgment and at its own expense, institute a suit against any such infringer
or alleged infringer and control, settle, and defend such suit in a manner
consistent with the terms and provisions hereof and recover, for its account,
any damages, awards or settlements resulting therefrom, subject to Paragraph
6.4. CBA shall reasonably cooperate in any such litigation at OSIRIS'S
expense.
6.3 If OSIRIS elects not to enforce any patent within the PATENT
RIGHTS, then it shall so notify CBA in writing within six (6) months of
receiving notice that an infringement exists, and CBA may, in its sole
judgment and at its own expense, take steps to enforce any patent and control,
settle, and defend any suit that it brings in a manner consistent with the
terms and provisions hereof, and recover, for its own account, any damages,
awards or settlements resulting therefrom.
6.4 Any recovery by OSIRIS under Paragraph 6.2 shall be deemed to
reflect loss of commercial sales, and OSIRIS shall pay to CBA fifteen percent
(15%) of the recovery net of all reasonable costs and expenses, associated
with each suit or settlement, actually borne by OSIRIS. One-half (1/2) of the
costs and expenses incurred by OSIRIS pursuant to Paragraph 6.2 shall be
credited against royalties payable by OSIRIS to CBA hereunder in connection
with sales in the country of such legal proceedings; provided, however, that
any such credit under this Paragraph 6.4 shall not exceed fifty percent (50%)
of the royalties otherwise payable to CBA with regard to sales in the country
of such action in any one calendar year, with any excess credit being carried
forward to future calendar years, and also provided that OSIRIS shall
reimburse to CBA one half of the costs recovered from the counterpart in any
such legal proceedings, always within the limits of the amount actually
credited against royalties.
6.5 In the event that litigation against OSIRIS is initiated by a
third party charging OSIRIS with infringement of a patent of the third party
in a country as a result of the manufacture, use or sale by OSIRIS of a
LICENSED PRODUCT or LICENSED SERVICE in that country, OSIRIS shall promptly
notify CBA in writing thereof. One-half (1/2) of the costs and expenses
incurred by OSIRIS pursuant to this Paragraph 6.5 shall be credited against
royalties payable by OSIRIS to CBA hereunder in connection with sales in the
country of such legal proceedings, provided, however, that any such credit
under this Paragraph 6.5 shall not exceed fifty percent (50%) of the royalties
otherwise payable to CBA with regard to sales in the country of such action in
any one calendar year, with any excess credit being carried forward to future
calendar years.
<PAGE>
6.6 In the event of a judgment in any suit in which a court of
competent jurisdiction rules that the manufacture, use or sale by OSIRIS in a
country of a LICENSED PRODUCT or LICENSED SERVICE covered by a PATENT RIGHT in
that country has infringed a third party's patent requiring OSIRIS to pay
damages or a royalty to said third party in that country, or in the event of a
settlement of such suit requiring damages or back royalty payments to
be made, payments due to CBA under Paragraph 5.2 of this AGREEMENT arising
from the applicable LICENSED PRODUCT or LICENSED SERVICE shall be
correspondingly reduced in that country by the amounts due under the
requirement of such judgment or under the terms of such settlement. The
royalty payment after taking into consideration any such reduction under this
Paragraph 6.6 shall not be reduced by more than fifty percent (50%) in any one
calendar year, with any excess credit being carried forward to future calendar
years.
6.7 In any infringement suit against a third party, should either
party hereto institute to enforce the PATENT RIGHTS pursuant to this
AGREEMENT, then the other party hereto shall, at the request of the party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available relevant records,
papers, information, samples, specimens, and the like. All reasonable out-of-
pocket costs incurred in connection with rendering cooperation requested
hereunder shall be paid by the party requesting cooperation.
SECTION 7 - PATENT RIGHTS AND CONFIDENTIAL INFORMATION
7.1 (a) OSIRIS shall have the right at its cost and expense to
file, prosecute and maintain patent applications and patents which are PATENT
RIGHTS in CBA'S or IST'S name through patent counsel selected by OSIRIS who
shall consult with and keep CBA advised with respect thereto: such patent
applications which are PATENT RIGHTS and filed in CBA's or IST's name shall,
however, always have been filed previously in Italy in accordance with
applicable Italian law currently in force prior to any filing of them in any
other country in which they are patentable. For the purposes of the above,
CBA shall notify OSIRIS as to whether any such patent application should be
filed in CBA's, or in IST's name.
(b) In any country where OSIRIS elects not to have a patent
application filed or to pay expenses associated with filing, prosecuting, or
maintaining a patent application or
<PAGE>
patent which is a PATENT RIGHT, CBA may file, prosecute, and/or maintain a
patent application or patent at its own expense and for its own exclusive
benefit.
(c) For patent applications in PATENT RIGHTS that are jointly
owned by CBA and OSIRIS since they relate to INVENTIONs which are the result
of the work of inventors from both OSIRIS and CBA (the "JOINT PATENT RIGHTS"),
OSIRIS shall file, prosecute and maintain all such patents and patent
applications and OSIRIS shall be licensed thereunder. Title to all such
patents and patent applications shall reside jointly in CBA and OSIRIS.
(d) The parties shall first consult with each other as to the
advisability, preparation, filing, prosecution and maintenance of such
applications and patents. Each party shall keep the other advised as to all
developments with respect to all patent applications and patents included in
PATENT RIGHTS, it being understood that whichever of the parties first
receives correspondence concerning such patent applications and patents shall
forward copies thereof to the other party. In any event, OSIRIS shall, in
accordance with Paragraph 7.1(a) above, be responsible for maintaining all
files with respect to such applications and patents, except as provided under
this Article 7, and shall maintain at its principal offices for review by CBA:
(i) copies of all official correspondence from the US Patent Office or from a
patent office in any other country within a reasonable time after receipt; and
(ii) copies of all substantive papers to be filed in the US Patent Office or a
patent office in any other country a reasonable time prior to filing to
provide sufficient time to comment thereon.
7.2 OSIRIS agrees that all packaging containing individual LICENSED
PRODUCT(S) sold by OSIRIS, AFFILIATES and SUBLICENSEES will be marked with the
number of the applicable patent(s) licensed hereunder in accordance with each
country's patent laws.
7.3 The parties agree and undertake to keep confidential all and any
information, whether written or oral, which is imparted to them by the other
in confidence or which is confidential and which is acquired by one party in
connection with this Agreement or the research to be carried out under it
including, for the avoidance of doubt, all such information relating to the
activities, business or affairs or the other party ("CONFIDENTIAL
INFORMATION"). The information shall not be disclosed or revealed to anyone
except employees of the recipient who have a need to know
<PAGE>
the information and who have entered into a secrecy agreement with the
recipient under which such employees are required to maintain confidential the
proprietary information of the recipient and such employees shall be advised
by the recipient of the confidential nature of the information and that the
information shall be treated accordingly. The recipient's obligations under
this Paragraph 7.3 shall not extend to any part of the information:
a. that can be demonstrated to have been in the
public domain or publicly known and readily
available to the trade or the public prior to the
date of the disclosure; or
b. that can be demonstrated, from written
records to have been in the recipient's possession
or readily available to the recipient from another
source not under obligation of secrecy to the
disclosing party prior to the disclosure; or
c. that becomes part of the public domain or
publicly known by publication or otherwise,
not due to any unauthorized act by the recipient.
d. that can be demonstrated, from written
records, to have been developed by the recipient
independently of the disclosed information.
The obligations of this Paragraph 7.3 shall also apply to AFFILIATES and/or
SUBLICENSEES provided such information by OSIRIS. CBA'S, OSIRIS'S,
AFFILIATES', and SUBLICENSEES' obligations under this Paragraph 7.3 shall
extend until five (5) years after the termination of this AGREEMENT.
Notwithstanding the foregoing, OSIRIS, AFFILIATES and/or SUBLICENSEES
shall have the right to disclose CONFIDENTIAL INFORMATION of CBA to a third
party who undertakes an obligation of confidentiality and non-use with respect
to such information at least as restrictive as the obligations under this
Paragraph 7.3.
<PAGE>
SECTION 8 - TERM AND TERMINATION
8.1 This AGREEMENT shall expire in each country on the date of
expiration of the last to expire patent included with PATENT RIGHTS in that
country or, if no patents are issued, ten (10) years from the EFFECTIVE DATE
of this AGREEMENT at which time OSIRIS shall have a fully paid up
noncancellable license to all TECHNOLOGY with respect to which it has
exercised the option under Article 8 of the Research Agreement.
8.2 Any matter or disagreement arising under Paragraphs 1.13 (c),
5.3, 4.1 or 4.2 shall be submitted to the arbitration procedure set out under
Section 9 below.
8.3 Except as provided in Paragraphs 4.1 and 4.2 above, upon breach
or default of any of the terms and conditions of this AGREEMENT, the
defaulting party shall be given written notice of such default in writing and
a period of ninety (90) days after receipt of such notice to respond in
writing to the notice of default or breach. If the default or breach is not
corrected within an additional ninety (90) day period, the party not in
default shall have the right to terminate this AGREEMENT.
8.4 OSIRIS may terminate this AGREEMENT for all or some of the
licenses granted herein under in any country under any PATENT RIGHT, for any
reason, upon giving CBA ninety (90) days written notice. In such case, the
provisions of Paragraph 8.1 shall not be applicable and CBA shall have the
right to freely use all those PATENT RIGHTS covered by such termination.
8.5 Termination shall not affect CBA'S right to recover unpaid
royalties or fees or reimbursement for patent expenses incurred, if any,
pursuant to Paragraph 7.1 prior to termination. Upon termination all rights
in and to the licensed technology (including PATENT RIGHTS) shall revert to
CBA at no cost to CBA.
8.6 Upon any termination of this AGREEMENT, OSIRIS at its option,
shall be entitled to finish any work-in-process which is completed within six
(6) months of termination of this AGREEMENT and to sell any completed
inventory of a LICENSED PRODUCT covered by this AGREEMENT which remains on
hand as of the date of the termination, so long as OSIRIS pays to CBA the
royalties applicable to said subsequent sales in accordance with the same
terms and conditions as set forth in this AGREEMENT.
8.7 In the event that this AGREEMENT and/or the rights and licenses
granted under this AGREEMENT to OSIRIS are terminated, any sublicense granted
under this AGREEMENT shall remain in full force and effect as a direct license
between CBA and the
<PAGE>
SUBLICENSEE under the terms and conditions of the sublicense agreement,
subject to the SUBLICENSEE agreeing to be bound directly to CBA under such
terms and conditions of the sublicense as well as all the relevant duties and
obligations of a licensee under this AGREEMENT (other than royalty and other
payment obligations which shall be paid in accordance with the sublicense
provided that CBA receives a [*CONFIDENTIALITY REQUESTED*] of the
SUBLICENSEE'S NET SALES) within thirty (30) days after CBA provides
written notice to the SUBLICENSEE of the termination of OSIRIS'S rights and
licenses under this AGREEMENT, provided further that CBA'S obligations under
such sublicense are no greater than currently existing under this AGREEMENT.
At the request of OSIRIS, CBA will acknowledge to a SUBLICENSEE, CBA'S
obligations to the SUBLICENSEE under this paragraph.
SECTION 9 - MISCELLANEOUS
9.1 All notices pertaining to this AGREEMENT shall be in writing and
sent certified mail, return receipt requested, to the parties at the following
addresses or such other address as such party shall have furnished in writing
to the other party in accordance with this Paragraph 9.1:
CENTRO DI BIOTECNOLOGIE AVANZATE:
If administrative: Leonardo Santi, M.D., Ph.D.
Chief Executive Officer
Consorzio per la gestione
Centro de Biotecnologie Avanzate
Largo Rosanna Benzi 10
16132 Genova, Italy
If technical: Prof. Ranieri Cancedda, M.D.
Director
Laboratorio di Differenziazione Cellulare
Centro di Biotecnologie Avanzate
Largo Rosanna Benzi 10
16132 Genova, Italy
OSIRIS THERAPEUTICS, INC.: Osiris Therapeutics, Inc.
2001 Aliceanna Street
Baltimore, Maryland 21231-2001
Attention: James S. Burns, President
<PAGE>
CC: Brosio, Casati E Associati
C.so Vittorio Emanuele II, 68
10121 Torino, Italy
Attn: Jane Golding, Esq. And
Avv. Proc. Donatella De Rosa
Carella, Byrne, Bain, Gilfillan, Cecchi,
Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Attention: Elliot M. Olstein, Esq.
9.2 All written progress reports, royalty and other payments, and
any other related correspondence shall be in writing and sent to CBA at the
address noted above, or such other addressee which CBA may designate in
writing from time to time. Checks are to be made payable to CBA.
9.3 This AGREEMENT shall be binding upon and inure to the benefit of
and be enforceable by CBA and its successors and permitted assigns. This
AGREEMENT is binding upon and shall inure to the benefit of OSIRIS, its
successors and assignees and shall not be assignable to another party without
the written consent of CBA, which consent shall not be reasonably withheld,
except that OSIRIS shall have the right to assign this AGREEMENT to another
party without the consent of CBA in the case of the sale or transfer or merger
or consolidation of OSIRIS or sale or transfer by OSIRIS to that party of all,
or substantially all, of its assets or all or substantially all of the portion
of its assets to which this AGREEMENT relates, provided the assignee
undertakes to be bound by and perform the obligations of the assignor under
this AGREEMENT.
9.4 In the event that any one or more of the provisions of this
AGREEMENT should for any reason be held by any court or authority having
jurisdiction over this AGREEMENT, or over any of the parties hereto to be
invalid, illegal or unenforceable,
<PAGE>
such provision or provisions shall be reformed to approximate as nearly as
possible the intent of the parties, and if unreformable, shall be divisible
and deleted in such jurisdictions; elsewhere, this AGREEMENT shall not be
affected.
9.5 The parties shall make reasonable efforts to settle in an
amicable way any dispute that may arise between them in connection with this
Agreement or the carrying out of the transaction contemplated herein.
9.6. Should either party consider it not possible to reach an
amicable settlement, then the dispute shall be resolved through arbitration
with a panel of three arbitrators, in particular, as regards any matter or
disagreement arising under Paragraphs 1.13 (c), 5.3, 4.1 or 4.2.
9.7. The first arbitrator shall be appointed by the party initiating
the arbitration proceedings within its demand for arbitration to the other
party; the second arbitrator shall be appointed by the other party within 30
days from the date on which it has received notice of the demand for
arbitration; and the third arbitrator, as Chairman of the panel, shall be
designated by agreement of the first two arbitrators within 30 days from the
appointment of the second arbitrator or, failing such agreement, by the
President of the Court of Genoa, Italy, upon request of one party. The
President of the Tribunal of Genoa, Italy, upon request of one party, shall
also designate an arbitrator in the same manner if the party required to make
such appointment shall not have done so within the period of time specified
above.
9.8. The appointment of the arbitrator shall be carried out by
formally notifying it to the other party through the judicial officer.
9.9. In the event that more than two parties legitimately are party
to the arbitration proceedings, then the dispute shall be resolved by a panel
of three arbitrators appointed by agreement of the various parties to the
procedure or, failing such agreement, by the President of the Tribunal of
Genoa, Italy, upon request of one party.
<PAGE>
9.10. The arbitration procedure shall be held in accordance with the
customary Italian Procedure Law.
9.11. The arbitrators shall come to a decision in accordance with
Italian Law ("arbitrato rituale di diritto") and within a term of 180 days
after their appointment be it by the parties, or by the President of Tribunal
of Genoa, Italy; the arbitrators' award shall not be subject to any form of
appeal or recourse.
9.12. The arbitration proceedings shall take place in Genoa, Italy and
shall be held in English.
9.13. This Agreement shall be governed by and constructed according to
the laws of Italy.
9.14 OSIRIS and its AFFILIATES and its SUBLICENSEES shall not use the
names, likenesses, or logos of CBA or any of its constituent parts and
affiliated hospitals and companies, in any press releases, general
publications, advertising, marketing, promotional or sales literature without
prior written consent from an authorized official of CBA, which consent shall
not be unreasonably withheld. OSIRIS shall, however, have the right to use
the name of CBA in agreements between OSIRIS and SUBLICENSEES and in any SEC
filing (including but not limited to 8K statements), fundraising documents and
the like and in any case where such use is required by law, rule or regulation.
9.15 CBA warrants that it has good and valid title to its interest in
the inventions claimed under PATENT RIGHTS with the exception of certain
retained rights of any government, or public body. In addition, CBA warrants
that it has not licensed or assigned any right or interest in or to PATENT
RIGHTS to any third party, and the granting of such rights to OSIRIS hereunder
does not require the consent of a third party; and CBA is not aware as of the
EFFECTIVE DATE of this AGREEMENT of
<PAGE>
any legal or contractual restriction which would inhibit its ability to
perform the terms and conditions imposed on it by this
AGREEMENT. CBA does not warrant the validity of any patents or that practice
under such patents shall be free of infringement. EXCEPT AS EXPRESSLY SET
FORTH IN THIS PARAGRAPH 9.14, OSIRIS, AFFILIATES AND SUBLICENSEES AGREE THAT
THE PATENT RIGHTS ARE PROVIDED AS IS, AND THAT CBA MAKES NO REPRESENTATION
OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF LICENSED PRODUCT(S) AND
LICENSED SERVICES INCLUDING THEIR SAFETY, EFFECTIVENESS, OR COMMERCIAL
VIABILITY. CBA DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCT(S) AND
SERVICES LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL
WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY
PARTICULAR PURPOSE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, CBA ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON
THE PART OF CBA AND INVESTIGATORS, FOR DAMAGES, INCLUDING BUT NOT LIMITED
TO, DIRECT, INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS' AND
EXPERTS' FEES, AND COURT COSTS (EVEN IF CBA HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, FEES OR COSTS), WHICH DAMAGES ARISE OUT OF
OR RESULT FROM THE MANUFACTURE, USE, OR SALE OF THE PRODUCT(S) AND
SERVICES LICENSED UNDER THIS AGREEMENT. OSIRIS, AFFILIATES AND
SUBLICENSEES ASSUME ALL RESPONSIBILITY AND LIABILITY FOR LOSS OR
DAMAGE CAUSED BY A PRODUCT AND SERVICE MANUFACTURED, USED OR SOLD
BY OSIRIS, ITS SUBLICENSEES AND AFFILIATES WHICH IS A LICENSED PRODUCT OR
LICENSED SERVICE AS DEFINED IN THIS AGREEMENT.
<PAGE>
9.16 OSIRIS shall defend and hold CBA, their present and former
trustees, officers, inventors of PATENT RIGHTS, agents, faculty, employees
and students harmless as against any third-party judgments, fees, expenses, or
other costs arising from or incidental to any product liability or other
lawsuit, claim, demand or other action for personal injury including death or
property damage brought as a consequence of the practice of the inventions of
LICENSED PRODUCTS or LICENSED SERVICES by OSIRIS or its AFFILIATED COMPANIES
or its SUBLICENSEES or those operating for its account or third parties who
purchase LICENSED PRODUCTS(S) or LICENSED SERVICES from any of the foregoing
entities whether or not CBA or said inventors, either jointly or severally, is
named as a party defendant in any such lawsuit, except those which arise from
the gross negligence or willful misconduct of any of parties indemnified
hereunder. Practice of the inventions covered by LICENSED PRODUCT(S) and
LICENSED SERVICES, by an AFFILIATE or an agent or a SUBLICENSEE or a third
party on behalf of or for the account of OSIRIS or by a third party who
purchases LICENSED PRODUCT(S) and LICENSED SERVICES from OSIRIS, shall be
considered OSIRIS'S practice of said inventions for purposes of this Paragraph
9.15. The obligation of OSIRIS to defend and indemnify as set out in this
Paragraph 9.15 shall survive the termination of this AGREEMENT. OSIRIS shall
have the sole right to defend, settle and compromise any claim or action
indemnified hereunder. OSIRIS shall be promptly notified of any claim, suit,
demand or action which is to be indemnified hereunder.
9.17 Prior to initiating the first commercial sale of any LICENSED
PRODUCT or LICENSED SERVICE as the case may be in any particular county,
OSIRIS, AFFILIATES and/or SUBLICENSEES shall establish and maintain product
liability or other appropriate insurance coverage with respect to LICENSED
PRODUCT(S) and LICENSED SERVICES, which coverage
<PAGE>
shall be similar to that maintained by companies at a stage of development
similar to OSIRIS for similar products, provided that such insurance is
available on terms, conditions and costs which are commercially reasonable
and prudent under the circumstances. Upon CBA'S request, OSIRIS will furnish
CBA with a Certificate of Insurance for each product liability insurance
policy obtained.
9.18 This AGREEMENT constitutes the entire understanding between
the parties with respect to the obligations of the parties with respect to the
subject matter hereof, and supersedes and replaces all prior agreements,
understandings, writings, and discussions between the parties relating to said
subject matter.
9.19 This AGREEMENT may be amended and any of its terms or conditions
may be waived only by a written instrument executed by the authorized
officials of the parties or, in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by either party of any condition or
term in any one or more particular instances shall be construed as a further
or continuing waiver of such condition or term or of any other condition or
term.
9.20 Upon termination of this AGREEMENT for any reason, Paragraphs
7.3, 8.1, 8.4, 8.5, 8.6, 9.6, 9.7, 9.8, 9.9 (to the extent OSIRIS, AFFILIATES
and/or SUBLICENSEES are selling or providing LICENSED PRODUCTS or LICENSED
SERVICES under the licenses granted under this agreement) and this Paragraph
9.13 shall survive termination of the AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the respective parties hereto have executed this
AGREEMENT by their duly authorized officers on the date appearing below
their signatures.
<PAGE>
CONSORZIO PER LA GESTIONE OSIRIS THERAPEUTICS, INC.
CENTRO DE BIOTECNOLOGIE AVANZATE
By: /s/ Leonardo Santi By: /s/ James S. Burns
Name: Leonardo Santi, M.D., Ph.D. Name: James S. Burns
Title: Chief Executive OfficerTitle: President and CEO
Date:_7/15/97______________ Date:_7/25/97_________
I have read, understand and agree to abide by the terms of this AGREEMENT.
By:_/s/ Ranieri Cancedda___
Ranieri Cancedda, M.D.
Title:_Professor_____________ Date:_7/15/97_______________
<PAGE>
ANNEX A
MATERIAL TRANSFER AGREEMENT
From: prof. Ranieri Cancedda,
Centro di Biotecnologie Avanzate
Largo Rosanna Benzi, 10
16132 Genova, Italy
Fax: +39 10 5737405
e-mail: [email protected]
To:
Date:
Re: General terms for the transfer of materials
Dear dr. ...........,
in order to avoid conflict of interest, and because of potential commercial
applications for some of the material that are distributed by our laboratory,
we ask each investigator who requests material (cells, antibodies, DNA probes,
and others) to agree to condition as specified below. Please complete, sign,
make a copy for your record and return the original to me
prof. Ranieri Cancedda
- -------------------------------------------------------------------------------
Please indicate the material(s) requested:
The material(s) requested will be used in this lab for studies concerning:
My institution is non-profit, and I will not be responsible for preventing
the material(s) or its derivatives to be used for commercial purposes.
I will be responsible for preventing the material(s) form being passed on to
other investigators outside my authority.
I will send you a copy of each abstract or paper in which we include
information about the materials(s).
Signature:
Title:
Address:
Fax:
e-mail:
Date:
<PAGE>
EXHIBIT B
RESEARCH PROPOSAL
[*CONFIDENTIALITY REQUESTED*]
MAIN REFERENCES
Agematsu K, Nakahori Y. Recipient origin of bone marrow-derived fibroblastic
stromal cells during all periods following bone marrow transplantation. Br J
Haematol 79:359-365, 1991.
Allay J, Dennis J, Haynesworth SE, Clapp DW, Lazarus HM, Caplan AI, Gerson SL.
Retroviral transduction of marrow derived mesenchymal precursors. Blood 82
(suppl.l):477a, 1993.
Allen TD, Dexter TM, Simmons PJ. Marrow biology and stem cells in colony-
stimulating factors: Molecular and Cellular Biology (Eds. Dexter TM, Garland JM,
Testa NG) Marcel Dekkes, New York pp 1-38, 1990.
Andlesaria P, Kase K, Glowacki J, Holland CA, Sakakeeny MA, Wright IA,
FitzGerald TJ, Lee CY, Greenberger JS. Engraftment of a clonal bone marrow
stromal cell line in vivo stimulates hematopoietic recovery from total body
irradiation. Proc Natl Acad Sci USA 84:7681-7685, 1987
Athanasou NA, Quinn J, Brenner MK. Origin of bone marrow stromal cells and
haemopoietic chimerism following boine marrow transplantation determined by in
situ hybridization. Br J Cancer 61:385-389, 1990.
Barnett JM, Eaves CJ, Phillips G, et al. Successful autografting in chronic
myeloid leukemia after maintenance of marrow in culture. Bone Marrow Transplant
4:345 351, 1989
Bentley SA, Knutsen T, Whang-Peng J. The origin of the hematopoietic
microenvironment in continuous bone marrow culture. Exp Hematol 10:367-372, 1982
Beresford, J.N. Osteogenic stem cells and the stromal system of bone and marrow.
Clin. Orthop. 240:279-280. 1989.
Buckwalter J.A., Rosenberg L.C., Hunziker E.B. Articular cartilage: composition,
structure, response to injury and methods of facilitating repair, in: Articular
Cartilage and Knee Function: Basic Science and Arthroscopy, 19-55, Raven Press,
New York. 1990
<PAGE>
EXHIBIT C
RESEARCH BUDGET
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
EXHIBIT D
INVENTION AGREEMENT
I soggetti sott indicati che a qualunque titolo, differente da rapporto di
dipendenza (a titolo meramente esemplificativo e non esaustivo: borsisti,
dottorandi, contrattisti, studenti, frequentatori ed altro), svolgono la
Laboratorio......................riconoscono che la tiolarita
di tutte le invenzioni, risulatati, prodotti, procedimenti, sviluppi e diritti
brevettuali e non, che derivano nel corso della ricerca svolat dagli stessi
presso il Laboratorio ............................ Appartengono
all'ente da cui il Laboratorio ........................dipende.
FIRMA
NOME
QUALIFICA
DATA
<PAGE>
EXHIBIT E
FACILITIES
[*CONFIDENTIALITY REQUESTED*]
<PAGE>
EXHIBIT F
RESEARCH PERSONNEL
[*CONFIDENTIALITY REQUESTED*]
