LICENSE AGREEMENT
by and between
THE SCRIPPS RESEARCH INSTITUTE,
a California nonprofit
public benefit corporation
and
CYANOTECH,
a Nevada corporation
TABLE OF CONTENTS
Page
1. Definitions............................................................................................ 1
1.1 Affiliate..................................................................................... 1
1.2 Aldolase Catalytic Antibody 38C2.............................................................. 1
1.3 Confidential Information...................................................................... 2
1.4 Field......................................................................................... 2
1.5 Licensed Process.............................................................................. 2
1.6 Licensed Product.............................................................................. 2
1.7 Net Sales..................................................................................... 2
1.8 Scripps Patent Rights......................................................................... 2
1.9 Scripps Technology............................................................................ 3
2. License Terms and Conditions........................................................................... 3
2.1 Grant of License.............................................................................. 3
2.2 Royalties..................................................................................... 3
2.3 Combination Products.......................................................................... 3
2.3.1 Definition of Combination Product..................................................... 3
2.3.2 Royalty Payable on Combination Products............................................... 3
2.4 Quarterly Payments............................................................................ 4
2.5 Term of License............................................................................... 4
2.6 Duration of Royalty Obligations............................................................... 4
2.7 Reports....................................................................................... 5
2.8 Records....................................................................................... 5
2.9 Foreign Sales................................................................................. 5
2.10 Foreign Taxes................................................................................. 5
3. Patent Matters......................................................................................... 6
3.1 Patent Prosecution and Maintenance............................................................ 6
3.2 Ownership..................................................................................... 6
4. Obligations Related to Commercialization............................................................... 6
4.1 Commercial Development Obligation............................................................. 6
4.2 Governmental Approvals and Marketing of Licensed Products...................................... 7
4.3 Indemnity...................................................................................... 7
4.4 Patent Marking................................................................................. 7
4.5 No Use of Name................................................................................ 7
4.6 U.S. Manufacture............................................................................... 7
4.7 Foreign Registration........................................................................... 7
5. Limited Warranty........................................................................................ 7
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TABLE OF CONTENTS
Page
6. Interests in Intellectual Property Rights............................................................... 8
6.1 Preservation of Title.......................................................................... 8
6.2 Royalty-free License to Improvements........................................................... 8
6.3 Governmental Interest......................................................................... 8
6.4 Reservation of Rights.......................................................................... 8
7. Confidentiality and Publication......................................................................... 8
7.1 Treatment of Confidential Information.......................................................... 8
7.2 Publicity...................................................................................... 9
8. Term and Termination.................................................................................... 9
8.1 Term........................................................................................... 9
8.2 Termination Upon Default....................................................................... 9
8.3 Termination Upon Bankruptcy or Insolvency...................................................... 9
8.4 Rights Upon Expiration........................................................................ 10
8.5 Rights Upon Termination....................................................................... 10
8.6 Work-in-Progress.............................................................................. 10
9. Assignment; Successors................................................................................. 10
9.1 Assignment.................................................................................... 10
9.2 Binding Upon Successors and Assigns........................................................... 10
10. General Provisions..................................................................................... 11
10.1 Independent Contractors....................................................................... 11
10.2 Arbitration................................................................................... 11
10.2.1 Location............................................................................. 11
10.2.2 Selection of Arbitrators............................................................. 11
10.2.3 Discovery............................................................................ 11
10.2.4 Case Management...................................................................... 12
10.2.5 Remedies............................................................................. 12
10.2.6 Expenses............................................................................. 12
10.2.7 Confidentiality...................................................................... 12
10.3 Entire Agreement; Modification................................................................ 12
10.4 California Law................................................................................ 12
10.5 Headings...................................................................................... 13
10.6 Severability.................................................................................. 13
10.7 No Waiver..................................................................................... 13
10.8 Name.......................................................................................... 13
10.9 Attorneys' Fees............................................................................... 13
ii
TABLE OF CONTENTS
Page
10.10 Notices....................................................................................... 13
10.11 Compliance with U.S. Laws..................................................................... 14
iii
LICENSE AGREEMENT
This License Agreement is entered into and made effective as
of this 13th day of April, 1998, by and between THE SCRIPPS RESEARCH INSTITUTE,
a California nonprofit public benefit corporation ("Scripps") located at 10550
North Torrey Pines Road, La Jolla, California 92037, and CYANOTECH, a Nevada
corporation ("Licensee") located at 73-4460 Queen Kaahumanu Highway, Hawaii
96740, with respect to the facts set forth below.
RECITALS
A. Scripps is engaged in fundamental scientific research
including research relating to catalytic antibodies and the expression of
proteins in algae.
B. Licensee is engaged in the development of algal protein
expression systems for the large-scale production of proteins useful in research
and industrial enterprises.
C. Scripps desires to grant to Licensee, and Licensee wishes to
acquire, an exclusive worldwide license to certain technology of Scripps
relating to the production of an aldolase catalytic antibody in microalgae.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, Scripps and Licensee hereby agree as follows:
1. Definitions. Capitalized terms shall have the meaning set forth below.
1.1 Affiliate. The term "Affiliate" shall mean any entity which directly or
indirectly controls, is controlled by or is under common control with Licensee.
The term "control" as used herein means the possession of the power to direct or
cause the direction of the management and the policies of an entity, whether
through the ownership of a majority of the outstanding voting securities or by
contract or otherwise.
1.2 Aldolase Catalytic Antibody 38C2. The term "Aldolase Catalytic Antibody
38C2" shall mean an aldol addition reaction catalyzing antibody or antibody
fragment having an amino acid residue sequence equivalent to that of an aldol
addition reaction catalyzing antibody or antibody fragment encoded by nucleic
acid in or from hybridoma 38C2 described in U.S. Patent No. 5,733,757.
1
1.3 Confidential Information. The term "Confidential Information" shall
mean any and all proprietary or confidential information of Scripps or Licensee
which may be exchanged between the parties at any time and from time to time
during the term of this Agreement. Information shall not be considered
confidential to the extent that it:
a. Is publicly disclosed through no fault of any party hereto, either
before or after it becomes known to the receiving party; or
b. Was known to the receiving party prior to the date of this Agreement,
which knowledge was acquired independently and not from another party hereto (or
such party's employees); or
c. Is subsequently disclosed to the receiving party in good faith by a
third party who has a right to make such disclosure; or
d. Has been published by a third party as a matter of right.
1.4 Field. The term "Field" shall mean all applications or products except
those adapted or intended for preventing, treating, mitigating or diagnosing a
disease or condition in humans or vertebrate animals.
1.5 Licensed Process. The term "Licensed Process" shall mean any process
utilizing Scripps Technology to produce Aldolase Catalytic Antibody 38C2 in
microalgae.
1.6 Licensed Product. The term "Licensed Product" shall mean any
composition of matter containing Aldolase Catalytic Antibody 38C2.
1.7 Net Sales. The term "Net Sales" shall mean the gross amount invoiced by
Licensee, or its Affiliates and sublicensees, or any of them, on all sales of
Licensed Product, less (i) discounts actually allowed, (ii) credits for claims,
allowances, retroactive price reductions or returned goods, (iii) prepaid
freight and (iv) sales taxes or other governmental charges actually paid in
connection with sales of Licensed Product (but excluding what is commonly known
as income taxes). For purposes of determining Net Sales, a sale shall be deemed
to have occurred when an invoice therefor shall be generated or the Licensed
Product shipped for delivery. Sales of Licensed Product by Licensee, or an
Affiliate or sublicensee of Licensee to any Affiliate or sublicensee which is a
reseller thereof shall be excluded, and only the subsequent sale of such
Licensed Products by Affiliates or sublicensees of Licensee to unrelated parties
shall be deemed Net Sales hereunder.
1.8 Scripps Patent Rights. The term "Scripps Patent Rights" shall mean
rights arising out of or resulting from (I) United States Patent Serial
No.5,733,757 and all reissues, reexaminations, and extensions thereof, so long
as said patent(s) has not been held
2
invalid and/or unenforceable by a court of competent jurisdiction from which
there is no appeal or, if appealable, from which no appeal has been taken, (ii)
PCT/US Patent Application Serial No. 98/00840 and all continuations and
divisionals thereof and (iii) all foreign counterpart patents and patent
applications for (i) and (ii).
1.9 Scripps Technology. The term "Scripps Technology" shall mean
proprietary property of Scripps developed in the laboratory of Dr. Stephen
Mayfield for producing Aldolase Catalytic Antibody 38C2, including materials,
processes, information and know-how related thereto, whether or not the same is
eligible for protection under the patent laws of the United States or elsewhere,
and whether or not any such materials, processes and technology, or information
related thereto, would be enforceable as a trade secret or the copying of which
would be enjoined or restrained by a court as constituting unfair competition.
2. License Terms and Conditions.
2.1 Grant of License. Scripps hereby grants to Licensee an exclusive,
worldwide license, without the right to sublicense, to Scripps Technology and
under Scripps Patent Rights, to use the Licensed Process to make Licensed
Product and to use and sell Licensed Product in the Field, subject to the terms
of this Agreement, provided, however, such exclusive license shall convert to a
non-exclusive license either (a) on the second anniversary of the Effective Date
if Licensee has failed to sell Licensed Product prior to such anniversary or (b)
on the fifth anniversary of the Effective Date.
2.2 Royalties. Licensee shall pay to Scripps a continuing royalty on a
country-by-country basis in the amount of (i) seven percent (7%) of Net Sales of
Licensed Product which cannot be made, used or sold in such country without
infringing one or more valid claims under Scripps Patent Rights or (ii) three
and one-half percent (3.5%) of Net Sales of all other Licensed Product.
2.3 Combination Products.
2.3.1 Definition of Combination Product. As used herein, the term
"Combination Product" shall mean a Licensed Product which cannot be
manufactured, used or sold without infringing Scripps Patent Rights, utilizing
Scripps Technology licensed hereunder, infringing or utilizing one or more
patents or proprietary technology or know-how of (I) Licensee, (ii) a third
party licensed pursuant to an agreement between Licensee and such third party,
or (iii) Scripps under a license agreement other than this Agreement (referred
to herein as "other licensed rights").
2.3.2 Royalty Payable on Combination Products. The royalty payable on
Combination Products shall be the royalty rate set forth in Section 2.2. above
based
on a pro rata portion of Net Sales of Combination Products in accordance with
the following formula:
A
X = ---
B, where
X = the pro rata portion of Net
Sales attributable to Scripps Patent Rights
or other Scripps Technology licensed herein
(expressed as a percentage), and
A = the fair market value of the
component in the Combination Product
utilizing Scripps Technology licensed
hereunder, and
B = A plus the fair market value of
all other components in the Combination
Product using other licensed rights.
The fair market values described above shall be determined by the parties hereto
in good faith. In the absence of agreement as to the fair market value of all of
the components contained in a Combination Product, the fair market value of each
component shall be determined by arbitration in accordance with the provisions
of Section 10.2 hereof.
2.4 Quarterly Payments. With regard to Net Sales made by Licensee or its
Affiliates, royalties shall be payable by Licensee quarterly, within sixty (60)
days after the end of each calendar quarter, based upon the Net Sales of
Licensed Product during such preceding calendar quarter, commencing with the
calendar quarter in which the first commercial sale of any Licensed Product is
made.
2.5 Term of License. Unless terminated sooner in accordance with the
provisions of this Agreement, the term of this license shall expire when the
last of the royalty obligations set forth has expired. Notwithstanding the
foregoing, if applicable government regulations require a shorter term and/or a
shorter term of exclusivity than provided for herein, then the term of this
License Agreement shall be so shortened or this License Agreement shall be
amended to provide for a non-exclusive license, and, in such event, the parties
shall negotiate in good faith to reduce appropriately the royalties payable as
set forth under the section heading "Royalties" hereof.
2.6 Duration of Royalty Obligations. The royalty obligations of Licensee as
to each Licensed Product shall terminate on a country-by-country basis
concurrently with the expiration of the last to expire of Scripps Patent Rights
utilized by or in such Licensed Product in each such country or, with respect to
Licensed Product not utilizing
4
any Scripps Patent Rights, fifteen (15) years after the date of first commercial
sale of such Licensed Product in such country.
2.7 Reports. Licensee shall furnish to Scripps at the same time as each
royalty payment is made by Licensee, a detailed written report of Net Sales of
the Licensed Product and the royalty due and payable thereon, including a
description of any offsets or credits deducted therefrom, on a
product-by-product and country-by-country basis, for the calendar quarter upon
which the royalty payment is based.
2.8 Records. Licensee shall keep, and cause its Affiliates and sublicensees
to keep, full, complete and proper records and accounts of all sales of Licensed
Product in sufficient detail to enable the royalties payable on Net Sales of
each Licensed Product to be determined. Scripps shall have the right to appoint
an independent certified public accounting firm approved by Licensee, which
approval shall not be unreasonably withheld, to audit the records of Licensee,
its Affiliates and sublicensees as necessary to verify the royalties payable
pursuant to this Agreement. Licensee, its Affiliates and sublicensees shall pay
to Scripps an amount equal to any additional royalties to which Scripps is
entitled as disclosed by the audit, plus interest thereon at the rate of one and
one-half percent (1.5%) per month. Such audit shall be at Scripps's expense;
provided, however, that if the audit discloses that Scripps was underpaid
royalties with respect to any Licensed Product by at least five percent (5%) for
any calendar quarter, then Licensee, its Affiliates or sublicensee, as the case
may be, shall reimburse Scripps for any such audit costs. Scripps may exercise
its right of audit as to each of Licensee, its Affiliates or sublicensees no
more frequently than once in any calendar year. The accounting firm shall
disclose to Scripps only information relating to the accuracy of the royalty
payments. Licensee, its Affiliates and sublicensees shall preserve and maintain
all such records required for audit for a period of three (3) years after the
calendar quarter to which the record applies.
2.9 Foreign Sales. The remittance of royalties payable on sales outside the
United States, if sold in other than United States Dollars, shall be payable to
Scripps in United States Dollar equivalents at the official rate of exchange of
the currency of the country from which the royalties are payable, as quoted in
the Wall Street Journal for the last business day of the calendar quarter in
which the royalties are payable. If the transfer of or the conversion into the
United States Dollar equivalents of any such remittance in any such instance is
not lawful or possible, the payment of such part of the royalties as is
necessary shall be made by the deposit thereof, in the currency of the county
where the sale was made on which the royalty was based to the credit and account
of Scripps or its nominee in any commercial bank or trust company of Scripps's
choice located in that country, prompt written notice of which shall be given by
Licensee to Scripps.
2.10 Foreign Taxes. Any tax required to be withheld by Licensee under the
laws of any foreign country for the accounts of Scripps shall be promptly paid
by Licensee for and on behalf of Scripps to the appropriate governmental
authority, and Licensee
5
shall use its best efforts to furnish Scripps with proof of payment of such tax
together with official or other appropriate evidence issued by the applicable
government authority. Any such tax actually paid on Scripps's behalf shall be
deducted from royalty payments due Scripps.
3. Patent Matters.
3.1 Patent Prosecution and Maintenance. From and after the date of this
Agreement, the provisions of this Section 3 shall control the prosecution and
maintenance of any patent included within Scripps Patent Rights. Subject to the
requirements, limitations and conditions set forth in this Agreement, Scripps
shall direct and control (I) the preparation, filing and prosecution of the
United States and foreign patent applications within Scripps Patent Rights
(including any interferences and foreign oppositions) and (ii) maintain the
patents issuing therefrom.
3.2 Ownership. The patent applications filed and the patents obtained by
Scripps pursuant to Section 3.1 hereof shall be owned solely by Scripps,
assigned to Scripps and deemed a part of Scripps Patent Rights.
4. Obligations Related to Commercialization.
4.1 Commercial Development Obligation. In order to maintain the license
granted hereunder in force, Licensee shall use reasonable efforts and due
diligence to develop Scripps Technology and Scripps Patent Rights which are
licensed hereunder into commercially viable Licensed Product, as promptly as is
reasonably and commercially feasible, and thereafter to produce and sell
reasonable quantities of Licensed Product. Licensee shall keep Scripps generally
informed as to Licensee's progress in such development, production and sale,
including its efforts, if any, to sublicense Scripps Technology and Scripps
Patent Rights, and Licensee shall deliver to Scripps a quarterly written report
and such other reports as Scripps may reasonably request. The parties hereto
acknowledge and agree that achievement of the milestones described in Exhibit A
attached hereto on or before the dates set forth therein shall be evidence of
compliance by Licensee with its commercial development obligations hereunder for
the time periods specified in Exhibit A. In the event Scripps has a reasonable
basis to believe that Licensee is not using reasonable efforts and due diligence
as required hereunder, upon notice by Scripps to Licensee which specifies the
basis for such belief, Scripps and Licensee shall negotiate in good faith to
attempt to mutually resolve the issue. In the event Scripps and Licensee cannot
agree upon any matter related to Licensee's commercial development obligations,
the parties agree to utilize arbitration pursuant to Section 10.2 hereof in
order to resolve the matter. If the arbitrator determines that Licensee has not
complied with its obligations hereunder, and such default is not fully cured
within sixty (60) days after the arbitrator's decision, Scripps may terminate
Licensee's rights under this Agreement.
6
4.2 Governmental Approvals and Marketing of Licensed Products. Licensee
shall be responsible for obtaining all necessary governmental approvals for the
development, production, distribution, sale and use of any Licensed Product, at
Licensee's expense, including, without limitation, any safety studies. Licensee
shall have sole responsibility for any warning labels, packaging and
instructions as to the use of Licensed Product and for the quality control for
any Licensed Product.
4.3 Indemnity. Licensee hereby agrees to indemnify, defend and hold
harmless Scripps and any parent, subsidiary or other affiliated entity and their
trustees, officers, employees, scientists and agents from and against any
liability or expense arising from any product liability claim asserted by any
party as to any Licensed Product or any claims arising from the use of any
Scripps Patent Rights or Scripps Technology pursuant to this Agreement. Such
indemnity and defense obligation shall apply to any product liability or other
claims, including without limitation, personal injury, death or property damage,
made by employees, subcontractors, sublicensees, or agents of Licensee, as well
as any member of the general public. Licensee shall use its best efforts to have
Scripps and any parent, subsidiary or other affiliated entity and their
trustees, officers, employees, scientists and agents named as additional insured
parties on any product liability insurance policies maintained by Licensee, its
Affiliates and sublicensees applicable to Licensed Products.
4.4 Patent Marking. To the extent required by applicable law, Licensee
shall mark all Licensed Products or their containers in accordance with the
applicable patent marking laws.
4.5 No Use of Name. The use of the name "The Scripps Research Institute",
"Scripps", or any variation thereof in connection with the advertising or sale
of Licensed Products is expressly prohibited.
4.6 U.S. Manufacture. To the extent required by applicable United States
laws, if at all, Licensee agrees that Licensed Products will be manufactured in
the United States, or its territories, subject to such waivers as may be
required, or obtained, if at all, from the United States Department of Health
and Human Services, or its designee.
4.7 Foreign Registration. Licensee agrees to register this Agreement with
any foreign governmental agency which requires such registration, and Licensee
shall pay all costs and legal fees in connection therewith. In addition,
Licensee shall assure that all foreign laws affecting this Agreement or the sale
of Licensed Products are fully satisfied.
5. Limited Warranty. Scripps hereby represents and warrants that it has
full right and power to enter into this Agreement. SCRIPPS MAKES NO OTHER
WARRANTIES CONCERNING SCRIPPS PATENT RIGHTS OR SCRIPPS TECHNOLOGY COVERED BY
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A
7
PARTICULAR PURPOSE AS TO SCRIPPS PATENT RIGHTS, SCRIPPS TECHNOLOGY OR ANY
LICENSED PRODUCT. SCRIPPS MAKES NO WARRANTY OR REPRESENTATION AS TO THE VALIDITY
OR SCOPE OF SCRIPPS PATENT RIGHTS, OR THAT ANY LICENSED PRODUCT WILL BE FREE
FROM AN INFRINGEMENT ON PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING SCRIPPS PATENT
RIGHTS OR SCRIPPS TECHNOLOGY COVERED BY THIS AGREEMENT.
6. Interests in Intellectual Property Rights.
6.1 Preservation of Title. Scripps shall retain full ownership and title to
Scripps Technology, and Scripps Patent Rights licensed hereunder and shall use
its reasonable best efforts to preserve and maintain such full ownership and
title, subject to Licensee fully performing all of its obligations under this
Agreement.
6.2 Royalty-free License to Improvements. Licensee hereby grants to Scripps
a non-exclusive, royalty-free license to any improvement to Scripps Technology
developed by Licensee, to use for its own research purposes or grant to other
nonprofit institutions for their research purposes.
6.3 Governmental Interest. Licensee and Scripps acknowledge that Scripps
has received, and expects to continue to receive, funding from the United States
Government in support of Scripps's research activities. Licensee and Scripps
acknowledge and agree that their respective rights and obligations pursuant to
this Agreement shall be subject to Scripps's obligations and the rights of the
United States Government, if any, which arise or result from Scripps's receipt
of research support from the United States Government, including without
limitation, the grant by Scripps to the United States a non-exclusive,
irrevocable, royalty-free license to Scripps Technology and Scripps Patent
Rights licensed hereunder for governmental purposes.
6.4 Reservation of Rights. Scripps reserves the right to use for any
non-commercial research purposes and the right to allow other nonprofit
institutions to use for any non-commercial research purposes any Scripps
Technology and Scripps Patent Rights licensed hereunder, without Scripps or such
other institutions being obligated to pay Licensee any royalties or other
compensation.
7. Confidentiality and Publication.
7.1 Treatment of Confidential Information. The parties agree that during
the term of this Agreement, and for a period of three (3) years after this
Agreement terminates, a party receiving Confidential Information of the other
party will (I) maintain in confidence such Confidential Information to the same
extent such party maintains its own proprietary industrial information, (ii) not
disclose such Confidential Information to any third
8
party without prior written consent of the other party and (iii) not use such
Confidential Information for any purpose except those permitted by this
Agreement.
7.2 Publicity. Except as otherwise provided herein or required by law, no
party shall originate any publication, news release or other public
announcement, written or oral, whether in the public press, stockholders'
reports, or otherwise, relating to this Agreement or to any sublicense
hereunder, or to the performance hereunder or any such agreements, without the
prior written approval of the other party, which approval shall not be
unreasonably withheld. Scientific publications published in accordance with
Section 7.2 of this Agreement shall not be construed as publicity governed by
this Section 7.3.
8. Term and Termination.
8.1 Term. Unless terminated sooner in accordance with the terms set forth
herein, this Agreement, and the license granted hereunder, shall terminate as
provided in Section 2.6 hereof.
8.2 Termination Upon Default. Any one or more of the following events shall
constitute an event of default hereunder: (i) the failure of a party to pay any
amounts when due hereunder and the expiration of fifteen (15) days after receipt
of a written notice requesting the payment of such amount; (ii) the failure of a
party to perform any obligation required of its to be performed hereunder, and
the failure to cure within sixty (60) days after receipt of notice from the
other party specifying in reasonable detail the nature of such default. Upon the
occurrence of any event of default, the non-defaulting party may deliver to the
defaulting party written notice of intent to terminate, such termination to be
effective upon the date set forth in such notice.
Such termination rights shall be in addition to and not in substitution for
any other remedies that may be available to the non-defaulting party.
Termination pursuant to this Section 8.2 shall not relieve the defaulting party
from liability and damages to the other party for breach of this Agreement.
Waiver by either party of a single default or a succession of defaults shall not
deprive such party of any right to terminate this Agreement arising by reason of
any subsequent default.
8.3 Termination Upon Bankruptcy or Insolvency. This Agreement may be
terminated by Scripps giving written notice of termination to Licensee upon the
filing of bankruptcy or bankruptcy of Licensee or the appointment of a receiver
of any of Licensee's assets, or the making by Licensee of any assignment for the
benefit of creditors, or the institution of any proceedings against Licensee
under any bankruptcy law. Termination shall be effective upon the date specified
in such notice.
9
8.4 Rights Upon Expiration. Neither party shall have any further rights or
obligations upon the expiration of this Agreement upon its regularly scheduled
expiration date with respect to this Agreement, other than the obligation of
Licensee to make any and all reports and payments for the final quarter period.
Provided, however, that upon such expiration, each party shall be required to
continue to abide by its non-disclosure obligations as described in Section 7.1,
and Licensee shall continue to abide by its obligation to indemnify Scripps as
described in Section 4.3 and by its obligations under Section 6.2 hereof.
8.5 Rights Upon Termination. Notwithstanding any other provision of this
Agreement, upon any termination of this Agreement prior to the regularly
scheduled expiration date of this Agreement, the license granted hereunder shall
terminate. Except as otherwise provided in Section 8.6 of this Agreement with
respect to work-in-progress, upon such termination, Licensee shall have no
further right to develop, manufacture or market any Licensed Product, or to
otherwise use any Scripps Patent Rights or any Scripps Technology not otherwise
includable therein. Upon any such termination, Licensee shall promptly return
all materials, samples, documents, information, and other materials which embody
or disclose Scripps Patent Rights or any Scripps Technology not otherwise
includable therein; provided, however, that Licensee shall not be obligated to
provide Scripps with proprietary information which Licensee can show that it
independently developed. Any such termination shall not relieve either party
from any obligations accrued to the date of such termination. Upon such
termination, each party shall be required to abide by its nondisclosure
obligations as described in Section 7.1, and Licensee shall continue to abide by
its obligations to indemnify Scripps as described in Section 4.3.
8.6 Work-in-Progress. Upon any such early termination of the license
granted hereunder in accordance with this Agreement, Licensee shall be entitled
to finish any work-in-progress and to sell any completed inventory of a Licensed
Product covered by such license which remain on hand as of the date of the
termination, so long as Licensee pays to Scripps the royalties applicable to
said subsequent sales in accordance with the terms and conditions as set forth
in this Agreement, provided that no such sales shall be permitted after the
expiration of six (6) months after the date of termination.
9. Assignment; Successors.
9.1 Assignment. Neither this Agreement nor any rights granted hereunder may
be assigned or transferred by Licensee except (I) to an Affiliate of Licensee or
(ii) as expressly permitted hereunder, without the prior written consent of
Scripps.
9.2 Binding Upon Successors and Assigns. Subject to the limitations on
assignment herein, this Agreement shall be binding upon and inure to the benefit
of any successors in interest and assigns of Scripps and Licensee. Any such
successor or assignee of
10
Licensee's interest shall expressly assume in writing the performance of all the
terms and conditions of this Agreement to be performed by Licensee.
10. General Provisions.
10.1 Independent Contractors. The relationship between Scripps and Licensee
is that of independent contractors. Scripps and Licensee are not joint
venturers, partners, principal and agent, master and servant, employer or
employee, and have no other relationship other than independent contracting
parties. Scripps and Licensee shall have no power to bind or obligate each other
in any manner, other than as is expressly set forth in this Agreement.
10.2 Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), and the procedures set forth below. In the event of any
inconsistency between the Rules of AAA and the procedures set forth below, the
procedures set forth below shall control. Judgment upon the award rendered by
the arbitrators may be enforced in any court having jurisdiction thereof.
10.2.1 Location. The location of the arbitration shall be in the County of
San Diego.
10.2.2 Selection of Arbitrators. The arbitration shall be conducted by a
panel of three neutral arbitrators who are independent and disinterested with
respect to the parties, this Agreement, and the outcome of the arbitration. Each
party shall appoint one neutral arbitrator, and these two arbitrators so
selected by the parties shall then select the third arbitrator. If one party has
given written notice to the other party as to the identity of the arbitrator
appointed by the party, and the party thereafter makes a written demand on the
other party to appoint its designated arbitrator within the next ten days, and
the other party fails to appoint its designated arbitrator within ten days after
receiving said written demand, then the arbitrator who has already been
designated shall appoint the other two arbitrators.
10.2.3 Discovery. Unless the parties mutually agree in writing to some
additional and specific pre-hearing discovery, the only pre-hearing discovery
shall be (a) reasonably limited production of relevant and non-privileged
documents, and (b) the identification of witnesses to be called at the hearing,
which identification shall give the witness's name, general qualifications and
position, and a brief statement as to the general scope of the testimony to be
given by the witness. The arbitrators shall decide any disputes and shall
control the process concerning these pre-hearing discovery matters. Pursuant to
the Rules of AAA, the parties may subpoena witnesses and documents for
presentation at the hearing.
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10.2.4 Case Management. Prompt resolution of any dispute is important to
both parties; and the parties agree that the arbitration of any dispute shall be
conducted expeditiously. The arbitrators are instructed and directed to assume
case management initiative and control over the arbitration process (including
scheduling of events, pre-hearing discovery and activities, and the conduct of
the hearing), in order to complete the arbitration as expeditiously as is
reasonably practical for obtaining a just resolution of the dispute.
10.2.5 Remedies. The arbitrators may grant any legal or equitable remedy or
relief that the arbitrators deem just and equitable, to the same extent that
remedies or relief could be granted by a state or federal court, provided
however, that no punitive damages may be awarded. No court action may be
maintained seeking punitive damages. The decision of any two of the three
arbitrators appointed shall be binding upon the parties.
10.2.6 Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be awarded to
the prevailing party, in the discretion of the arbitrators, or may be
apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
10.2.7 Confidentiality. Except as set forth below, the parties shall keep
confidential the fact of the arbitration, the dispute being arbitrated, and the
decision of the arbitrators. Notwithstanding the foregoing, the parties may
disclose information about the arbitration to persons who have a need to know,
such as directors, trustees, management employees, witnesses, experts,
investors, attorneys, lenders, insurers, and others who may be directly
affected. Additionally, if a party has stock which is publicly traded, the party
may make such disclosures as are required by applicable securities laws.
Further, if a party is expressly asked by a third party about the dispute or the
arbitration, the party may disclose and acknowledge in general and limited terms
that there is a dispute with the other party which is being (or has been)
arbitrated. Once the arbitration award has become final, if the arbitration
award is not promptly satisfied, then these confidentiality provisions shall no
longer be applicable.
10.3 Entire Agreement; Modification. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof.
There shall be no amendments or modifications to this Agreement, except by a
written document which is signed by both parties.
10.4 California Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California.
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10.5 Headings. The headings for each article and section in this Agreement
have been inserted for 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.
10.6 Severability. Should any one or more of the provisions of this
Agreement be held invalid or unenforceable by a court of competent jurisdiction,
it shall be considered severed from this Agreement and shall not serve to
invalidate the remaining provisions thereof. The parties shall make a good faith
effort to replace any invalid or unenforceable provision with a valid and
enforceable one such that the objectives contemplated by them when entering this
Agreement may be realized.
10.7 No Waiver. 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 such party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
10.8 Name. Whenever there has been an assignment or a sublicense by
Licensee as permitted by this Agreement, the term "Licensee" as used in this
Agreement shall also include and refer to, if appropriate, such assignee or
sublicensee.
10.9 Attorneys' Fees. In the event of a dispute between the parties hereto
or in the event of any default hereunder, the party prevailing in the resolution
of any such dispute or default shall be entitled to recover its reasonable
attorneys' fees and other costs incurred in connection with resolving such
dispute or default.
10.10 Notices. Any notices required by this Agreement shall be in writing,
shall specifically refer to this Agreement and shall be sent by registered or
certified airmail, postage prepaid, or by telefax, telex or cable, charges
prepaid, or by overnight courier, postage prepaid and shall be forwarded to the
respective addresses set forth below unless subsequently changed by written
notice to the other party:
For Scripps: The Scripps Research Institute
10550 North Torrey Pines Road
La Jolla, California 92037
Attention:
Fax No.: (619) 784-9910
For Licensee: Cyanotech Corporation
73-4460 Queen Kaahumanu Highway
Kailua-Kona, HI 96740
Attention: President and CEO
Fax No.: (808) 329-3597
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Notice shall be deemed delivered upon the earlier of (i) when received, (ii)
three (3) days after deposit into the mail, or (iii) the date notice is sent via
telefax, telex or cable, (iv) the day immediately following delivery to
overnight courier (except Sunday and holidays).
10.11 Compliance with U.S. Laws. Nothing contained in this Agreement shall
require or permit Scripps or Licensee to do any act inconsistent with the
requirements of any United States law, regulation or executive order as the same
may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date set forth above.
SCRIPPS: LICENSEE:
THE SCRIPPS RESEARCH INSTITUTE CYANOTECH CORPORATION
By:/s/Arnold LaGuardia By:/s/Gerald R. Cysewski
------------------- ---------------------
Senior Vice President President & CEO
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EXHIBIT A
Milestones
I. Pilot production of Licensed Product and shipment of sufficient Licensed
Product to Scripps for evaluation. To be completed within four months after
receipt of Licensed Product from Scripps.
II. Production of reagent quantities of Licensed Product (1 to 10 grams).
To be completed within eight months after receipt of Licensed Product from
Scripps.
III. Commercial Sales of Licensed Product. To commence within 12 months
after receipt of Licensed Product from Scripps.
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