Exhibit 10.5


 


TECHNOLOGY TRANSFER AGREEMENT



AMONG SCHERING AG, BERLEX, INC., 



COLLATERAL THERAPEUTICS, INC., AND



CARDIUM THERAPEUTICS, INC.


 


This Technology Transfer
Agreement (the “Agreement”) is made and entered into as of the Effective Date
(as defined below) by and among Schering Aktiengesellschaft, a German
corporation (“Schering AG”); Berlex Inc., a Delaware corporation, a U.S.
affiliate of Schering AG (“Berlex”); Collateral Therapeutics, Inc., a
Delaware corporation, a U.S affiliate of Schering AG (“Collateral”); and
Cardium Therapeutics, Inc., a Delaware corporation (“Cardium”).  Schering AG, Berlex and Collateral are also
referred to individually and collectively herein as “Schering”.  Each of the aforementioned Schering entities
as well as Cardium is referred to individually herein as a “Party” and
collectively herein as “Parties”.  This
Agreement shall be effective as of the date by which all of the Parties have
executed it (the “Effective Date”); however, the transfer of the rights and
corresponding obligations contemplated hereby shall be dependent upon, and
shall occur upon the date of, the closing of a Qualified Financing on the
Transfer Date (each of which is defined below).


 


WHEREAS, Schering is the owner or licensee of
certain technology relating to methods of gene therapy and compositions for the
potential treatment of cardiovascular diseases (the “Technology” as described
in more detail herein);


 


WHEREAS, Schering pursuant to its business
plans has elected to focus on product development efforts different from those
related to the Technology and wishes to transfer its rights and corresponding
obligations associated with the Technology to Cardium in connection with the
mutual covenants and conditions set forth in this Agreement;


 


WHEREAS, Cardium is seeking to complete a
financing to enable it, among other things, to further evaluate and potentially
develop certain aspects of the Technology, and wishes to assume the rights and
corresponding obligations associated with the Technology in connection with the
mutual covenants and conditions set forth in this Agreement;


 


NOW THEREFORE, in consideration of the mutual
covenants and conditions hereinafter set forth in this Agreement, the Parties
hereby agree as follows:


 


I. 
DEFINITIONS


 


1.1           Defined Terms.  The following terms when used herein shall
have the following meanings:


 


“Affiliate” means any company controlled by,
controlling, or under common control with a Party and shall include any company
fifty percent (50%) or more of whose voting stock or participating profit
interest is owned or controlled, directly or indirectly by a Party, and any
company which owns or controls, directly or indirectly fifty percent


 


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(50%) or more of the voting
stock of a Party, as well as any company which a Party (or a company owned or
controlled by or owning or controlling a Party) controls or owns at the maximum
control or ownership right permitted in the country where the company exists.


 


“Biologic(s)” mean the following genes (and
their related biological components such as corresponding proteins and nucleic
acid sequences, plasmid constructs, vectors and the like) each as described in
the Patents and/or Technology: (i) human Fibroblast growth factor 4 (FGF-4);
 (ii) Insulin-like growth factor 1
(IGF-1); and (iii) mutant Endothelial nitric oxide synthase factor (mutant
eNOS).  Each of the factors (i) through
(iii) shall constitute a “Type of Biologic” as used herein.


 


“Candidate” means a potential Product being developed
by Cardium.  “Lead Product Candidate” and
“Back-Up Candidate” are defined in Section V.


 


“Collateral-NYU License Agreement” means that
certain exclusive license agreement effective as of March 24, 1997
(including any amendments thereto), entered into by and between Collateral and
New York University concerning aspects of the Technology.


 


“Collateral-UC License Agreements” means
those certain exclusive license agreements effective as of September 25,
1995 (including any amendments thereto) and June 18, 1997 (including any
amendments thereto), entered into by and between Collateral and The Regents of
the University of California concerning aspects of the Technology.


 


“Collateral-VA License Agreement” means that
certain exclusive license agreement effective as of November 9, 1995
(including any amendments thereto), entered into by and
between Collateral and the Veterans Medical Research Foundation concerning
aspects of the Technology.


 


“Confidential Information” is defined in Section VII.


 


“Control” or “Controlled” shall refer to
ownership, license and/or possession of the ability to assign, transfer or
grant a license or sublicense of patent rights, know-how, regulatory filings or
other intangible rights, as provided for herein.


 


“Drug Approval Application” means an
application for Regulatory Approval required to be approved before marketing
and commercial sale of a Product in humans as a biologic or a drug in a
regulatory jurisdiction.


 


“Effective Date” is defined as the date by
which all of the Parties have executed this Agreement.


 


“Exclusive Technology” means the Technology
described and/or encompassed by the Patents, the Third-Party License
Agreements, and the AGT INDs, as well as other Technology to the extent it is
related solely to the Biologics, the Therapeutic Methods, the IND Candidate
and/or the Products and was developed for, or in connection with, the
Biologics, the Therapeutic Methods, the IND Candidate and/or the Products,
and/or was used in such connection by Schering prior to the Effective Date
(including by way of illustration and not limitation, preclinical research and
development, formulations,
CMC, clinical and regulatory information used or useful for the research,
development,


 


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manufacture, use or sale of
Product(s) that relate solely to the Biologics, Therapeutic Methods or IND
Candidate, as well as producer cells and adenoviral vectors and particles used
to produce the IND Candidate).  Materials,
internal documents and other information comprising the Exclusive Technology
will be identified and their transfer facilitated in good faith by the
individuals and in the time frame established in Section III, Subsection 6.


 


“Field” means the the diagnosis, cure,
mitigation, treatment or prevention of disease in man or other animals.


 


“First Commercial Sale” means the date
Cardium (or its Affiliate(s), successor(s)-in-interest, assignee(s) or
Sublicensee(s)) first sells commercially, pursuant to Regulatory Approval,
Products in the United States, Japan or any country of the EU.


 


“Force Majeure” is defined in Section XII.


 


“IND” means an Investigational New Drug
application filed with United States Food and Drug Administration pursuant to
21 CFR §312, et seq, which allows an investigational drug to be exempt from
premarketing approval requirements and to be shipped lawfully for the purpose
of conducting clinical trials.


 


“IND Equivalent” means an application
submitted in a country other than the US for approval to conduct Clinical
Development of a drug compound or drug composition.


 


“IND Candidate” means the FGF Lead Product
Candidate for which INDs (or IND Equivalents) have already been filed by
Schering in the U.S. and Europe (which INDs are referred to herein as the “AGT
IND(s)”).  The U.S. AGT IND has sometimes
been referred to by the Parties as IND Number BB-IND-7471 (along with
associated amendments and protocols). The European IND Equivalents have been
referred to by various different designations. 
The IND Candidate has sometimes been referred to by the Parties as
Ad5FGF-4, Ad5-FGF4, Ad5.1-FGF4, or GenerxTM.


 


“Milestone Payments” are defined in Section IV.


 


“Net Sales” shall be defined as amounts
invoiced by Cardium (or its Affiliates, successors-in-interest, assignees or
licensees), from worldwide sales of Product(s) to end users, less deductions
for: (i) transportation and other charges, including insurance relating
thereto; (ii) sales and excise taxes or customs duties paid by the selling
party and any other governmental charges imposed upon the sale of the
Product(s); (iii) distributors fees, rebates or allowances actually
granted, allowed or incurred; (iv) quantity discounts, cash discounts or
charge backs actually granted, allowed or incurred in the ordinary course of
business in connection with the sale of the Product(s); (v) allowances or
credits to customers, not in excess of the selling price of the Product(s), on
account of governmental requirements, rejection, outdating, recalls or return
of the Product(s); and (vi) less actual amounts for uncollectable
accounts. Sales of the Product(s) between Cardium and its Affiliates solely for
research or clinical testing purposes shall be excluded from the computation of
Net Sales.


 


“Non-Exclusive Technology” (or “Mixed Assets)
means Technology developed and/or used by Schering prior to the Effective Date
that is used by Schering for, or has been identified by Schering as being
useful for, the research, development,


 


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manufacture, use or sale of
Product(s) but which does not relate solely to the Biologics, Therapeutic
Methods, IND Candidate or Products; including by way of illustration and not
limitation, formulations, CMC, clinical and regulatory information used or
useful for the research, development, manufacture, use or sale of Product(s)
that do not relate solely to the Biologics, Therapeutic Methods or IND
Candidate.  Materials, internal documents
and other information comprising the Non-Exclusive Technology will be
identified and, where relevant, transfer of copies facilitated in good faith by
the individuals and in the time frame established in Section III, Subsection 6.


 


“Non-Patent Royalties” are defined in Section IV.


 


“One Stage Further” is defined in Section V.


 


“Patent(s)” mean one or more of the patents
or patent applications listed in Exhibit A , which are owned, licensed or
otherwise Controlled by Schering that cover the manufacture, use, offering,
importation or sale of Product(s) in a particular country or region (a “Patent
Jurisdiction”) and any and all subsequent divisional and continuation
applications of the patent applications and patents referred to above, and any
continuation-in-part applications claiming priority to the patent applications
and patents referred to above; any and all patents that have issued or in the
future issue from the aforesaid patent applications; and any and all extensions
or restorations by existing or future extension or restoration mechanisms,
including substitutions, reexaminations, revalidations, reissues, renewals, and
extensions thereof.


 


“Pivotal Clinical Trial(s)” means clinical
trial(s) which when completed will have demonstrated that the Product(s) (i) is
safe and efficacious, (ii) has an established dose, (iii) has an
established route of administration and (iv) has a treatment schedule in
the target population, all sufficient for the purpose of supporting a Drug
Approval Application.


 


“Product(s)” means any Biologic or
Therapeutic Method in the Field, or any product or method contained within the
Exclusive Technology.


 


“Qualified Financing” is defined in Section II.


 


“Qualifying Consideration” is defined in Section V.


 


“Regulatory Approval” means any approvals,
product and/or establishment licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture, use, storage, importation,
export, transport, or sale of Product(s) in a regulatory jurisdiction.  “Regulatory Approval Application” means any
application seeking a Regulatory Approval.


 


“Reimbursements” are defined in Section IV.


 


“Royalty Payment” is defined in Section IV.


 


“Royalty Report” and “Royalty Term” are
defined in Section IV.


 


“Schering-Yale License Agreement” means that
certain exclusive license agreement effective as of August 9, 2000
(including any amendments thereto), entered


 


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into by and between Schering AG
and Yale University concerning aspects of the Technology.


 


“Sublicensee(s)” means, with respect to
Product(s), a Third Party to whom Cardium has granted a sublicense under this
Agreement to make (or have made), use, sell (or have sold), offer to sell, or
import such Product(s).


 


“Technology” means all information, technology
and know-how, including, but not limited to, patents, patent applications,
continuations and continuations-in-part, divisional and provisional patent
applications, trade secrets, methods, processes, techniques, materials,
compositions, formulations, chemistry manufacturing and controls information,
clinical or regulatory data and information, results of tests or studies,
expertise and other information or data which were developed and/or used by
Schering prior to the Effective Date, and Controlled by Schering as of the
Effective Date, for the research, development, manufacture, use or sale of
Product(s).


 


“Term” is defined in Section X.


 


“Therapeutic Method(s)” means methods of
cardiovascular gene therapy for the potential treatment of diseases and conditions
in the Field (including methods for the delivery of genes to the heart or
vasculature and the use of angiogenic and/or non-angiogenic genes for the
potential treatment of diseases of the heart or vasculature).  The methods listed above include the use of
gene delivery vectors and other components to carry out, facilitate, direct or
monitor the described gene therapies and are collectively referred to herein as
“Therapeutic Method(s)”.


 


“Third Party” means an entity other than
Schering, Collateral or any of their respective Affiliates.


 


“Third Party License Agreement(s)” means the
license agreements between Schering and a Third Party related to the Exclusive
Technology and listed in Exhibit B.


 


“Transfer Date” is defined in Section II.


 


“Up-Front Payment” is defined in Section IV.


 


II. 
QUALIFIED FINANCING


 


1.  Condition
Precedent.  The transfers of rights
and assumptions of obligations contemplated by this Agreement, including
without limitation the rights to be transferred or granted to Cardium by Schering
and the consideration to be provided to Schering by Cardium, each in connection
with this Agreement, shall be dependent upon the occurrence of a Qualified
Financing (as defined below), and shall occur coincident with the closing of
the Qualified Financing, the date of which closing (or, if the Qualified
Financing is completed in a series of closings, the date of the first closing
by which Cardium shall have received the minimum amount specified below in Section II.2)
shall be defined as the “Transfer Date”.


 


2.  Nature
of Qualified Financing.  A “Qualified
Financing”, as used herein, refers to a financing secured by Cardium pursuant
to which Cardium receives funding


 


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of at least Twenty Million U.S. Dollars
($20,000,000), which funding is to be used principally to advance the purposes
of this Agreement (consistent with commercially reasonable business practices
and the corporate fiduciary obligations of Cardium).


 


3.  Cancellation
Upon Non -Occurrence of Qualified Financing.   Schering AG (on behalf of itself and its
affiliates) reserves the right to cancel this Agreement without any liability
or obligation owed to Cardium under this Agreement in the event that the
Qualified Financing does not occur by October 21, 2005.


 


III.  TECHNOLOGY TRANSFER TO
CARDIUM


 


1.  Exclusive
Technology Owned by Schering.  As
soon as reasonably practicable following the Transfer Date, Schering shall
assign to Cardium, or cause its appropriate Affiliate to assign to Cardium, all
rights, title and interest in and to Exclusive Technology that is owned by
Schering as of the Effective Date.


 


2.  Exclusive
Technology Licensed by Schering. 
Schering shall to the extent possible, without incurring additional
third-party costs or expenses (which additional third-party costs or expenses
would need to be borne by Cardium in the event that Cardium requests the
corresponding transfer), transfer to Cardium, or cause its appropriate
Affiliate to transfer to Cardium, all rights and corresponding obligations in
and to Exclusive Technology that is not owned by but is licensed or otherwise
Controlled by Schering or an Affiliate of Schering as of the Effective Date,
subject to the following provisions:


 


(i)                                     To
the extent permitted by the applicable licensors and/or license agreements
(including the Third Party License Agreements), Schering (or its appropriate
Affiliate) shall enter into a novation arrangement under which Cardium shall
assume all rights and corresponding obligations of Schering (or its appropriate
Affiliate) under the applicable license agreement.


 


(ii)                                  To
the extent that a novation under an applicable license agreement is not
possible or permitted, to the extent permitted by the applicable licensors
and/or license agreements, Schering (or its appropriate Affiliate) shall
exclusively (even as to Schering and its Affiliates) sublicense Cardium on a
worldwide basis to make, have made, use, sell, have sold, offer and/or import
Product(s).


 


(iii)                               To
the extent permitted by applicable governmental regulations, Schering (or its
appropriate affiliate) shall transfer to Cardium the AGT INDs and any
Regulatory Approval Applications for Product(s).


 


(iv)                              All
rights with respect to the Exclusive Technology listed in this subsection to
be granted by Schering to Cardium are expressly subject to any restrictions,
limitations or exclusions applicable to Technology under any Third Party
licenses, agreements or otherwise, including, without limitation, and without
prejudice to the generality of the foregoing, any


 


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restrictions, limitations or exclusions
contained in Third Party License Agreements.


 


3.  Permits
and Licenses.  Schering shall to the
extent possible, without incurring additional third-party costs and expenses
(which additional third-party costs or expenses would need to be borne by
Cardium in the event that Cardium requests the corresponding transfer),
transfer to Cardium, or cause its appropriate Affiliate to transfer to Cardium,
all permits, regulatory licenses and other such licenses comprised within the
Exclusive Technology.


 


4.  Information
Relating Solely to Products. 
Schering shall to the extent possible, without incurring additional
third-party costs and expenses (which additional third-party costs or expenses
would need to be borne by Cardium in the event that Cardium requests the
corresponding transfer), transfer to Cardium, or cause its appropriate
Affiliate to transfer to Cardium, all laboratory notebooks, documents and other
information comprised within the Exclusive Technology (collectively “Information
Relating Solely to Products”).


 


5.  Non-Exclusive
Technology or “Mixed Assets”. 
Schering shall to the extent possible, without incurring additional
third-party costs and expenses (which additional third-party costs or expenses
would need to be borne by Cardium in the event that Cardium requests the
corresponding transfer), provide to Cardium, or cause its appropriate Affiliate
to provide to Cardium, copies of or, at Schering’s option, and under
appropriate conditions of confidentiality, access to Non-Exclusive Technology
and shall permit Cardium to non-exclusively use or employ such information
solely in the development and/or commercialization of Product(s) pursuant to
this Agreement.


 


6.  Technology
Transfer Process.  Technology
comprising the Exclusive Technology and the Non-Exclusive Technology, each as
defined herein, will be identified and, where applicable, their transfer
facilitated in good faith by a “Tech Transfer Team” comprising individuals from
Schering having appropriate knowledge of the preclinical, CMC, clinical,
regulatory and legal aspects of the Technology, and corresponding individuals
designated by Cardium.  The Tech Transfer
Team shall facilitate the carrying out of the technology transfer process as
contemplated by this Agreement, but shall not be entitled to alter the
respective rights and obligations of the Parties, which shall be governed
solely by this Agreement.  In order to
facilitate Cardium’s reinitiation of Product development and clinical trials,
and to shorten the overall time during which Schering will be involved in the
technology transfer process, the Tech Transfer Team shall use diligent efforts
to initiate the technology transfer process within two (2) weeks following
the closing of the Qualified Financing, to conduct the transfers as soon as is
practicable thereafter, and (to the greatest extent feasible) to complete the
technology transfer process within three (3) months of the closing of the
Qualified Financing.


 


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IV.  CONSIDERATION: UP-FRONT
PAYMENT, MILESTONES AND ROYALTIES


 


1.  Consideration.  Upon the occurrence of the Qualified
Financing and in consideration of the rights granted by Schering hereunder,
Cardium shall make the following payments to Schering AG (or to any of its
Affiliates as it shall designate in writing to Cardium):


 


(i)                                     Reimbursements:  Cardium shall reimburse Schering for all
third-party costs and expenses (i.e. costs or expenses required to be paid to
third parties) in connection with the filing, prosecuting or maintaining
Patents to be transferred to Cardium, or licenses to be transferred to or
sublicensed to Cardium, in each case for all activities occurring or items
becoming due on or after April 1, 2005 (collectively the “Reimbursements”);


 


(ii)                                  Up-Front
Payment:  Cardium shall make a
non-refundable and non-creditable up-front payment (the “Up-Front Payment”) of
Four Million U.S. Dollars ($4,000,000) within five (5) business days
following receipt of the proceeds of the Qualified Financing;


 


(iii)                               Milestone
Payments:  Cardium shall make a
milestone payment (each a “Milestone Payment”) of Ten Million U.S. Dollars
($10,000,000) within thirty (30) days of the First Commercial Sale of each Type
of Biologic and the first Product employing AGT but not constituting a Type of
Biologic, provided that such Milestone Payment shall be paid only once for each
Biologic, or other Product as described in this Section, and without regard to
the number of jurisdictions such Biologic or other Product may be
commercialized in;


 


(iv)                              Royalties:  Cardium shall make royalty payments (each a “Royalty
Payment”) on Net Sales by Cardium or its licensee(s) or assignee(s) of each
Product as follows:


a.                                       Five
Percent (5%) on Net Sales of a Product comprising an FGF-4 Biologic; or


b.                                      Four
Percent (4%) on Net Sales of any other Product; or


c.                                       Certain
Non-Patent Royalties as provided below.


 


2.  Royalty
Payments.  Royalty Payments shall be
paid on a country-by-country basis from the First Commercial Sale of Product in
such country until the expiration of the last to expire Patent within the
Technology having valid claims covering such Product in such country.  A Patent shall be deemed to be expired when
all of the claims covering a Product have been held invalid or unenforceable by
a final unappealable or unappealed decision of a court of competent
jurisdiction.


 


3.  Non-Patent
Royalties.  If the development,
manufacture, use or sale of a Product would not, without the licenses described
in this Agreement, constitute an infringement of any Patent, then the royalties
payable with respect to such a Product (“Non-Patent Royalties”) will be reduced
by one half (i.e. to Two-and-One-Half Percent (2.5%) for a Product compising an
FGF-4 Biologic or Two Percent (2%) for any other Product) until such time as a
generic version of the relevant Product becomes available on the applicable
market, on a country-by-


 


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country basis, after which there would be no
further royalties and Cardium shall have a fully-paid license with respect to
such Product. A “generic” product as used herein is a product sold under a
marketing authorization granted by a Regulatory Authority to a Third Party (and
which is not a Sublicensee of Cardium) that contains the same Biologic as the
relevant Product as its active pharmaceutical ingredient, and has an approved
indication which is the same as (or significantly overlapping to that of) the
indication of such Product.


 


4.  Third-Party
Royalties.  All Royalty Payments to
be made by Cardium to Schering pursuant to this Agreement are independent of
and additional to any payments to be made by Cardium to any Third Party under
the Third Party License Agreements, and any other payments that Cardium may
have to make.


 


5.  Royalty
Reports.  Cardium shall provide
Schering a report (each a “Royalty Report”) and Royalty Payment on a quarterly
calendar basis following the First Commercial Sale.  The Royalty Report relating to Net Sales
within the U.S. shall be provided within thirty (30) days after the end of the
calendar quarter to which such report and payment apply, and the Royalty Report
relating to Net Sales for countries other than the U.S. shall be provided
within sixty (60) days after the end of the calendar quarter to which such
report and payment apply. Payment of the applicable royalties will accompany
the aforesaid reports.


 


6.  Records
of Net Sales and Auditing.  Cardium
shall keep, and require any applicable Sublicensee and Affiliate to keep, for a
period of not less than seven (7) years, complete and accurate records of
all Net Sales of Products.  Schering
shall have the right at Schering’s sole expense following at least three (3) weeks
notice, to examine such royalty records during regular business hours during
the life of Cardium’s obligation to pay royalties on Products and for one (1) year
thereafter; provided however, that such examination shall not (i) take
place more often than once a year, or (ii) cover any records which date
prior to the date of the last examination. For any underpayments more than five
(5) percent by Cardium found under this Section Cardium shall pay
Schering the amount of underpayment, interest as provided for in Section IV.10
from the time the amount was due, and Schering’s out-of-pocket expenses.  For any underpayments less than five (5) percent
by Cardium found under this Section, Cardium shall pay Schering only the amount
of underpayment plus interest.  Any
overpayments by Cardium will be refunded to Cardium or credited to future
royalties, at Cardium’s election. Any records or accounting information
received from Cardium or its Sublicensees or Affiliates shall be Confidential
Information for purposes of Section VII.


 


If there is a dispute between the Parties
following any audit performed pursuant to this Section, either Party may refer
the issue (an “Audit Disagreement”) to an independent certified public
accountant for resolution.  In the event
an Audit Disagreement is submitted for resolution by either Party, the Parties
shall comply with the following procedures. 
(i) The Party submitting the Audit Disagreement for resolution
shall provide written notice to the other Party that it is invoking the
procedures of this Section.  (ii) Within
thirty (30) business days of the giving of such notice, the Parties shall
jointly select a recognized international accounting firm to act as an
independent expert to resolve such Audit Disagreement. (iii) The Audit
Disagreement submitted for resolution shall be described by the Parties to


 


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the independent expert, which description may
be in written or oral form, within ten (10) business days of the selection
of such independent expert. (iv) The independent expert shall render a
decision on the matter as soon as practicable. 
(v) The decision of the independent expert shall be final and
binding unless such Audit Disagreement involves alleged fraud, breach of this
Agreement or construction or interpretation of any of the terms and conditions
thereof. (vi) All fees and expenses of the independent expert, including
any third party support staff or other costs incurred with respect to carrying
out the procedures specified at the direction of the independent expert in
connection with such Audit Disagreement, shall be borne by each Party in
inverse proportion to the disputed amounts awarded to the Party by the
independent expert through such decision (e.g. party A disputes $100, the
independent expert awards party A $60, then party A pays forty (40%) percent
and party B pays sixty (60%) percent of the independent expert’s costs).


 


7.  Taxes
on Royalties.  Any tax paid or
required to be withheld by Cardium for the benefit of Schering on account of
royalties payable under this Agreement shall be deducted from the amount of
royalties otherwise due.  Cardium shall
secure and send to Schering proof of any such taxes withheld and paid and
shall, at Schering’s expense and request, provide reasonable assistance in
recovering such taxes, if possible.


 


8.  Form of
Payment.  All payments due to
Schering hereunder shall be made in U.S. dollars by wire to a bank in Germany
designated in writing by Schering; provided, that if payments in respect of Net
Sales are based on Net Sales in non-U.S. currencies, the amount of Net Sales
and any deductions used to calculate Net Sales, if any, shall be converted
monthly to U.S. dollars at the Noon Buying Rates published by the Federal
Reserve Bank of New York, as of the last business day of each applicable month.


 


9.  Net
Sales Exclusions.  In the event that
Cardium or its Sublicensees distributes Product(s) to any entity for research
or clinical testing purposes, and determines that such distributions shall be
excluded from the computation of Net Sales, then Cardium shall exclude such
distributions from Net Sales and provide Schering such information with the
Royalty Report describing such distribution of all such Product(s), the purpose
for which such Product(s) were distributed, and the quantities of Product(s)
distributed in the applicable calendar quarter.


 


10.           Late
Payments / Interest. Any payment due under this Agreement shall be due on
such date as specified in the Agreement and, in the event that such date is not
a business day, then the next succeeding business day. Any failure by Cardium
to make a payment within five (5) days after the date when due shall
obligate Cardium to pay computed interest, the interest period commencing on
the due date and ending on the payment day, to Schering at a rate per annum
equal to the Prime Rate as quoted by the Bank of America on REUTERS screen
<USPRIME1> plus a premium of 2 %, or the highest rate allowed by law,
whichever is lower. The interest calculation shall be based on the act/act computation
method. The interest rate shall be adjusted whenever there is a change in the
Prime Rate quotation on REUTERS screen <USPRIME1> mentioned above.
Interest shall be compounded annually in arrears. Such


 


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interest shall be due and payable on the
tender of the underlying principal payment.


 


V.  SUBLICENSING AND ASSIGNMENTS
BY CARDIUM 


 


1.  Sublicenses
and Assignments in General:  The
assignments, licenses and other rights granted to Cardium pursuant to this Agreement
are, to the extent not prohibited by applicable Third Party License Agreements,
sublicensable and assignable by Cardium, subject to the following conditions:


 


(i)                                     The
licenses, assignments and sublicenses granted to Cardium may not be sublicensed
or assigned by Cardium without the prior written consent of Schering, which
written consent shall not be unreasonably withheld by Schering; provided
further that consent will not be withheld, and Cardium shall have the right to
sublicense or assign such rights, if (a) Schering and its Affiliates are
released from any and all financial and other obligations with respect to Third
Party rights; (b) Cardium remains responsible for all of its corresponding
obligations to Schering under this Agreement; and (c) Schering is named as
a third party beneficiary in such license, assignment or sublicense, with the
right to seek legal remedies to enforce the terms of such license, assignment
or sublicense;


 


(ii)                                  Each
sublicense or assignment shall provide that the sublicensee or assignee is
subject to the terms and conditions of the applicable license or assignment
granted by Schering to Cardium;


 


(iii)                               Cardium
shall remain primarily liable to Schering for all of Cardium’s applicable
obligations contained in this Agreement, and any act or omission by any
sublicensee or assignee of Cardium that would be a breach of this Agreement if
committed or omitted by Cardium, will be deemed to be a breach of this
Agreement by Cardium;


 


(iv)                              Within
thirty (30) days of the effective date of each sublicense or assignment,
Cardium shall provide Schering with a complete copy of the sublicense or
assignment.


 


2.  Sublicenses
or Assignments of Biologics or Products Not Advanced by Cardium:  In the event that Cardium should sublicense
or assign any Biologic or Product (with all requisite consents) to any Third
Party without having advanced development of such Biologic and/or Product at
least “One Stage Further” (as defined below), then the following provisions
shall apply:


 


(i)                                     Cardium
shall pay to Schering twenty percent (20%) of the “Qualifying Consideration”
(as defined below) received from such Third Party for the applicable sublicense
or assignment.


 


(ii)                                  For
purposes of this Agreement, stages of development of a potential Biologic or
Product shall be as follows: (1) identifying a specific Product candidate
(a “Candidate”); (2) successfully
testing a Candidate in a preclinical study of efficacy; (3) successfully
completing cGMP manufacturing and process development of a Candidate; (4) successfully
testing a Candidate in a preclinical toxicology and/or biodistribution study;


 


11





















 


(5) successfully testing a Candidate in
a Phase I clinical study or equivalent thereof; (6) successfully testing a
Candidate in a Phase II clinical study or additional Phase II clinical study or
equivalent thereof; 

(7) successfully testing a Candidate in a Phase III clinical study or
equivalent thereof; and (8) obtaining a Regulatory Approval for marketing
a Candidate in the U.S., Japan or any country of the EU. Success will be
determined by the ability of the Candidate to progress to the next stage of
development.


 


(iii)                               The
term “One Stage Further” means advancing a Candidate from whatever stage in the
preceding list it is currently in to the next stage in the list.  The most advanced Candidate of each Type of
Biologic is referred to herein as a “Lead Product Candidate.”  In the specific case of the FGF Lead Product
Candidate (also referred to as Ad5FGF-4 or GenerxTM), more than one Phase II
clinical study of the Candidate has been conducted but an additional Phase II
clinical study is to be conducted in order to evaluate effectiveness of the
Candidate (completion of which will constitute advancing the Lead Product
Candidate One Stage Further).  In the
case of one or more “Back-Up Candidate(s)” which are Biologic(s) or Product(s)
capable of being developed as potential alternatives to a Lead Product
Candidate, there shall be no requirement that such Back-Up Candidate(s) be or
have been advanced One Stage Further, provided that the Lead Product Candidate
has advanced One Stage Further.


 


(iv)                              For
purposes of this Agreement, “Qualifying Consideration” consists of all lump sum
or other payments received from such Third Party for the applicable sublicense,
license or assignment, except for reimbursements to Cardium of development
expenses actually incurred by Cardium. Payments covered hereunder encompass
both monetary and non-monetary consideration including, without limitation,
license fees, milestone payments, license maintenance fees, and the fair market
value of, or, at Schering’s option, a percentage share in, any non-monetary
payments such as equity.


 


VI.  PRODUCT DEVELOPMENT EFFORTS
AND DILIGENCE


 


1.               Diligence
Requirements.  Cardium shall use
commercially reasonable diligence to develop and commercialize at least one
Product Candidate of each Type of Biologic as defined above; provided, however,
that: (i) the diligence obligations for each Type of Biologic covered by
one or more of the Third Party License Agreements will be co-extensive with any
applicable diligence obligations under the applicable Third Party License
Agreement; and (ii) the diligence obligations for each other Type of
Biologic not covered by a Third Party License Agreement shall be for Cardium to
use commercially reasonable efforts to advance at least one potential Product
of each Type of Biologic at least One Stage Further within two (2) years
of the Transfer Date, and thereafter to advance such potential Product at least
One Stage Further within each subsequent two (2) year period until the
potential Product has entered human clinical trials or within each subsequent
three (3) year period once an IND for the Product has been filed or within
a four (4) year period once the Product has entered Pivotal Clinical
Trials.


 


12





















 


2.               Diligence
Reports.  Cardium shall provide to
Schering an annual report describing progress with respect to each of the
applicable diligence requirements identified above.


 


VII. 
CONFIDENTIAL INFORMATION, NO IMPLIED WARRANTY


 


1.  Confidential
Information.  As used herein, “Confidental
Information” means all non-public information (including without limitation
specifications, methods, data, materials, know-how, and other written or oral
communications or information) provided by one Party (a “Disclosing Party”) to
another Party (a “Receiving Party”), except to the extent that such
information: (a) is at the time of its receipt within public knowledge or
thereafter becomes public knowledge through no act or omission of the Receiving
Party; (b) was known to the Receiving Party as evidenced by written
records shown to exist prior to the disclosure by the Disclosing Party; (c) is
received from a third party who did not, directly or indirectly, obtain the
information or material from the Disclosing Party; or (d) is developed by
the Receiving Party without reference to, and independently of, the disclosure
by the Disclosing Party.


 


2.  Cardium
Confidential Information.  As used
herein, “Cardium Confidential Information” comprises all Confidential
Information controlled or produced by Cardium, including without limitation the
Information Related Solely to the Products (which is to be transferred to
Cardium pursuant to the terms of this Agreement) and any information developed
by Cardium in connection with the development and/or commercialization of
Product(s) or the performance of its obligations hereunder.  Schering shall not disclose Cardium
Confidential Information except in connection with the performance of its
obligations hereunder or as required by applicable law, regulation or
governmental order (provided, however, that in the event of such a required
disclosure, Cardium was given reasonable notice and opportunity to contest the
required disclosure or seek confidential treatment and/or a protective order,
and that Schering discloses only that portion of the Confidential Information
that was required to be disclosed, subject to any confidential treatment or
protective order).


 


3.  Schering
Confidential Information.  As used
herein, “Schering Confidential Information” comprises all Confidential
Information controlled or produced by Schering, excluding the Information
Related Solely to the Products (which is to be transferred to Cardium pursuant
to the terms of this Agreement), but including without limitation the
Non-Exclusive Technology (which may be used non-exclusively by Cardium in
connection with the development and/or commercialization of Products).  Cardium shall not disclose Schering
Confidential Information except in connection with the performance of its
obligations hereunder or as required by applicable law, regulation or
governmental order (provided, however, that in the event of such a required
disclosure, Schering was given reasonable notice and opportunity to contest the
required disclosure or seek confidential treatment and/or a protective order,
and that Cardium discloses only that portion of the Confidential Information that
was required to be disclosed, subject to any confidential treatment or
protective order).


 


13





















 


VIII. 
REPRESENTATIONS AND WARRANTIES


 


1.  Representations
and Warranties of Cardium.  Cardium
represents and warrants to Schering as follows:


 


(a)                                  Organization.  It is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.


 


(b)                                 Authority.  It has full corporate power and authority to
execute and deliver this Agreement and the other agreements and instruments to
be executed and delivered by Cardium pursuant hereto and to consummate the
transactions contemplated hereby and thereby, and will still have such power
and authority as of the Transfer Date. 
All corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly and
properly taken and obtained.


 


(c)                                  Enforceability.  This Agreement has been duly executed and
delivered by Cardium and constitutes, and such other agreements and instruments
when duly executed and delivered by Cardium will constitute, legal, valid, and
binding obligations of Cardium enforceable against Cardium in accordance with
their respective terms.


 


(d)                                 Approvals,
Consents, Etc.  No approval, authorization,
consent, or other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution and
delivery by Cardium of this Agreement and the execution and delivery by Cardium
of such other agreements and instruments or the consummation of the
transactions contemplated hereby or thereby.


 


(e)                                  No
Conflicts.  None of the execution,
delivery, or performance of this Agreement or any other agreements or
instruments to be executed and delivered by Cardium (i) conflicts with or
results in a breach under Cardium’s corporate documents or any material
contractual undertaking of Cardium, or (ii) conflicts with or results in a
violation of any of the laws of the jurisdiction of incorporation of Cardium.  Cardium has not entered and will not enter
into any written or oral agreement before or after the Effective Date that is
or would be inconsistent with its obligations under this Agreement.


 


(f)                                    Title.  As of the Effective Date it has, and as of
the Transfer Date it will still have, good title to or valid leases or licenses
(and is not in breach of any such leases or licenses) for all its properties,
rights, and assets necessary for the fulfillment of its obligations and
responsibilities under this Agreement.


 


(g)                                 No
Prior or Subsequent Grants.  As of
the Effective Date and through the Term of this Agreement, Cardium has not
granted and will not grant any assignments, licenses or sublicenses or
otherwise transfer any rights related to Product(s) in a manner inconsistent
with this Agreement.


 


14





















 


2.  Representations
and Warranties of Schering.  Schering
(including each Schering Affiliate holding rights or other property to be
transferred hereunder or having other obligations hereunder) represents and
warrants to Cardium as follows:


 


(a)                                  Organization.  Schering AG is a corporation duly organized,
validly existing and in good standing under the laws of Germany; Berlex Inc. is a corporation duly organized, validly existing and
in good standing under the laws of 
Delaware; and Collateral Therapeutics, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.


 


(b)                                 Authority.  It has full corporate power and authority to
execute and deliver this Agreement and the other agreements and instruments to
be executed and delivered by Schering pursuant hereto and to consummate the
transactions contemplated hereby and thereby, and will still have such power
and authority as of the Transfer Date. 
All corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly and
properly taken and obtained.


 


(c)                                  Enforceability.  This Agreement has been duly executed and
delivered by Schering and constitutes, and such other agreements and
instruments when duly executed and delivered by Schering will constitute,
legal, valid, and binding obligations of Schering enforceable against Schering
in accordance with their respective terms.


 


(d)                                 Approvals,
Consents, Etc.  No approval,
authorization, consent, or other order or action of or filing with any court,
administrative agency or other governmental authority is required for the
execution and delivery by Schering of this Agreement and the execution and
delivery by Schering of such other agreements and instruments or the
consummation of the transactions contemplated hereby or thereby.


 


(e)                                  No
Conflicts.  None of the execution,
delivery, or performance of this Agreement or any other agreements or
instruments to be executed and delivered by Schering (i) conflicts with or
results in a breach under Schering’s corporate documents or any material
contractual undertaking of Schering, or (ii) conflicts with or results in
a violation of any of the laws of the jurisdiction of incorporation of
Schering.  Schering has not entered and
will not enter into any written or oral agreement before or after the Effective
Date that is or would be inconsistent with its obligations under this
Agreement.


 


(f)                                    Title.  As of the Effective Date it has, and as of
the Transfer Date it will still have, good title to or valid leases or licenses
(and is not in breach of any such leases or licenses) for all its properties,
rights, and assets necessary for the fulfillment of its obligations and
responsibilities under this Agreement.


 


(g)                                 No
Prior or Subsequent Grants.  As of
the Effective Date and through the Term of this Agreement, Schering has not
granted and will not grant any


 


15





















 


assignments, licenses or sublicenses or
otherwise transfer any rights related to Product(s) in a manner inconsistent
with this Agreement.


 


IX. 
DISCLAIMERS AND INDEMNIFICATION 


 


1.  Disclaimer.  Schering and Cardium specifically disclaim
any guarantee that the research, development or commercialization of Product(s)
will be successful, in whole or in part. 
The failure to successfully develop Product(s) will not constitute a
breach of any representation or warranty or other obligation under this
Agreement.  EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, CARDIUM AND SCHERING MAKE NO REPRESENTATIONS AND
EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH
RESPECT TO THE BIOLOGICS, THERAPEUTIC METHODS, TECHNOLOGY, OR PRODUCTS,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF TECHNOLOGY (WHETHER PATENTED OR UNPATENTED), OR
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.


 


2.  Indemnification
By Cardium.  Cardium hereby agrees to
indemnify and hold Schering, its Affiliates and their respective officers,
directors, employees, agents, and representatives (collectively, the “Schering
Indemnitees”) harmless from and against any and all claims, liabilities,
losses, damages, costs and expenses in respect of claims against the Schering
Indemnitees by parties other than the Schering Indemnitees, including
reasonable fees and disbursements of counsel and expenses of reasonable
investigation (collectively, “Schering Losses”), arising out of, based upon or
caused by or related to: (i) the
inaccuracy of any material representation or the material breach of any
warranty, covenant or agreement of Cardium contained in this Agreement or in
any other agreement or instrument delivered by Cardium pursuant to this
Agreement; (ii) the material breach by Cardium of this Agreement or of any
other agreement or instrument delivered by Cardium pursuant to this Agreement; (iii) any
negligence or intentional wrongdoing in connection with the research,
development or commercialization of Product(s) by Cardium, its Affiliates or
sublicensee(s); or (iv) the conduct by Cardium, its Affiliates or
sublicensees of the research, development or commercialization of
Product(s).  The foregoing
notwithstanding, under no circumstances shall Cardium be obligated to indemnify
any Schering Indemnitee to the extent that any Schering Loss is due to the
negligence or willful misconduct of one or more Schering Indemnitees.


 


3.  Indemnification
By Schering.  Schering hereby agrees
to indemnify and hold Cardium, its Affiliates, subcontractors and their
respective officers, directors, employees, agents, and representatives
(collectively, the “Cardium Indemnitees”) harmless from and against any and all
claims, liabilities, losses, damages, costs and expenses in respect of claims
against the Cardium Indemnitees by parties other than the Cardium Indemnitees,
including reasonable fees and disbursements of counsel and expenses of
reasonable investigation (collectively, “Cardium Losses”), arising out of,
based upon or caused by: (i) the inaccuracy of any material representation
or the material breach of any warranty, covenant or agreement of Schering
contained in this Agreement or in any other agreement or


 


16





















 


instrument delivered by Schering pursuant to
this Agreement; or (ii) the material breach by Schering of this Agreement
or of any other agreement or instrument delivered by Schering pursuant to this
Agreement.  The foregoing
notwithstanding, under no circumstances shall Schering be obligated to
indemnify any Cardium Indemnitee to the extent that any Cardium Loss is due to
the negligence or willful misconduct of one or more Cardium Indemnitees.


 


4.  Notices,
Etc.  Each indemnified party agrees
to give the indemnifying party prompt written notice of any action, claim,
demand, discovery of fact, proceeding or suit (collectively, “Claims”) for
which such indemnified party intends to assert a right to indemnification under
this Agreement; provided however, that failure to give such notification shall
not affect the indemnified party’s entitlement to indemnification hereunder
except to the extent that the indemnifying party shall have been prejudiced as
a result of such failure.  The
indemnifying party shall have the initial right (but not the obligation) to
defend, settle or otherwise dispose of any Claim for which the indemnified
party intends to assert a right to indemnification under this Agreement as
contemplated in the preceding sentence if and so long as the indemnifying party
has recognized in a written notice to the indemnified party provided within
thirty (30) days of such written notice its obligation to indemnify the
indemnified party for any Schering Losses or Cardium Losses (as the case may
be) relating to such Claim, provided however that the indemnifying party shall
obtain the written consent of the indemnified party prior to ceasing to defend,
settling or otherwise disposing of any Claim. 
If the indemnifying party fails to state in a written notice during such
thirty (30) day period its willingness to assure the defense of such a Claim,
the Schering or Cardium Indemnitee, as the case may be, shall have the right to
defend, settle or otherwise dispose of such claim, subject to the applicable
provisions above.


 


X. 
TERM, TERMINATION AND SURVIVAL


 


1.  Term.  The term of this Agreement (the “Term”) shall
commence on the Effective Date and shall (unless earlier terminated as provided
herein) continue until both of the following have occurred: (i) the
expiration of the last-to-expire Patent; and (ii) the end of a calendar
year in which no sales of Products have occurred during the full year
(following a year in which sales of Products have occurred pursuant to a
Regulatory Approval).


 


2.  Termination.  This Agreement may be terminated (the result
a “Termination”) as follows:


 


(a)                                  Breach.  If either Party materially breaches, or
materially defaults in the performance of, or fails to be in compliance with,
any material warranty, representation, agreement or covenant of this Agreement,
including any payment obligations, and such default or noncompliance shall not
have been substantially remedied, or steps initiated to substantially remedy
the same to the other Party’s reasonable satisfaction (provided that the
default or noncompliance can be remedied within one hundred and eighty (180)
days), within sixty (60) days after receipt by the defaulting Party of a
written notice thereof and demand to cure such default from the other Party
(or, in the case of an alleged breach of a diligence obligation within


 


17





















 


one hundred twenty (120) days of receipt of
such notice), the Party not in default or breach may terminate this Agreement.  In such instance the terminating Party may
maintain the licenses and, subject to damages for such breach, obligations
pursuant to this Agreement.  In the event
that the breach, default or failure relates only to one or more specific
Biologic(s), Therapeutic Method(s) or Product(s), then the potential
termination of rights and obligations hereunder shall extend only to such
specific Biologic(s), Therapeutic Method(s), or Product(s).


 


(b)                                 Bankruptcy.  Either Party may terminate this Agreement or
the licenses granted by such Party, if, at any time, the other Party shall file
in any court pursuant to any statute, a petition in bankruptcy or insolvency or
for reorganization in bankruptcy or for an arrangement or for the appointment
of a receiver or trustee of such Party or of its assets, or if such Party
proposes a written agreement of composition or extension of its debts, or if
such Party shall be served with an involuntary petition against it, filed in
any insolvency proceeding, and such petition shall not be dismissed within
sixty (60) days after the filing thereof, or if such Party shall propose or be
a party to any dissolution, or if such Party shall make an assignment for the
benefit of creditors.


 


(c)                                  Lack
of Technical or Commercial Feasibility. 
In the event that Cardium determines, in its sole discretion, that one
or more Biologic(s), Therapeutic Method(s), or Product(s) lacks sufficient
technical or commercial feasibility, it may elect to (i) terminate its
rights and corresponding obligations hereunder with respect to such
Biologic(s), Therapeutic Method(s), or Product(s), or (ii) terminate this
Agreement.  Any termination pursuant to
this provision shall be effective upon thirty (30) days written notice to
Schering.


 


3.  Accrued
Obligations.  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


 


4.  Effect
of Termination.  Except as provided
above, upon any termination of this Agreement, the licenses granted to Cardium
hereunder shall terminate and any information or property transferred to
Cardium by Schering hereunder shall be, at Schering’s election, returned to
Schering or destroyed.  In the event of a
termination by Cardium for Lack of Technical or Commercial Feasibility, as
described above, licenses granted to Cardium shall terminate (and information
and property returned or destroyed) with respect to the particular Biologic(s),
Therapeutic Method(s), or Product(s) (if Cardium so elects under (i) above),
or (ii)  this Agreement in its entirety (if Cardium so elects under (ii) above).
In the event of any termination of rights with respect to a particular
Biologic, Therapeutic Method or Product, or a termination of this entire
Agreement, at Schering’s election, Cardium will (to the greatest extent it is
free to do so): (i) transfer to Schering any Cardium Confidential
Information and any other data, documentation and intellectual property
associated with the Biologic, Therapeutic 


 


18





















 


Method or Product to which the termination
applies, or (ii) grant to Schering a perpetual, royalty free, worldwide,
sub-licensable license under such Cardium Confidential Information, data,
documentation and intellectual property for Schering to develop and
commercialize any product or therapeutic method for which such Cardium
Confidential Information, data, documentation and intellectual property may be
useful.


 


5.  Survival.  The rights and obligations set forth in this
Agreement shall extend beyond the Term or Termination of this Agreement only to
the extent expressly provided for herein, or to the extent that the survival of
such rights or obligations are necessary to permit their complete fulfillment
or discharge.  Without limiting the
foregoing, the Parties have identified the following Sections as being intended
to survive beyond the Term or Termination of this Agreement: Sections VII
through XII, inclusive.


 


XI.                                PATENTS


 


Cardium will maintain, at its own cost and
expense, all Patents that are assigned to it hereunder, and will reimburse
Schering for all third-party costs and expenses that Schering may incur in
filing, prosecuting and maintaining any Patents which are subject to this
Agreement but are not assigned to Cardium. If Cardium decides that it does not
wish to maintain any Patent that is assigned to it, it shall not allow such
Patent to lapse or otherwise become unenforceable until it has first notified
Schering and allowed Schering to take over responsibility for the filing and
maintenance of the Patent, at Schering’s sole cost and expense. If Schering
takes over such responsibility the Patent, Cardium will reassign it to
Schering, it will no longer be subject to the terms of this Agreement, and
Cardium will have no further rights or obligations in respect of it.


 


XII. 
MISCELLANEOUS


 


1.  Notices.  Any notice or other communication required or
permitted to be given by either Party under this Agreement shall be effective
when delivered, if delivered by hand or by electronic facsimile with receipt
verified or five days after mailing if mailed by registered or certified mail,
postage prepaid and return receipt requested, and shall be addressed to each
Party at the following addresses or such other address as may be designated by
notice pursuant to   this Section:


 


	
  If to Cardium:

  	
   

  	
  If to Schering:

  
	
   

  	
   

  	
   

  
	
  Chief Business Officer or President

  	
   

  	
  Schering Aktiengesellschaft

  
	
  Cardium Therapeutics, Inc.

  	
   

  	
  13353 Berlin, Germany

  
	
  11622 El Camino Real, Suite 300

  	
   

  	
  Attn: Legal Department

  
	
  San Diego, CA 92130

  	
   

  	
  Fax: +49 30 468 14086

  
	
  Fax: (858) 794-3440

  	
   

  	
   

  



 


2.  Assignment;
Binding Effect.  Except as otherwise
specifically provided herein, neither this Agreement, nor any rights granted
hereunder, shall be assignable by any Party hereto without the prior written
consent of the other Party; provided


 


19





















 


however, that either Party may assign this
Agreement without the consent of the other Party to its Affiliates, if the
assigning Party guarantees the full performance of its Affiliates’ obligations
hereunder, or in connection with the sale or transfer of all or substantially
all of its assets relating to this Agreement, whether by merger, sale of stock,
operation of law or otherwise.  Any
purported assignment in contravention of this Section shall, at the option
of the non-assigning Party, be null and void and of no effect.


 


3.  Negation
of Agency.  Nothing herein contained
shall be deemed to create an agency, joint venture, amalgamation, partnership,
or similar relationship between Schering and Cardium.  The relationship between the Parties
established by this Agreement is that of independent contractors.


 


4.  Affiliates
of Parties.  Each Party may perform
its obligations hereunder personally or through one or more Affiliates and
shall be responsible for the performance of such obligations, and any
liabilities resulting therefrom.  Neither
Party shall permit any of its Affiliates to commit any act (including any act
of omission) which such Party is prohibited hereunder from committing directly.


 


5.  Beneficiaries.  No person, other than Schering or Cardium and
their permitted assignees hereunder, shall be deemed an intended beneficiary
hereunder or have any right to enforce any obligation of this Agreement.


 


6.  Further
Assurances.  Each Party agrees to
execute, acknowledge and deliver such further instruments, and to do all such
other acts as may be necessary or appropriate in order to carry out the
purposes and intent of this Agreement.


 


7.  Force
Majeure.  Except for royalty or other
payments due to each other, no Party shall be liable for any failure or delay
in performance under this Agreement to the extent such failure or delay arises
from Force Majeure.  A Force Majeure is
fire, explosion, earthquake, storm, flood, strike, labor difficulties, war,
insurrection, riot, act of God or the public enemy, or any law, act, order,
export or import control regulations, proclamation, decree, regulation,
ordinance, or instructions of local, state, federal or foreign governmental or
other public authorities, or judgment or decree of a court of competent
jurisdiction (but excluding a court injunction against a Party’s performance)
and not otherwise arising out of breach by such Party of this Agreement.  In the event of the occurrence of such an
event, the Party so affected shall give prompt written notice to the other
Party, stating the period of time the occurrence is expected to continue and
shall use best efforts to end the failure or delay and ensure that the effects
of such Force Majeure are minimized.


 


8.  Publicity.  No public announcement concerning the
existence or the terms of this Agreement shall be made, either directly or
indirectly, by Cardium or Schering, except as may be legally required by
applicable laws, regulations, or judicial order, without first obtaining the
approval of the other Party and agreement upon the nature, text, and timing of
such announcement, which approval and agreement shall not be unreasonably
withheld.  The Party desiring to make any
such public announcement shall provide the other Party with a written copy of
the proposed announcement in sufficient time prior to public release to allow
such other Party to comment upon such announcement, prior to


 


20





















 


public release.  Neither Party shall issue any press release
or make any public announcement which includes or otherwise uses the name of
the other Party in any public statement or document except with the prior written
consent of such Party


 


9.  Registration
and Filing of the Agreement.  To the
extent, if any, that a Party concludes in good faith that it is required to
file or register this Agreement or a notification thereof with any governmental
authority, including without limitation the U.S. Securities and Exchange
Commission and the Competition Directorate of the Commission of the European
Communities, in accordance with applicable laws and regulations, such Party may
do so, and the other Party shall cooperate in such filing or notification and
shall execute all documents reasonably required in connection therewith at the
expense of the requesting party.  The
Parties shall promptly inform each other as to the activities or inquiries of
any such governmental authority relating to this Agreement, and shall cooperate
to respond to an request for further information therefrom at the expense of
the requesting party


 


10.  Patent
Marking.  Cardium agrees to mark or
have its applicable Affiliate(s), assignee(s) or Sublicensee(s) mark all
Products sold pursuant to this Agreement in accordance with the applicable
statute(s) or regulation(s) relating to patent marking in the country or
countries of manufacture and sale thereof.


 


11.  Entire
Agreement.  This Agreement together
with all Exhibits contains the entire agreement between the Parties with
respect to the subject matter hereof.


 


12.  Amendments.  No amendment, modification or addition hereto
shall be effective or binding on either Party unless set forth in writing and
executed by duly authorized representatives of both parties.


 


13.  Waiver.  No waiver of any rights under this Agreement
shall be deemed effective unless contained in writing signed by the Party
charged with such waiver, and no waiver of any breach or failure to perform
shall be deemed a waiver of any future breach or failure to perform or any
other right arising under this Agreement.


 


14.  Headings.  The section headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the Parties.


 


15.  Ambiguities.  Ambiguities, if any, in this Agreement shall
not be construed against any Party, irrespective of which Party may be deemed
to have authored the ambiguous provision.


 


16.  Applicable
Law.  This Agreement shall be
governed by, subject to and construed in accordance with the laws of the State
of California (without regard to its conflicts of laws provisions).


 


17.  Compliance
with Laws.  In exercising their
rights under this Agreement, the Parties shall fully comply 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 Agreement.


 


21





















 


18.  Severability.  If any provision of this Agreement is held to
be invalid, void or unenforceable for any reason, it shall be adjusted, if
possible, rather than voided in order to achieve the intent of the Parties (as
reflected herein) to the maximal extent possible.  In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the fullest extent possible.


 


19.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.


 


IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representatives as of the Effective Date.


 


 


	
  SCHERING AG

  	
   

  	
  CARDIUM THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  / S / Dr. Hubertus Erlen

  	
   

  	
   

  	
  By:

  	
  / S / Christopher J. Reinhard

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:  Chairman of the Executive Board

  	
   

  	
  Its:  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  / S / Dr. Karin Dorrepaal

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:  Member of the Executive Board

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BERLEX INC.

  	
   

  	
  COLLATERAL THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  / S / Robert Chabora

  	
   

  	
   

  	
  By:

  	
  / S / John Nicholson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:  Vice President

  	
   

  	
  Its:  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Executed by all as of October 13, 2005]

  	
   

  	
   

  	
   

  
									



 


22





















 


EXHIBIT A


 


Exhibit A  (Patent Applications and Patents)


 


	
  Application/Patent Number

  	
   

  	
  Application/Patent Date

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USSN
  08/396,207

  	
   

  	
  28 Feb 1995

  	
   

  	
  UC (AGT)
  (CT1-US1)

  
	
  US 5,792,453

  	
   

  	
  11 Aug 1998

  	
   

  	
  UC (AGT)
  (CT1-US2)

  
	
  PCT/US1996/02631

  	
   

  	
  27 Feb 1996

  	
   

  	
  UC (AGT)
  (CT1-PCT2)

  
	
  US 6,100,242

  	
   

  	
  08 Aug 2000

  	
   

  	
  UC (AGT)
  (CT1-US3)

  
	
  USSN 09/021,773

  	
   

  	
  11 Feb 1998

  	
   

  	
  UC (AGT)
  (CT1-US4)

  
	
  PCT/US1999/02702

  	
   

  	
  09 Feb 1999

  	
   

  	
  UC (AGT)
  (CT1-PCT3)

  
	
  US 6,174,871

  	
   

  	
  16 Jan 2001

  	
   

  	
  UC (AGT)
  (CT1-US5)

  
	
  USSN
  09/435,156

  	
   

  	
  05 Nov 1999

  	
   

  	
  UC (AGT)
  (CT1-US6)

  
	
  USSN
  09/609,080

  	
   

  	
  30 Jun 2000

  	
   

  	
  UC (AGT)
  (CT1-US7)

  
	
  USSN 09/847,936

  	
   

  	
  03
  May 2001

  	
   

  	
  UC (AGT)
  (CT1-US8)

  
	
  PCT/US2000/30345

  	
   

  	
  03 Nov 2000

  	
   

  	
  UC (AGT)
  (CT1-PCT4)

  
	
  PCT/US2002/13990

  	
   

  	
  03
  May 2002

  	
   

  	
  UC (AGT)
  (CT1-PCT5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USSN
  08/852,779

  	
   

  	
  06
  May 1997

  	
   

  	
  UC (AGT)
  (CT3-US1)

  
	
  PCT/US1998/08848

  	
   

  	
  30 Apr 1998

  	
   

  	
  UC (AGT)
  (CT3-PCT)

  
	
  USSN 09/068,102

  	
   

  	
  30 Apr 1998

  	
   

  	
  UC (AGT)
  (CT3-US2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USSN
  07/062,925

  	
   

  	
  16 Jun 1987

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US1)

  
	
  USSN
  07/177,506

  	
   

  	
  04 Apr 1988

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US2)

  
	
  USSN
  07/806,771

  	
   

  	
  06 Dec 1991

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US3)

  
	
  USSN
  07/901,705

  	
   

  	
  22 Jun 1992

  	
   

  	
  NYU (FGF4) (CT4(B)-US4)

  
	
  US 5,750,659

  	
   

  	
  12
  May 1998

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US5)

  
	
  US 5,459,250

  	
   

  	
  17 Oct 1995

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US6)

  
	
  US 5,883,071

  	
   

  	
  16 Mar 1999

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US7)

  
	
  US 6,432,702

  	
   

  	
  13 Aug 2002

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US8)

  
	
  US 6,355,781

  	
   

  	
  12 Mar 2002

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US9)

  
	
  USSN
  08/799,130

  	
   

  	
  13 Feb 1997

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US10)

  
	
  USSN
  09/605,304

  	
   

  	
  28 Jun 2000

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US11)

  
	
  USSN
  09/940,601

  	
   

  	
  27 Aug 2001

  	
   

  	
  NYU (FGF4)
  (CT4(B)-US12)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US 5,126,323

  	
   

  	
  30 Jun 1992

  	
   

  	
  NYU (FGF4)
  (CT4(R)-US1)

  
	
  US 5,430,019

  	
   

  	
  04 Jul 1995

  	
   

  	
  NYU (FGF4)
  (CT4(R)-US2)

  
	
  PCT/US1990/06702

  	
   

  	
  15 Nov 1990

  	
   

  	
  NYU (FGF4)
  (CT4(R)-PCT)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Prov.
  60/129,550

  	
   

  	
  16 Apr 1999

  	
   

  	
  Yale (eNOS)

  
	
  PCT/US2000/09913

  	
   

  	
  14 Apr 2000

  	
   

  	
  Yale (eNOS)

  
	
  US 6,900,038

  	
   

  	
  31
  May 2005

  	
   

  	
  Yale (eNOS)

  
	
  USSN
  10/889,121

  	
   

  	
  12 Jul 2004

  	
   

  	
  Yale (eNOS)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Prov.
  60/403,637

  	
   

  	
  16 Aug 2002

  	
   

  	
  Berlex
  (eNOS)

  
	
  USSN
  10/642,255

  	
   

  	
  15 Aug 2003

  	
   

  	
  Berlex
  (eNOS)

  
	
  PCT/US2003/025626

  	
   

  	
  15 Aug 2003

  	
   

  	
  Berlex
  (eNOS)

  
	
  Inv.
  Disclosure A-0551 (2004)

  	
   

  	
  (not yet
  filed)

  	
   

  	
  Berlex (eNOS
  + FGF-4)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Prov.
  60/403,638

  	
   

  	
  16 Aug 2002

  	
   

  	
  Berlex
  (eNOS)

  
	
  USSN
  10/641,924

  	
   

  	
  15 Aug 2003

  	
   

  	
  Berlex
  (eNOS)

  
	
  PCT/US2003/025745

  	
   

  	
  15 Aug 2003

  	
   

  	
  Berlex
  (eNOS)

  



 


23





















 


	
  Application/Patent Number

  	
   

  	
  Application/Patent Date

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Prov.
  60/272,034

  	
   

  	
  01 Mar 2001

  	
   

  	
  Berlex (Adv
  Pdn)

  
	
  USSN
  10/085,029

  	
   

  	
  01 Mar 2002

  	
   

  	
  Berlex (Adv
  Pdn)

  
	
  PCT/US2002/05596

  	
   

  	
  27 Feb 2002

  	
   

  	
  Berlex (Adv
  Pdn)

  



 


24





















 


EXHIBIT B


 


Third Party
License Agreements


 


	
  Licensor

  	
   

  	
  Licensee

  	
   

  	
  License Date

  	
   

  	
  Reference

  
	
  New York University

  	
   

  	
  Collateral Therapeutics

  	
   

  	
  24 Mar 1997

  	
   

  	
  FGF-4

  
	
  University of California

  	
   

  	
  Collateral Therapeutics

  	
   

  	
  25 Sep 1995

  	
   

  	
  AGT

  
	
  University of California

  	
   

  	
  Collateral Therapeutics

  	
   

  	
  18 Jun 1997

  	
   

  	
  AGT

  
	
  Veterans Medical Research Found’n

  	
   

  	
  Collateral Therapeutics

  	
   

  	
  9 Nov 1995

  	
   

  	
  AGT

  
	
  Yale University

  	
   

  	
  Schering AG

  	
   

  	
  9 Aug 2000

  	
   

  	
  eNOS

  



 


25