UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: November 22, 2006

Date of Earliest Event Reported: November 17, 2006

ImmunoCellular Therapeutics, Ltd.

(Exact name of registrant as specified in its charter)

 

Delaware   33-17264-NY   11-2856146
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (I.R.S. Employer
Identification No.)

1999 Avenue of the Stars, 11 th Floor

Los Angeles, California

    90067
(Address of principal executive offices)     (Zip Code)

Registrant’s telephone number, including area code: (310) 789-1213

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements. Forward-looking statements are identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under “Risk Factors.” The identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

 

ITEM 1.01.  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Agreements with Cedars-Sinai Medical Center

On September 15, 2006, ImmunoCellular Therapeutics, Ltd. (“ICT”) entered into a binding Memorandum of Agreement, dated as of September 15, 2006, with Cedars-Sinai Medical Center to acquire an exclusive, worldwide license for a cancer vaccine therapy technology that ICT is developing. The parties agreed to use their best efforts to prepare and enter into a definitive license agreement within 60 days from September 15, 2006.

On November 17, 2006, Cedars-Sinai and ICT entered into a definitive Exclusive License Agreement dated as of November 17, 2006, and a related Stock Purchase Agreement, dated as of November 17, 2006, and Registration Rights Agreement, dated as of November 17, 2006.

Under the terms of the Exclusive License Agreement, ICT acquired an exclusive, worldwide license from Cedars-Sinai to certain technology for use as cellular therapies, including dendritic cell-based vaccines for neurological disorders that include brain tumors and neurodegenerative disorders and other cancers. This technology is covered by a number of pending U.S. and foreign patent applications.

As an upfront licensing fee, ICT issued Cedars-Sinai 694,000 shares of ICT common stock at the closing of the licensing agreement transaction and is required to pay $62,000 within 30 days of the closing. Additional specified milestone payments will be required to be paid by ICT to Cedars-Sinai when ICT initiates patient enrollment in its first Phase III clinical trial and when it receives FDA marketing approval for its first product.

ICT has agreed to pay Cedars-Sinai a specified percentage of all sub-licensing income and of ICT’s gross revenues from sales of products produced from the licensed technology, subject to a reduction if ICT must make any payments to any third party whose proprietary rights would be infringed by the sale of the products. To maintain its rights to the licensed technology, ICT must meet certain development and funding milestones. These milestones include, among other things, commencing a Phase I clinical trial for a product candidate by March 31, 2007 and raising at least $5,000,000 in funding from equity or other sources by December 31, 2008.

Pursuant to the Stock Purchase Agreement and Registration Rights Agreement, ICT has agreed to file a registration statement with the Securities and Exchange Commission covering the shares issued to Cedars-Sinai within 60 days of the closing of the licensing transaction.

 

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Agreements with Dr. John Yu

Concurrently with ICT entering into the Memorandum of Agreement with Cedars-Sinai to license the cancer vaccine therapy technology, ICT entered into a binding Memorandum of Agreement, dated as of September 15, 2006 with Dr. John Yu, who was an inventor of the technology and is a full-time employee of Cedars-Sinai. Under this Memorandum of Agreement, Dr. Yu agreed to serve as ICT’s Chief Scientific Officer on a part-time basis for an initial one-year term following the closing of the licensing transaction with Cedars-Sinai. In consideration of Dr. Yu’s relinquishment to Cedars-Sinai of his royalty interest in the cancer vaccine therapy technology to facilitate this transaction, ICT agreed to issue Dr. Yu a number of shares of ICT’s common stock equal to 34% of ICT’s outstanding shares (including shares issuable upon the exercise of certain options and warrants) at the time of the licensing transaction closing. ICT and Dr. Yu agreed to use their best efforts to enter into a definitive agreement within 60 days from September 15, 2006.

On November 17, 2006, Dr. Yu and ICT entered into a definitive Agreement, dated as of November 17, 2006, and a related Securities Agreement, dated as of November 17, 2006, Non-qualified Stock Option Agreement, dated as of November 17, 2006 and Registration Rights Agreement, dated as of November 17, 2006. Under the Agreement, Dr. Yu will serve as ICT’s Chief Scientific Officer for an initial one-year term on a part-time basis and will not receive any compensation for these services except the grant of the stock option described below. Under the terms of the Agreement and the Non-Qualified Stock Option Agreement, ICT granted Dr. Yu (i) an option to purchase 150,000 shares of ICT’s common stock in consideration for his relinquishment of his royalty interest in the cancer vaccine therapy technology and (ii) an option to purchase 5,783,424 shares of ICT’s common stock in consideration of his agreeing to serve as ICT’s Chief Scientific Officer for a one-year term. Both options have an exercise price of $1.00 per share, a term of ten years and were fully vested upon grant. ICT was not required to issue any of the shares to Dr. Yu that were contemplated by the Memorandum of Agreement between the parties.

Pursuant to the Securities Agreement and Registration Rights Agreement, ICT has agreed to file a registration statement with the Securities and Exchange Commission covering the shares issuable upon exercise of Dr. Yu’s options within 60 days of Dr. Yu becoming ICT’s Chief Scientific Officer.

For so long as Dr. Yu owns ICT shares or fully vested immediately exercisable options to purchase ICT shares totaling at least 2,000,000 shares, ICT will use its commercially reasonable efforts to enable Dr. Yu to continue to serve on ICT’s Board of Directors. For so long as Dr. Yu owns ICT shares or fully vested immediately exercisable options to purchase ICT shares totaling at least 4,000,000 shares or at least 5,000,000 shares, ICT will use its commercially reasonable efforts to enable Dr. Yu and either one or two, respectively, of his designees to serve on ICT’s Board of Directors.

 

ITEM 2.01.  COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

As described in Item 1.01 of this Report, ICT has acquired exclusive, worldwide licensing rights to certain technology from Cedars-Sinai, and the terms of this acquisition are set forth in Item 1.01. A more detailed description of the acquired technology is set forth in Item 1.01 of ICT’s Current Report on Form 8-K, dated September 20, 2006, which description is incorporated herein by this reference.

 

ITEM 3.02.  UNREGISTERED SALES OF EQUITY SECURITIES

In connection with the transactions described in Item 1.01 of this Report, ICT issued Cedars-Sinai 694,000 shares of its common stock and granted Dr. John Yu fully vested options with a ten-year term to purchase 5,933,424 shares of ICT common stock at an exercise price of $1.00 per share. The consideration for each of these issuances is described in Item 1.01 of this Report. These securities were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933 for offers and sales that do not involve a public offering.

 

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In October and November 2006, ICT sold a total of 150,000 units at $1.00 per unit to three individuals. Each unit consisted of one share of ICT common stock and a warrant to purchase one additional share of ICT common stock at an exercise price of $2.50 per share that expires on January 30, 2009. These securities were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933 for offers and sales that do not involve a public offering.

 

ITEM 5.01.  CHANGES IN CONTROL OF REGISTRANT

Upon the closing on November 17, 2006 of the cancer vaccine technology acquisition described in Item 1.01 of this Report, ICT granted Dr. John Yu an option to purchase 5,933,424 shares of ICT’s common stock at an exercise price of $1.00 per share, and ICT issued Cedars-Sinai 694,000 shares of ICT’s common stock. Upon the issuance of the shares to Cedars-Sinai, Cedars-Sinai owned 8.5% of ICT’s outstanding shares of common stock and, based on the currently outstanding shares of ICT common stock, Dr. Yu would own approximately 42% of ICT’s outstanding shares of common stock if he exercised all of his options to acquire ICT shares. Under the terms of this transaction, Dr. John Yu will have the right to serve as a director of ICT and to name as many as two other members of ICT’s board of directors, subject to his holding certain specified levels of ICT shares of common stock or options to purchase such shares. ICT currently has an authorized number of directors of five. The issuance of the ICT shares to Dr. Yu upon his exercise of his option and his right to serve as a director and to name two other directors may result in a future change in control of ICT. The shareholders of ICT approved the above issuances and Dr. Yu’s right to serve as a director and to name two other directors of ICT by a written consent of a majority of those shareholders.

 

ITEM 5.02.  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

Dr. Manfred Mosk was elected as ICT’s Non-Executive Chairman of the Board and Dr. John Yu was elected a director of ICT, and David Wohlberg resigned as a director of ICT, all effective as of November 17, 2006.

John S. Yu, M.D., Director and Chief Scientific Officer (age 43)

John S. Yu, M.D. is a member of the full-time faculty in the Department of Neurosurgery at Cedars-Sinai Medical Center. An internationally renowned neurosurgeon, Dr. Yu’s clinical focus is on the treatment of malignant and benign brain and spinal tumors. He is also conducting extensive research in immune and gene therapy for brain tumors. He has also done extensive research in the use of neural stem cells as delivery vehicles for brain cancers and neurodegenerative diseases. He was inducted into Castle and Connelly’s America’s Top Doctors in 2005. Dr. Yu has published articles in a number of prestigious journals, including The Lancet, Cancer Research, Cancer Gene Therapy, Human Gene Therapy, Journal of Neuroimmunology, Journal of Neurological Science and Journal of Neurosurgery. Dr. Yu earned his bachelor’s degree in French literature and biological sciences from Stanford University and spent a year at the Sorbonne in Paris studying French literature. He also pursued a fellowship in immunology at the Institut Pasteur in Paris. He earned his medical degree from Harvard Medical School and master’s degree from the Harvard University’s Department of Genetics. He completed his neurosurgical residency at Massachusetts General Hospital in Boston. In addition, he was a Neuroscience Fellow at the National Institutes of Mental Health in the Neuroimmunology Unit at Massachusetts General Hospital from 1988 to 1989 and was a Culpepper Scholar at the Molecular Neurogenetics Unit at that hospital from 1993 to 1995. His other honors include the Preuss Award, Joint Section on Tumors, American Association of Neurological Surgeons and Congress of Neurologic Surgeons in 1995. He received the Academy Award from the American Academy of Neurological Surgery at its 1996 annual meeting. Other honors include the Young Investigator Award from the Congress of Neurological Surgeons in 2000, the National Brain Tumor Foundation Grant in 2001, and the Mahaley Clinical Research award from the American Association of Neurological Surgeons in 2005.

 

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On November 17, 2006, Dr. Yu entered into an Agreement, dated as of November 17, 2006, to serve as ICT’s Chief Scientific Officer on a part-time basis for a term of one year. Under the terms of the Agreement and the Non-Qualified Stock Option Agreement, ICT granted Dr. Yu (i) an option to purchase 150,000 shares of ICT’s common stock in consideration for his relinquishment of his royalty interest in the cancer vaccine therapy technology and (ii) an option to purchase 5,783,424 shares of ICT’s common stock in consideration of his agreeing to serve as ICT’s Chief Scientific Officer for a one-year term, as more fully described in Item 1.01 of this Report which is incorporated by reference into this Item 5.02. Dr. Yu will continue to be a full-time employee of Cedars-Sinai.

Manfred Mosk, Ph.D., Chairman of the Board of Directors (age 70)

Manfred Mosk, Ph.D. has been the President of Technomedics Management & Systems, Inc., a privately held independent health care economics consulting firm, for more than the past five years. Dr. Mosk currently serves on the Board of Directors of Nondyne, Inc., Oncotx, Inc., UCLA's Jonsson Cancer Center Foundation, The University Kidney Disease Research Associates at USC and the Board of Governors at Cedars-Sinai Medical Center.

Dr. Mosk previously was a co-founder in 2004 and served as the Interim President until April 2005 and a director until November 2005 of Spectral Molecular Imaging, Inc., OMI’s predecessor company. Dr. Mosk previously served as the Non Executive Chairman of Duska Therapeutics, Inc. and on the Board of Directors of Arbios Systems, Inc., The College of Naturopathic Medicine and The California State University Foundation.

Dr. Mosk was the co-founder, former President and CEO of Medco Research, Inc. He voluntarily retired from these positions in 1992 and later rejoined the Board and served again as a director for one year. Medco was subsequently acquired by King Pharmaceuticals, Inc. Under Dr. Mosk's leadership Medco acquired licenses, raised funds, became a public company and developed the first ever approved and marketed adenosine based drug in the US. Dr. Mosk holds B.S., M.S. and Ph.D. degrees in business administration from The California State University and California Western University. Dr. Mosk is a member of a number of professional organizations including the International Society of Stem Cell Research, The New York Academy of Sciences, The National Association of Business Economists, The American Society of Health Economists and the International Society of Pharmacoeconomics and Outcomes Research.

In July 2006, ICT retained Technomedics to assist ICT in identifying and acquiring new technologies and agreed to pay Technomedics a total of $80,000 in four equal monthly installments commencing upon the closing of the Cedars-Sinai licensing transaction.

ICT and Technomedics entered into an Agreement, dated as of November 17, 2006, pursuant to which Dr. Mosk agreed to serve as ICT’s Non-Executive Chairman of the Board on a part-time basis for a one-year term. Dr. Mosk may step down upon 30 days written notice to ICT. Pursuant to the terms of this Agreement, Dr. Mosk was granted options with a seven-year term to purchase a total of 300,000 shares at an exercise price of $1.00 per share, with the option fully vested upon grant as to 150,000 shares and the option for the balance of the shares to vest in four equal quarterly installments following the date of grant. Should Dr. Mosk be asked to step down without cause, all of his outstanding options will be fully vested. Upon Dr. Mosk ceasing to serve as Non-Executive Chairman of the Board for any reason except his being removed for cause, his then fully vested options will be exercisable during their term for up to two years following his ceasing to serve as Non-Executive Chairman of the Board. Under the Agreement, Dr. Mosk may provide consulting services to, or become employed by, and serve on the board of directors and in any other capacity with other persons or entities engaged in investment financing and/or medical and pharmaceutical corporate or other patent and research activities and be compensated for such activities, and any such activities shall not be deemed to constitute an usurpation of a corporate opportunity of ICT or a breach of Dr. Mosk’s obligations, provided that such companies are not developing or marketing products or potential products based on ICT’s products being developed, products for neurodegenerative diseases, and dendritic cell-based vaccines for brain tumors and other cancers.

 

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ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

 

(c) Exhibits

 

Exhibit No.   

Description

10.1    Exclusive License Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.*
10.2    Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT
10.3    Stock Purchase Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.
10.4    Registration Rights Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.
10.5    Securities Purchase Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.
10.6    Nonqualified Stock Option Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.
10.7    Registration Rights Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.

 

* Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by the Registrant with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by the Registrant with the Securities and Exchange Commission.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ImmunoCellular Therapeutics, Ltd.
November 22, 2006     By:    /s/ David Wohlberg
        Name:   David Wohlberg
        Title:   President and Chief Operating Officer

 

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Exhibit Index

 

Exhibit No.   

Description

10.1    Exclusive License Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.*
10.2    Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT
10.3    Stock Purchase Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.
10.4    Registration Rights Agreement, dated as of November 17, 2006, by and between Cedars-Sinai Medical Center and ICT.
10.5    Securities Purchase Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.
10.6    Nonqualified Stock Option Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.
10.7    Registration Rights Agreement, dated as of November 17, 2006, by and between Dr. John Yu and ICT.

 

* Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by the Registrant with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by the Registrant with the Securities and Exchange Commission.

 

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Exhibit 10.1

EXCLUSIVE LICENSE AGREEMENT

THIS EXCLUSIVE LICENSE AGREEMENT (“Agreement”) is entered into this 17 th day of November 2006, and shall be effective as of the date specified in Section 2.7 hereof (“Effective Date”) by and between CEDARS-SINAI MEDICAL CENTER , a California nonprofit public benefit corporation (“CSMC”), with offices at 8700 Beverly Boulevard, Los Angeles, California 90048-1865, and ImmunoCellular Therapeutics, Ltd., a Delaware corporation that was formerly named Optical Molecular Imaging, Inc. (“Licensee”), with offices at 11 th Floor, 1999 Avenue of the Stars, Los Angeles, California 90067.

RECITALS

A. CSMC owns Patent Rights and Technical Information (as defined below) invented or developed in the course of certain research into the diagnosis of diseases and disorders in humans and the prevention and treatment of disorders in humans utilizing cellular therapies, including dendritic cell-based vaccines for brain tumors and other cancers and neurodegenerative disorders at CSMC conducted under the direction of Dr. John Yu (Dr. Yu, hereinafter, “Inventor”; the research, hereinafter, “Research Project”).

B. CSMC desires to have the Patent Rights and the Technical Information developed, used and commercialized in the Field of Use (as defined below) by Licensee, and Licensee desires to obtain an exclusive, worldwide license to conduct research in the Field of Use, and to develop, manufacture, use and sell Products (as defined below) in the Field of Use, using the Patent Rights and Technical Information in accordance with the terms of this Agreement. Other than the rights expressly granted by CSMC hereunder within the Field of Use, Licensee acknowledges that CSMC shall retain all other rights with respect to the Patent Rights and the Technical Information.

C. CSMC and Licensee intend that the execution, delivery and performance of this Agreement by each party, and the consummation of the transactions contemplated hereunder, shall not at any time threaten CSMC’s tax-exempt status under Section 501(c)(3) of the Internal Revenue Code and Section 23701d of the California Revenue and Taxation Code, or cause CSMC to be in default under any of CSMC’s issued and outstanding tax-exempt bonds.

NOW, THEREFORE, in consideration of the mutual covenants and premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Text marked by [ * * *] has been omitted pursuant to a Request for Confidential Treatment and was filed separately with the Securities and Exchange Commission .


1. DEFINITIONS

1.1 Affiliate ” or “ Affiliates ” shall mean any corporation, person or entity, which controls, is controlled by, or is under common control with, a party to this Agreement without regard to stock or other equity ownership. For purposes hereof, the terms “control” and “controls” mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation, person or entity, whether through the ownership of voting securities, by contract or otherwise.

1.2 Confidential Information ” shall mean any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in connection with this Agreement, including, without limitation, all specifications, know how, trade secrets, technical information, drawings, software, models, business information and patent applications pertaining to the Patent Rights and Technical Information, and as further provided in Section 10 hereof.

1.3 FDA ” shall mean the United States Food and Drug Administration, or any successor agency thereof.

1.4 Field of Use ” shall mean cellular therapies or diagnostics utilizing cellular therapies, including dendritic cell-based vaccines for neurological disorders including brain tumors and neurodegenerative disorders and other cancers.

1.5 Funding Agencies ” shall mean any public or private granting agencies which have provided funding to CSMC or to any of the inventors named on the Patent Rights for the development of any of the Patent Rights or Technical Information prior to the Effective Date.

1.6 Future Patent Rights ” shall mean any patents and/or patent applications claiming Inventions invented after the Effective Date through any use of the Patent Rights or Technical Information licensed hereunder arising where such Inventions arise from work conducted by or under the direction of the Inventor (except in the case of Dr. John Yu working in his capacity as Licensee’s Chief Scientific Officer and without using any facilities, resources or personnel of CSMC), and any patents and/or patent applications (including provisional patent applications) in any other country corresponding to any of the foregoing, and all divisions, continuations, continuations-in-part, reissues, reexaminations, supplementary protection certificates and extensions thereof, whether domestic or foreign, and any patent that issues thereon.

1.7 Future Technical Information ” shall mean the following information in the Field of Use developed after the Effective Date through practicing the Inventions claimed in or otherwise directly arising through any of the Patent Rights or Technical Information licensed hereunder where such Inventions or information arises from work conducted by or under the direction of the Inventor (except in the case of Dr. John Yu working in his capacity as Licensee’s Chief Scientific Officer and without using any facilities, resources or personnel of CSMC): Know-how, trade secrets, unpublished patent applications, software, bioinformatics, unpatented technology, technical information, statistical information and analyses, biological materials, chemical reagents, preclinical and clinical information, and any and all confidential and proprietary information described in the Future Patent Rights or Inventions invented after the Effective Date through any use of the Patent Rights or Technical Information.

 

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1.8 Invention ” shall mean all unpatented, patentable and patented inventions, discoveries, designs, apparatuses, systems, machines, methods, processes, uses, devices, models, composition of matter, technical information, trade secrets, know-how, codes, programs or configurations of any kind which are in the Field of Use.

1.9 Licensee Improvements ” shall mean any and all processes, uses, designs, applications, methods and compositions of matter, indications, improvements, enhancements and modifications in the Field of Use directly based upon or directly created using the Patent Rights and/or Technical Information and which were discovered or developed by or on behalf of Licensee (exclusive of work performed by CSMC or the Inventor, except in the case of Dr. John Yu working in his capacity as Licensee’s Chief Scientific Officer and without using any facilities, resources or personnel of CSMC) during the term of this Agreement.

1.10 Patent Rights ” shall mean the patents and/or patent applications existing on the Effective Date which are described on Schedule A attached hereto, and all patents and/or patent applications (including provisional patent applications) existing as of the Effective Date in any other country corresponding to any of the foregoing, and all divisions, continuations, continuations-in-part, reissues, reexaminations, supplementary protection certificates and extensions thereof, whether domestic or foreign, and any patent that issues thereon, excluding any improvements by Dr. John Yu working in his capacity as Licensee’s Chief Scientific Officer. The Patent Rights are all owned by CSMC.

1.11 Product ” or “ Products ” shall mean any human therapeutics, diagnostics (including algorithms or any components thereof), bioinformatics and any other human health care products and/or services in the Field of Use utilizing or derived in any manner whatsoever from any of the Patent Rights, Technical Information or Licensee Improvements, which Product(s), except for the license granted hereunder, would infringe a Valid Claim.

1.12 Technical Information ” shall mean, as of the Effective Date, the following information in the Field of Use which is described in the Patent Rights: Know-how, trade secrets, unpublished patent applications, software, bioinformatics, unpatented technology, technical information, statistical information and analyses, biological materials, chemical reagents, preclinical and clinical information, in each case which has been conceived or reduced to practice prior to the Effective Date, in the conduct of the Research Project at CSMC under the direction of the Inventor. The Technical Information shall be the information in the Field of Use described in Schedule B hereto which is embodied in the Patent Rights and which has been reduced to practice prior to the Effective Date in the conduct of the aforementioned research programs at CSMC under the direction of the Inventor. Technical Information is all owned by CSMC.

1.13 Territory ” shall mean the entire world.

 

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1.14 Valid Claim ” shall mean a claim of a pending patent application or an issued patent included within the Patent Rights or Future Patent Rights licensed to Licensee, which claim has not (a) been pending for longer than ten (10) years after the first commercial sale of a Product, (b) lapsed, been canceled or become abandoned, (c) been declared invalid or unenforceable by a non-appealable decision or judgment of a court or other appropriate body or authority of competent jurisdiction, or (c) been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

 

2. LICENSE

2.1 Grant of Exclusive Rights. Subject to the terms of this Agreement, CSMC hereby grants to Licensee, and Licensee hereby accepts from CSMC, the exclusive, worldwide license, with the right to grant sublicenses (subject to the terms of Section 2.2 hereof), during the term of this Agreement (as provided in Section 6 hereof) to conduct research in the Field of Use using the Patent Rights and the Technical Information and to develop, use, make, have made, practice, import, carry out, manufacture, have manufactured, offer for sale, sell and/or have sold Products in the Field of Use in the Territory using the Patent Rights and the Technical Information. The foregoing grant of exclusivity is made expressly subject to the following:

(a) All applicable laws and regulations, including, without limitation, the requirements of federal law as pertains to the manufacture of products within the United States;

(b) All applicable rules of the Funding Agencies which have provided funding to CSMC or to any of its employees (including any of the inventors named on the Patent Rights) for the development of the Patent Rights and Technical Information, with CSMC disclosing to Licensee concurrently with CSMC’s execution of this Agreement the specific funding, if any, that has been provided by any Funding Agency including the National Institutes of Health, National Brain Tumor Foundation and the Musella Foundation; and

(c) The following non-exclusive rights to the Patent Rights and Technical Information, which are retained by CSMC within the Field of Use:

(i) Subject to Licensee’s right to prior review to determine the patentability thereof (which shall expire after thirty (30) days after Licensee’s receipt thereof), the right to submit for publication the scientific findings from research conducted by or through CSMC or its investigators (including the Inventor) related to the Patent Rights and the Technical Information; and provided further that if Licensee determines to file a patent application, Licensee shall have a further thirty (30) day period thereafter to do so, and CSMC shall delay any publication with respect thereto for that period.

(ii) Except as provided in subparagraph (d) of this Section 2.1, the right (A) to use any tangible or intangible information contained in the Patent Rights or the Technical Information (so long as CSMC shall treat such information as Confidential Information and maintain its confidentiality in accordance with Section 10 hereof), for CSMC’s internal teaching and other educationally-related and non-commercial (except for charges to its own patients) clinical purposes, where clinical use does not involve a third party funding grant to commercialize such information, and (B) to obtain research funding for further study and development thereof from governmental and other nonprofit organizations (including grant applications); and

 

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(iii) Except as provided in subparagraph (d) of this Section 2.1, the right to conduct research using the Patent Rights, Technical Information, Future Patent Rights and Future Technical Information, and to develop, use, make, practice, carry-out, and otherwise exploit the Patent Rights, Technical Information, Future Patent Rights and Future Technical Information for CSMC’s internal research and non-commercial (except for charges to its own patients) clinical purposes, where clinical use does not involve a third party funding grant to commercialize any Product.

(d) Except as provided by Sections 2.3 and 2.6 hereof, CSMC shall not, under any circumstances, grant and/or transfer any rights retained by CSMC under Section 2.1(c) to any third party (other than to Licensee or, where required by applicable law, rule, regulation, governmental policy or contract, to any Funding Agency or the United States Government) to commercialize Inventions or information related thereto derived directly from the Patent Rights or the Technical Information in the Field of Use as a result of CSMC’s teaching and internal research and clinical activities with respect to the Patent Rights and Technical Information otherwise permitted by Sections 2.1(c)(ii) and (iii) above.

(e) Notwithstanding any other provision hereof to the contrary, all rights to the Patent Rights and the Technical Information outside of the Field of Use are retained by CSMC.

(f) The grant of exclusive rights hereunder is made expressly subject to any non-exclusive license and any option granted by CSMC to the Torrey Pines Institute of Molecular Studies (“TPIMS”) per the specific contractual requirements of the April 4, 2006 Material Transfer Agreement (“TPIMS MTA”) between CSMC and TPIMS. CSMC has been informed by the Inventor that the individual peptides included in the Materials (as defined in the TPIMS MTA) consist solely of superagonist peptides that are epitopes of gp100 and HER-2 whose sequences are defined in Schedule C . CSMC shall use commercially reasonable efforts to reacquire, at its expense, any rights of CSMC licensed to TPIMS and any option granted to TPIMS pursuant to the specific contractual requirements of the TPIMS MTA so that CSMC can give Licensee within six (6) months from the Effective Date an exclusive license to all of the Patent Rights subject, however, to a license granted by CSMC to TPIMS for the relevant Patent Rights limited to academic research and other educationally related, non-commercial activities. If CSMC is unable to reacquire the non-academic/educational license rights and terminate the option of TPIMS as described above within the six-month period, the parties’ sole remedy shall be that CSMC and Licensee will negotiate in good faith to determine whether a reduction in the number of shares of Licensee’s common stock issued to CSMC as a license fee pursuant to Section 4.1 is reasonable and appropriate. It is understood and agreed that the grant of a non-exclusive license to the relevant Patent Rights to TPIMS limited to academic research and other educationally related non-commercial activities shall not be considered a basis for negotiating a possible reduction as provided in the previous sentence.

2.2 Right to Sublicense or Assign Rights. Licensee shall have the right to grant sublicenses or to assign any or all of the rights granted hereunder consistent with this Agreement; provided, however, that Licensee shall not sublicense or assign its rights to any part of the Patent Rights or Technical Information licensed under this Agreement, or assign its rights under this Agreement, to any entity (or a subsidiary of such entity) which is not a recognized biopharmaceutical, pharmaceutical or bio-diagnostic company which

 

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either (a) at the time of the sublicense or assignment has annual revenues or a market capitalization for its equity securities of at least One Hundred Million Dollars ($100,000,000), or (b) is generally recognized in such industries and has a level of science, management and investors of such quality as shall be acceptable to CSMC (each, an “Acceptable Assignee”) on the basis of CSMC’s prior written consent (which consent shall not be unreasonably withheld or delayed). In order to preserve and protect the value of the Patent Rights and Technical Information, Licensee shall obtain the prior written consent of CSMC prior to entering into any sublicense or assignment with any party who is not an Acceptable Assignee under clause (a) above. Licensee shall also keep CSMC reasonably informed with respect to the progress of any relations entered into with any sublicenses or assignments entered into by Licensee with any Acceptable Assignee (or any other party for whom CSMC has given its prior written consent). As an express condition of any such sublicense or assignment, any such assignee or sublicensee shall be required to agree in writing to be bound by commercially reasonable royalty reporting and record keeping, indemnification and inspection provisions, and the applicable provisions of this Agreement, including, without limitation, those pertaining to the use of CSMC’s name and marks, indemnification of CSMC and the use of CSMC’s Confidential Information. Licensee will be responsible for enforcing each sublicensee’s obligations under its sublicense and, in particular, royalty payment obligations due on such sublicensee’s sales of Products. If Licensee shall conduct one or more audits of its sublicensees or assignees hereunder during the term hereof, Licensee shall provide copies of all audit reports to CSMC on a timely basis. The covenants pertaining to the use of CSMC’s name and marks, the indemnification of CSMC and the use of CSMC’s Confidential Information in any sublicense or assignment shall run for the benefit of CSMC, who shall be expressly stated as being a third-party beneficiary thereof with respect to the covenants set forth in this Agreement. Licensee understands and agrees that none of its permitted sublicenses hereunder shall reduce in any manner any of its obligations set forth in this Agreement.

2.3 Certain Future Rights. The following shall pertain to Inventions which constitute Future Patent Rights or Future Technical Information: Subject to the rights and applicable rules of the Funding Agencies and subject to the rights of TPIMS under the TPIMS MTA and the license described in Section 2.1(f), Licensee shall have, for a period of one hundred twenty (120) days after either (a) receipt by Licensee of written notice from CSMC disclosing in adequate detail any such Inventions in the Field of Use, or (b) written notification by the Inventor to each of Licensee and CSMC disclosing in adequate detail any such Inventions in the Field of Use, the exclusive first right to negotiate with CSMC to obtain one or more licenses to the Future Patent Rights in the Field of Use and/or Future Technical Information in the Field of Use, upon such terms and conditions as shall be agreed by the parties hereto, which terms and conditions shall include provisions for fair market value consideration for the grant of any such licenses. Subject to the rights and applicable rules of the Funding Agencies or the United States Government, and to the extent it would not impair or jeopardize any efforts of CSMC to obtain domestic or foreign rights thereto, CSMC shall provide Licensee with prompt written disclosure of Future Patent Rights in the Field of Use and/or Future Technical Information in the Field of Use as may be developed by CSMC or the Inventor. If Licensee declines or fails to pursue, or if the parties fail to conclude negotiations for a license to, such Future Patent Rights in the Field of Use and/or Future Technical Information in the Field of Use during the one hundred twenty (120) day period specified above, then CSMC shall have the right to commence discussions with any other party concerning such Future Patent Rights and/or Future Technical Information, but shall not accept terms from any third party that are less favorable to

 

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CSMC than the final offer, if any, made by Licensee during the one hundred twenty (120) days negotiating period. Subject to the provisions of this Section 2.3, Licensee acknowledges and agrees that CSMC expressly retains and reserves any and all right, title and interest in and to the Future Patent Rights and Future Technical Information, whether or not in the Field of Use and, accordingly, no license to any Future Patent Rights or Future Technical Information is granted to Licensee under this Agreement. CSMC shall use its reasonable and continuing efforts during the term of this Agreement, in accordance with its policies and procedures, where appropriate, to file and maintain patent applications claiming Inventions in the Field of Use.

2.4 License to Use Improvements. Licensee hereby grants to CSMC the following nonexclusive, royalty free, fully paid up rights and licenses to the Licensee Improvements:

(a) Subject to Licensee’s right to prior review to determine the patentability thereof within thirty (30) days following receipt by Licensee, the right and license to publish the scientific findings from research conducted by or through Licensee or on its behalf by CSMC or the Inventor related to the Licensee Improvements; and provided further that if Licensee determines to file a patent application, Licensee shall have a further thirty (30) day period thereafter to do so and CSMC’s right and license shall be delayed until completion of that period.

(b) Except as provided below in this Section 2.4, the right and license to use any tangible or intangible information contained in the Licensee Improvements (so long as CSMC shall treat such information as Confidential Information and maintain its confidentiality in accordance with Section 10 hereof), for CSMC’s internal teaching and other educationally-related and non-commercial (except for charges to its own patients) clinical purposes, where clinical use does not involve a third party funding grant to commercialize such information, and to obtain research funding from governmental and other nonprofit organizations (including grant applications); and

(c) Except as provided below in this Section 2.4 and so long as CSMC shall treat such information as Confidential Information and maintain its confidentiality in accordance with Section 10 hereof, the right and license to conduct research using the Licensee Improvements, and to develop, use, make, practice and carry out the Licensee Improvements for CSMC’s internal teaching and research and non-commercial (except for charges to its own patients) clinical purposes, where clinical use does not involve a third party funding grant to commercialize any Product.

Except as provided in Sections 2.3 and 2.6 hereof, CSMC shall not, under any circumstances, grant and/or transfer any rights granted to CSMC under this Section 2.4 to any third party (other than to Licensee or, where required by applicable law, rule, regulation, governmental policy or contract, to any Funding Agency or the United States Government) to commercialize Inventions in the Field of Use resulting directly from the Licensee Improvements as a result of CSMC’s internal research and clinical activities with respect to the Licensee Improvements otherwise permitted by Sections 2.4(b) and (c) above.

 

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2.5 Milestones. Licensee acknowledges that it is important to CSMC, and a requirement of the United States Government under Title 35, Section 203 of the United States Code, that Licensee pursue the development, commercialization and marketing of Products and otherwise exercise commercially reasonable efforts to maximize the value of this Agreement to CSMC. Licensee shall be deemed to have exercised commercially reasonable efforts to maximize the value of this Agreement to CSMC if Licensee has used and is using reasonable efforts to meet the requirements set forth on Schedule D hereto, with each such requirement being deemed a separate and independent condition (each, a “Milestone”). Within sixty (60) days after each anniversary of the Effective Date, Licensee shall prepare and deliver to CSMC an annual written report (to be certified by an executive officer of Licensee) that provides an overview of Licensee’s progress towards achieving each Milestone and its other efforts with respect to the ongoing development, commercialization, and marketing of the Products. If Licensee fails to meet any Milestone, Licensee will have ninety (90) days after notice from CSMC to remedy the default or, if the default is capable of being cured but cannot be remedied within such ninety (90)-day period, as reasonably determined by CSMC and Licensee, to develop a written plan for the cure or other resolution of the default and diligently pursue the same, which plan is subject to the approval of CSMC, not to be unreasonably withheld. During any period when a Milestone has been missed, Licensee will use reasonable diligence to subsequently meet that Milestone. If Licensee does not so remedy the failure, CSMC may within ninety (90) days of CSMC’s receipt of such annual written report, at its option and as its sole remedy for Licensee’s breach of this Section 2.5, upon written notice to Licensee, convert the exclusive license granted under Section 2.1 hereof to a non-exclusive license or to a co-exclusive license, or terminate the license as provided under Title 35, Section 203 of the United States Code, which shall be effective sixty (60) days after such written notice.

2.6 Procedure for Granting Access to Technical Information. The grant of rights by CSMC to Licensee pursuant to Section 2.1 hereof are expressly subject to the following provisions:

(a) Responsibility for Monitoring Access to Technical Information. During the term of this Agreement, the responsibility for monitoring access to the Technical Information (and any Future Technical Information) in the Field of Use at CSMC shall be borne by the Inventor or, in the event that all of the Inventor shall die, become disabled or otherwise cease to be employees of CSMC for whatever reason, the Senior Vice President for Academic Affairs of CSMC (or his or her functional equivalent at CSMC) (the “Gatekeeper”). Subject to Sections 2.1(c), 2.4 and 3.3 hereof, the Gatekeeper shall not grant access to the Technical Information or any Future Technical Information in the Field of Use to any person except as provided in this Section 2.6, and CSMC’s sole responsibility with respect to requests for the grant of access to the Technical Information or any Future Technical Information in the Field of Use by any person shall be to refer all such requests to the Gatekeeper.

(b) Conditions of Access to the Technical Information. As a condition to any use of the Technical Information or Future Technical Information by, and any grant of access to the Technical Information or any Future Technical Information to, any person within the Field of Use during the term of this Agreement, such person shall be required to (i) obtain the prior written consent of the Gatekeeper to obtain the use of or access to the Technical Information or Future Technical Information within the Field of Use, and (ii) after obtaining the Gatekeeper’s prior written consent, execute a material transfer agreement (to be

 

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obtained from the Gatekeeper) in the form customarily employed for such purpose by CSMC. Such material transfer agreement shall identify Licensee’s rights in such Technical Information and/or such Future Technical Information and specify the obligations of the transferee, which obligations shall not be less than those of CSMC under this Agreement. The Gatekeeper shall then promptly provide the executed originals of all such material transfer agreements to CSMC, with an executed copy to Licensee for its records.

(c) Special Situations. Licensee shall obtain the prior written consent of CSMC to any proposed transfer of Technical Information or any Future Technical Information, or any proposed sublicense of any Patent Rights, to any other person or entity for which special notice is provided by CSMC to Licensee under the specific provisions of this Agreement.

2.7 Conditions to Effectiveness. As a condition precedent to the effectiveness of this Agreement, all of the following documents and instruments shall have been fully executed and delivered by each of the parties hereto and thereto: (a) this Agreement, including applicable Schedules A, B, C, D, F and G , (b) that certain Stock Purchase Agreement by and between Licensee and CSMC in the form of that attached hereto as Schedule E (the “Stock Purchase Agreement”), and (c) a stock certificate or certificates in the name of CSMC for the Shares of Licensee as provided in Section 4.1 hereof. For purposes of this Agreement, the “Effective Date” shall mean, and this Agreement shall become effective upon, the date upon which the last of the documents or instruments described in the preceding sentence has been fully executed and delivered by all of the parties hereto and thereto.

2.8 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by CSMC to Licensee are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code and other similar international laws, licenses of rights to “intellectual property” as defined in Section 101 of the U.S. Bankruptcy Code or such international laws. CSMC agrees that Licensee, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code and other similar international laws. CSMC further agrees that, in the event of the commencement of a bankruptcy proceeding by or against CSMC under the U.S. Bankruptcy Code, Licensee shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and the same, if not already in Licensee’s possession, shall be promptly delivered to it (i) upon any such commencement of a bankruptcy proceeding upon its written request therefore, unless CSMC elects to continue to perform all of its obligations under this Agreement, or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of CSMC upon written request therefore by Licensee.

 

3. REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of CSMC. Except for the rights, if any, of the Funding Agencies or the United States Government, CSMC represents and warrants to Licensee that, to the best of its actual, current knowledge (without investigation outside of CSMC as to such representations and warranties) (a) it has the right to grant the licenses in this Agreement, (b) except for the rights granted by CSMC to TPIMS pursuant to the TPIMS MTA and the license described in Section 2.1(f), it has not granted

 

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licenses to the Patent Rights or Technical Information to any other party that would restrict the rights granted hereunder except as stated herein, (c) there are no claims, judgments or settlements to be paid by CSMC with respect the Patent Rights or Technical Information or pending claims or litigation relating to the Patent Rights or Technical Information, (d) it is the sole owner of the Patent Rights and Technical Information, (e) the patents and patent applications in the Patent Rights have been applied for, and (f) it has not received notice from any third party that the Patent Rights or Technical Information infringes the proprietary rights of any third party. Except for any potential or actual rights of Funding Agencies or the United States Government and the rights of TPIMS under the TPIMS MTA and the license described in Section 2.1(f), CSMC is not aware that any additional rights or licenses are necessary for Licensee to exercise its licensed rights granted by CSMC under this Agreement.

3.2 Representations and Warranties of Licensee . Licensee represents and warrants to CSMC that (a) Licensee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of California and has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder; (b) the execution and delivery of this Agreement by Licensee and the performance by Licensee of its obligations hereunder have been duly authorized by all necessary corporate action; (c) this Agreement constitutes the legal, valid and binding obligation of Licensee, enforceable against Licensee in accordance with its terms; (d) neither the execution or delivery of this Agreement by Licensee, nor the performance by Licensee of its obligations hereunder, (i) requires the consent or approval of any third party, except the shareholders of Licensee, which consent has been obtained; (ii) shall constitute a default under any material contract by which Licensee or any of its material assets is bound (or any event which, with notice or lapse of time, or both, would constitute such a default); or (iii) shall constitute a violation of any judgment, order or decree of any court, arbitrator, governmental agency or authority binding upon Licensee; and (e) to the best of Licensee’s actual, current knowledge (without investigation outside of Licensee as to such representations and warranties), Licensee has not granted, and will not grant, licenses to the Patent Rights to any third party that would conflict with or otherwise compromise the rights reserved by Licensor hereunder.

3.3 Limited Warranty. CSMC makes no representation or warranty other than those expressly specified in this Agreement. Licensee accepts the Patent Rights and the Technical Information on an “AS-IS” basis. CSMC MAKES NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHER ATTRIBUTES OF ANY OF THE PATENT RIGHTS OR TECHNICAL INFORMATION.

3.4 Rights Retained by Funding Agencies. Licensee acknowledges that to the extent that the Patent Rights and Technical Information have been developed in part under one or more funding agreements (“Funding Agreements”) with one or more Funding Agencies, such Funding Agencies have certain statutory, non-exclusive rights relative thereto for use for government purposes as well as regulatory or statutory “march-in rights” (collectively, “Statutory Rights”). Licensee also acknowledges that to the extent that the Future Patent Rights and Future Technical Information may be developed in part under one or more Funding Agreements with one or more Funding Agencies, such Funding Agencies may have certain Statutory Rights relative thereto. This Agreement is explicitly made subject to such Statutory Rights and, to the extent of any conflict between any such Statutory Rights and this Agreement, such Statutory Rights shall prevail.

 

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4. CONSIDERATION

In consideration of the execution and delivery by CSMC of this Agreement, Licensee agrees as follows:

4.1 Issuance of Stock. As of the Effective Date, Licensee shall have issued and sold to CSMC shares of the voting common stock of Licensee (the “Shares”) described in the Stock Purchase Agreement as a component of the non-refundable license fee to be paid to CSMC for the license rights granted hereunder. The Shares to be issued to CSMC shall be common stock, with the rights, preferences, privileges and restrictions set forth in the Stock Purchase Agreement and/or in Licensee’s Certificate of Incorporation and other charter documents (“Charter Documents”). Licensee represents and warrants to CSMC that, as of the Effective Date, the total Shares issuable to CSMC hereunder shall equal eight and one-half percent (8.5%), in the aggregate, of the total issued and outstanding shares of Licensee’s capital stock, as more fully described in the capitalization table attached as Schedule F .

4.2 Cash License Fee. Within thirty (30) days of the Effective Date, Licensee shall pay to CSMC a non-refundable license fee in the amount of Sixty Two Thousand Dollars ($62,000).

4.3 Milestone Payments . Within thirty (30) days of initiating patient enrollment in the Phase III clinical trial for its first Product, Licensee shall pay CSMC a non-refundable Milestone Payment in the amount of [ * * * ]. Within sixty (60) days of receiving FDA marketing approval for its first Product, Licensee shall pay CSMC an additional non-refundable Milestone Payment in the amount of [ * * *].

4.4 Payment of Royalties. Licensee shall pay to CSMC certain royalties, which shall be determined and paid in accordance with Schedule G hereto.

4.5 Right of First Consideration . With respect to continued research in the Field of Use, Licensee shall consider CSMC as its external research facility of first choice, for research contracts in excess of Twenty Thousand Dollars ($20,000) for research in the Field of Use (excluding therefrom clinical trials in which CSMC could be considered to be an inappropriate choice by reason of its relationships with the Inventor). Licensee shall notify CSMC in each case where Licensee intends to fund such external research in the Field of Use. Such notice shall specify the general criteria upon which Licensee intends to choose the appropriate facility to conduct the proposed research, and CSMC shall promptly provide such information to Licensee as shall be relevant in demonstrating its ability to meet such criteria. Upon the presentation of such information, CSMC and Licensee shall negotiate in good faith the proposed terms of a research agreement, to be consummated within forty-five (45) days after receipt of detailed written notice from Licensee specifying the research to be conducted. The overhead and other terms of any research agreement offered by CSMC to License shall be the standard overhead rate established for commercial sponsored research at CSMC and using CSMC’s standard sponsored research agreement form.

 

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4.6 Value of License Consideration. CSMC acknowledges and agrees that the royalties and other obligations of Licensee under this Agreement constitute fair market value for the rights granted to Licensee under this Agreement based on arms’-length negotiations with Licensee and an independent evaluation made by CSMC’s outside expert(s).

 

5. PATENT RIGHTS

5.1 Prosecution. Commencing on the Effective Date, Licensee shall assume, in coordination with CSMC, full responsibility for the application, maintenance, reexamination, reissue, opposition and prosecution of any kind (collectively “Prosecution”) relating to the Patent Rights in the Territory, including, but not limited to, payment of all costs, fees and expenses related thereto. Subject to the approval of CSMC (which approval shall not be unreasonably withheld or delayed), Licensee shall have the right to select counsel with respect to the responsibility assumed by Licensee in this Section 5.1, and Licensee shall diligently pursue the Prosecution of the Patent Rights for the benefit of CSMC. For all purposes of the patent Prosecution, CSMC shall be named the “client” of such patent counsel. Each party shall provide the other with copies of any and all material or communications with the United States Patent and Trademark Office, or any foreign patent office, and CSMC shall be afforded the opportunity of prior review and comment on such action or paper.

5.2 Abandonment, Disclaimers, Etc. Licensee shall obtain the prior written consent of CSMC (which consent shall not be unreasonably withheld or delayed), prior to abandoning, disclaiming, withdrawing, seeking reissue or allowing to lapse any material patent, patent application or Licensee Improvements relating to the Patent Rights. In the event that Licensee shall elect to abandon the Prosecution or maintenance of any patent or patent application included in the Patent Rights, Licensee shall notify CSMC of such election at least forty-five (45) days before a final due date which would result in abandonment or bar of patentability of the patent or patent application. In such event, CSMC may, at its sole option and expense, continue Prosecution or maintenance of the patent application or patent. Licensee further agrees that it shall not file any continuation-in-part application relating to the Patent Rights unless the additional disclosure or material to be included in the continuation-in-part application is necessary or appropriate to support the patentability of a claim recited in a parent application on which the continuation-in-part application is based. Prior to filing any continuation-in-part application, Licensee shall consult with CSMC to discuss the need for filing such an application. If CSMC shall disagree with Licensee’s conclusion that such a continuation-in-part application is either necessary or appropriate to support the patentability of a claim recited or capable of being recited in a patent application, then the matter shall be submitted for resolution to independent patent counsel mutually agreed upon by the parties, who will determine whether a continuation-in-part application is necessary or appropriate in accordance with this Section 5.2. Any decision made by such independent patent counsel shall be conclusive and binding on the parties hereto.

5.3 Expenses. Licensee shall pay all expenses resulting from its obligations in Section 5.1 hereof. CSMC shall exercise reasonable efforts to cause the Inventor (to the extent they are available and on CSMC’s staff as employees) to cooperate fully with Licensee with respect to the Prosecution, maintenance and protection of the Patent Rights, and CSMC shall be reimbursed for all reasonable out of pocket expenses as such expenses are incurred.

 

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6. TERM AND TERMINATION

6.1 Term. Unless earlier terminated as provided in Section 6.2 hereof, the term of this Agreement shall commence on the Effective Date and shall expire, on a country-by-country basis, on the date upon which the last to expire of the patents covering the Patent Rights or a Valid Claim shall expire.

6.2 Termination. Except as provided by Section 6.3 hereof, this Agreement shall terminate upon the earliest to occur of the following:

(a) Automatically if Licensee shall enter into a liquidating bankruptcy, be adjudged insolvent, liquidate, dissolve and/or if the business of Licensee shall be placed in the hands of a receiver, assignee, or trustee, whether by voluntary act of Licensee or otherwise; provided, however, that if any such action is involuntary, termination shall not take place unless the action is not reversed within sixty (60) days. Further, Licensee shall give CSMC at least forty-five (45) days’ prior written notice before Licensee initiates any bankruptcy proceeding, and CSMC shall have the right to terminate this Agreement immediately upon receipt of such notice;

(b) Automatically if the performance by either party to this Agreement of any term, covenant, condition or provision hereof (i) shall jeopardize (A) the licensure of CSMC, (B) CSMC’s participation in the Medicare, Medi-Cal or other reimbursement or payment programs, (C) the full accreditation of CSMC by the Joint Commission of Accreditation of Healthcare Organizations or any other state or nationally recognized accreditation organization, or (D) CSMC’s tax-exempt status; or (ii) is deemed illegal or unethical by any recognized governmental agency or body. Upon the occurrence of any of the items set forth in this subparagraph (b), CSMC shall provide written notice to Licensee setting forth the reason for such proposed termination and the parties shall work in good faith to attempt to revise the terms of this Agreement to mitigate the issues described in (i) and (ii) of the preceding sentence while protecting Licensee’s interest in the Patent Rights and Technical Information. If CSMC and Licensee cannot within thirty (30) days from the foregoing notice by CSMC resolve the issues described in (i) and (ii) above through a revision to the terms of this Agreement reasonably satisfactory to CSMC, CSMC may immediately terminate this Agreement upon written notice to Licensee;

(c) Upon thirty (30) days’ written notice from CSMC that a required payment by Licensee is delinquent if, within such thirty (30) day period, Licensee shall fail to pay fully any royalty payment required by Section 4.2 hereof or Schedule G hereto;

(d) Upon sixty (60) days’ written notice from CSMC if, within such sixty (60) day period following notice from CSMC that it is in breach or default, Licensee shall fail to cure fully any breach or default of any material obligation under this Agreement as described in such written notice detailing the facts of such breach with reasonable specificity; provided, however, that Licensee may avoid such termination if, before the end of such 60-day period, such breach or default has been cured by Licensee to the reasonable satisfaction of CSMC;

 

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(e) Upon sixty (60) days’ written notice from Licensee if, within such sixty (60) day period, CSMC shall fail to cure fully any breach or default of any material obligation under this Agreement as described in such written notice detailing the facts of such breach with reasonable specificity; provided, however, that CSMC may avoid such termination if, before the end of such 60 day period, such breach or default has been cured by CSMC to the reasonable satisfaction of Licensee;

(f) Upon the mutual written agreement of the parties hereto (such termination to be effective as of the date mutually agreed upon in such written agreement); or

(g) Upon sixty (60) days’ written notice from Licensee if Licensee voluntarily elects to terminate this Agreement.

6.3 Obligations Upon Termination. Upon any termination of this Agreement pursuant to Section 6.2 hereof, nothing herein shall be construed to release any party from any liability for any obligation incurred through the effective date of termination (e.g., confidentiality, reimbursement of patent expenses incurred prior to such date, etc.) or for any breach of this Agreement prior to the effective date of such termination. Licensee may, for a period of one (1) year after the effective date of such termination, sell all tangible Products customarily classified as “inventory” that it has on hand at the date of termination, subject to payment by Licensee to CSMC of the applicable royalty or royalties, as set forth in Schedule G ; provided, that any such action by Licensee does not subject CSMC to any of the occurrences set forth in Section 6.2(b) hereof.

6.4 Effect of Termination. In the event of any termination of this Agreement pursuant to Section 6.2 hereof, where such termination has not been caused by any action or inaction on the part of any sublicensee of Licensee or by any breach by such sublicensee of its obligations under its sublicense from Licensee, such termination of this Agreement shall be without prejudice to the rights of each non breaching sublicensee of Licensee and each non breaching sublicensee shall be deemed to be a licensee of CSMC thereunder, and CSMC shall be entitled to all rights, but shall not be subject to any obligations (other than the grant of license and appurtenant obligations under this Agreement to the extent provided for in such sublicense) of Licensee thereunder. This Section 6.4, however, shall not be applicable if this Agreement has been terminated under Section 6.2(b) under circumstances where the application of this Section 6.4 would subject CSMC to any of the occurrences set forth in Section 6.2(b).

6.5 Right to Institute Legal Actions. Notwithstanding the provisions of Section 6.2 hereof, but subject to Section 2.5 hereof, CSMC, on the one hand, and Licensee, on the other hand, may institute any other legal action or pursue any other remedy against the other party permitted by applicable law if the other party does not substantially cure any breach or default of any material obligation as provided herein.

6.6 Reversion of Rights. Notwithstanding anything to the contrary set forth herein (including, but not limited to, Section 5 hereof), full responsibility for Prosecution of the Patent Rights shall, at the option of CSMC (exercisable in its sole and absolute discretion), and at its sole expense from the date of reversion, revert to CSMC upon any termination of this Agreement.

 

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7. INFRINGEMENT BY THIRD PARTIES

7.1 Enforcement. Licensee shall have the first right and the obligation to enforce, at its sole expense, any Patent Rights to the extent licensed hereunder against infringement by third parties and shall notify CSMC in writing in advance of all such enforcement efforts. Upon Licensee’s undertaking to pay all expenditures reasonably incurred by CSMC, CSMC shall reasonably cooperate in any such enforcement and, as necessary, join as a party therein. Licensee shall reimburse CSMC for all expenses, including reasonable attorneys’ fees, incurred in connection with any such enforcement. In the event that Licensee does not file suit against or commence and conclude settlement negotiations with a substantial infringer of Patent Rights within ninety (90) days of receipt of a written demand from CSMC that Licensee bring suit, then the parties will consult with one another in an effort to determine whether a reasonably prudent licensee would institute litigation to enforce the patent in question in light of all relevant business and economic factors (including, but not limited to, the projected cost of such litigation, the likelihood of success on the merits, the probable amount of any damage award, the prospects for satisfaction of any judgment against the alleged infringer, the possibility of counterclaims against the parties hereto, the impact of any possible adverse outcome on Licensee and the effect any publicity might have on the parties’ respective reputations and goodwill). If, after such process, it is determined that a suit should be filed and Licensee does not file suit or commence settlement negotiations forthwith against the infringer, then CSMC shall have the right, at its own expense, to enforce any Patent Rights licensed hereunder on behalf of itself and Licensee. Any amount recovered in any such action or suit, whether by judgment or settlement, shall be paid to or retained entirely by whichever party brought the action, or where both parties participate in such action or suit, all such amounts shall be allocated to each party in the ratio of damages incurred, after first paying each party’s out-of-pocket expenses, including reasonable attorneys’ fees.

7.2 Defense Of Patent Rights. In the event that any Patent Rights are the subject of a legal action seeking declaratory relief or of any reexamination or opposition proceeding instituted by a third party, the parties agree to promptly consult with each other concerning the defense of such actions or proceedings. If the parties agree that such defense should be undertaken, then Licensee shall bear the expenses, including attorneys’ fees, associated with such defense and in any recoupment of expenses. If the parties disagree, then the party desiring to defend the action or proceeding may proceed with such defense and will bear its own expenses, and be entitled to all sums recovered.

 

8. INDEMNIFICATION

8.1 Indemnification by Licensee. Subject to Section 8.2 hereof, Licensee shall hold harmless, defend and indemnify CSMC and each of its officers, directors, employees (including the Inventor), agents and sponsors of the research (except Licensee) (each, an “Indemnified Party”, and collectively, the “Indemnified Parties”) from and against any and all claims, damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses and costs of investigation, whether or not suit is filed) suffered or incurred by any of the Indemnified Parties in any action, suit, litigation, arbitration or dispute of any kind (“Action”) arising or resulting from any negligence or willful acts or omissions on the part of Licensee, its Affiliates or permitted sublicensees in connection with (a) their use of the Patent Rights or Technical Information and/or (b) the exercise of their rights hereunder or under any sublicense, including, but not limited to (i) the preclinical development and clinical testing of Products, and (ii) the manufacture,

 

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sale, use, marketing, or other disposition of Products developed, manufactured, sold, marketed, used or otherwise disposed of under this Agreement. The foregoing indemnification shall not apply to any claim, damage, loss, liability, cost or expense to the extent attributable to the negligent activities or intentional misconduct of any of the Indemnified Parties. As part of its obligations hereunder, Licensee shall defend any Action brought against any of the Indemnified Parties with counsel of its own choosing and reasonably acceptable to CSMC, and neither CSMC nor any other Indemnified Party shall enter into any settlement of any such Action without first obtaining prior approval of Licensee. Should CSMC or any other Indemnified Party not afford Licensee the right to defend any such Action, or should CSMC or any other Indemnified Party not obtain the approval of Licensee to any such settlement, Licensee shall have no obligation to indemnify CSMC or any other Indemnified Party hereunder. Should Licensee fail to provide a defense for the Indemnified Parties as required hereunder, then Licensee shall reimburse CSMC for its out-of-pocket expenses (including reasonable attorneys’ fees and expenses and costs of investigation) which are incurred as a result of any investigation, defense or settlement relating to the foregoing, which reimbursement shall be made to CSMC upon receipt by Licensee of invoices reflecting in reasonable detail such expenses incurred by CSMC. Licensee shall obtain and maintain insurance policies (including products liability and general liability policies at such time as is appropriate) which are reasonable and necessary to cover its activities and to comply with the indemnification obligations set forth above. Such insurance policies shall name CSMC as an additional insured party, and shall provide a minimum of Three Million Dollars ($3,000,000) in coverage per occurrence and provide for a thirty (30) day notice to CSMC of any material change in coverage under such policies. Upon initiation of any human clinical studies using a therapeutic molecule covered by the Patent Rights, Licensee shall have first increased its insurance coverage to an aggregate amount that is commercially reasonable and consistent with prevailing business practice for the risks involved. Licensee shall provide CSMC with Certificates of Insurance within thirty (30) days of the Effective Date (subject to extension if reasonably required) and annually thereafter, evidencing the policies required in accordance with this Section 8.1.

8.2 Notice of Claim. CSMC shall promptly notify Licensee in writing of any claim or Action or material threat thereof brought against any Indemnified Party in respect of which indemnification may be sought and, to the extent allowed by law, shall reasonably cooperate with Licensee in defending or settling any such claim or Action. No settlement of any claim, Action or threat thereof received by CSMC and for which CSMC intends to seek indemnification (for itself or on behalf of any other Indemnified Party) shall be made without the prior joint written approval of Licensee and CSMC.

 

9. USE OF NAMES

Licensee shall not, unless as required by any law or governmental regulation, use the name of CSMC, and/or any of its trademarks, service marks, trade names or fictitious business names without express prior written consent of the Vice President for Public Relations and Marketing of CSMC. Further, prior to any reference by Licensee to the names or marks of CSMC in any manner, Licensee shall provide CSMC with a writing reflecting the proposed reference so that CSMC can review the reference within a reasonable period of time prior to the proposed use thereof by Licensee. This limitation includes, but is not limited to, use by Licensee in any regulatory filing, advertising, offering circular, prospectus, sales presentation, news release or trade publication.

 

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Subject to compliance by Licensee with the foregoing, which shall be deemed conditions precedent to any use of CSMC’s name or marks by Licensee, Licensee shall ensure that the name of CSMC is used as scientifically or academically appropriate in the “byline” of any article, abstract, manuscript or any other publication related to the subject matter hereof.

 

10. CONFIDENTIALITY

10.1 Non-Disclosure. Except to the extent Licensee’s counsel determines that disclosure of the terms of this Agreement is required by law, the parties hereto shall keep the terms of this Agreement and all business and scientific discussions relating to the business of the parties strictly confidential. All patient information to which a party is given access by the other party shall be subject to the provisions of the Confidentiality of Medical Information Act (Cal. Civ. Code §§56, et seq.) and the Health Insurance Portability and Accountability Act of 1996, and all regulations promulgated thereunder. It may, from time to time, be necessary for the parties, in connection with performance under this Agreement, to disclose Confidential Information (including know-how) to each other. The Receiving Party (as defined in Section 1.2 hereof) shall keep in strictest confidence the Confidential Information of the Disclosing Party (as defined in Section 1.2 hereof), using the standard of care it normally uses for information of like character, and shall not disclose the Confidential Information to any third party or use it except as expressly authorized by the prior written consent of the Disclosing Party or as otherwise permitted by this Agreement; provided, however, that Licensee may disclose the Confidential Information received from CSMC to its Affiliates and sublicensees as shall be reasonably necessary to carry out the intent of this Agreement or any sublicense granted by Licensee as contemplated by this Agreement if, but only if, such Affiliates and/or sublicensees each execute a confidentiality agreement containing confidentiality provisions no less restrictive than those confidentiality provisions contained in this Section 10. The Receiving Party’s obligation hereunder shall not apply to Confidential Information that the Receiving Party can show:

(a) Is or later becomes part of the public domain through no fault or neglect of the Receiving Party;

(b) Is received in good faith from a third party having no obligations of confidentiality to the Disclosing Party, provided that the Receiving Party complies with any restrictions imposed by the third party;

(c) Is independently developed by the Receiving Party without use of the Disclosing Party’s Confidential Information; or

(d) Is required by law or regulation to be disclosed (including, without limitation, in connection with FDA filings, filings with another government agency or as required under the California Public Records Act), provided that the Receiving Party uses reasonable efforts to restrict disclosure and to obtain confidential treatment.

10.2 Limits on Permitted Disclosures. Each party agrees that any disclosure or distribution of the other party’s Confidential Information within its own organization shall be made only as is reasonably necessary to carry out the intent of this Agreement.

 

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The parties further agree that all of their respective officers, employees, agents, representatives or approved sublicensees to whom any Confidential Information is disclosed or distributed shall have agreed to maintain its confidentiality. In such event, the Receiving Party shall identify with reasonable particularity, upon request by the Disclosing Party, each person within the Receiving Party’s organization to whom the Receiving Party has disclosed or distributed Confidential Information.

10.3 Legally Required Disclosures. If a subpoena or other legal process concerning Confidential Information is served upon any party hereto pertaining to the subject matter hereof, the party served shall notify the other party immediately, the other party shall cooperate with the party served, at the other party’s expense, in any effort to contest the validity of such subpoena or other legal process. This Section 10.3 shall not be construed in any way to limit any party’s ability to satisfy any disclosure of its relationship with the other party required by any governmental authority.

10.4 Patent Rights as Confidential Information. The Patent Rights are understood by Licensee to be the Confidential Information of CSMC to the extent “unpublished” as such term is construed under the United States Patent Laws. As such, Licensee’s confidentiality obligations hereunder automatically extend to any and all Technical Information and to any and all patent applications of CSMC relating to any Patent Rights, Technical Information, Future Patent Rights and Future Technical Information and to any and all communications with the United States Patent Office, and any foreign patent office relating to any Patent Rights, Technical Information, Future Patent Rights or Future Technical Information.

10.5 Return of Confidential Information. In the event of any termination of this Agreement, the Receiving Party shall promptly return all Confidential Information and any copies made thereof previously made available to the Receiving Party by the Disclosing Party, except that the Receiving Party may retain one copy of the Confidential Information in the custody of its chief legal officer solely for the purpose of monitoring compliance with this Agreement.

10.6 Remedies. Both parties acknowledge and agree that it would be difficult to measure damages for breach by either party of the covenants set forth in this Section 10, and that injury from any such breach would be incalculable, and that money damages would therefore be an inadequate remedy for any such breach. Accordingly, either party shall be entitled, in addition to all other remedies available hereunder or under law or equity, to injunctive or such other equitable relief as a court may deem appropriate to restrain or remedy any breach of such covenants.

 

11. INFORMATION EXCHANGE

In addition to the Patent Rights and Technical Information, the parties shall cooperate to exchange such non confidential information as may be appropriate and necessary to facilitate Licensee’s development and commercialization of Products incorporating any Patent Rights or Technical Information.

 

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12. PATENT MARKING

In the event any Product is the subject of a patent under the Patent Rights or Future Patent Rights, Licensee shall mark all products made, sold or otherwise disposed of by or on behalf of it or any of its sublicensees with the word “Patented” followed by the number of the licensed patent. In such case, Licensee shall mark any Product made using a process or method covered by any such Patent Rights or Future Patent Rights with the number of each such patent and, if such Product is covered by Future Patent Rights, Licensee shall respond to any request or disclosure under Title 35, Section 287(b)(4)(B) of the United States Code by only notifying CSMC of the request for disclosure.

 

13. MISCELLANEOUS

13.1 Notices. Any notice, request, instruction or other document required by this Agreement shall be in writing and shall be deemed to have been given (a) if mailed with the United States Postal Service by prepaid, first class, certified mail, return receipt requested, at the time of receipt by the intended recipient, (b) if sent by Federal Express ® , Airborne ® , or other overnight carrier, signature of delivery required, at the time of receipt by the intended recipient, or (c) if sent by facsimile transmission, when so sent and when receipt has been acknowledged by appropriate telephone or facsimile receipt, addressed as follows:

In the case of Inventor:

Dr. John Yu

Suite 800E

8631 West Third Street

Los Angeles, CA 90048

Fax: (310) 423-1038

or in the case of CSMC to:

Cedars Sinai Medical Center

Room 2009, North Tower

8700 Beverly Boulevard

Los Angeles, California 90048-1865

Attention: Senior Vice President for

Academic Affairs

Fax: (310) 423-0119

 

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with a copy to

Cedars-Sinai Medical Center

8701 W. Third Street, Suite 290

Los Angeles, California 90048

Attn: Vice President for Legal Affairs

Fax: (310) 423-0101

or in the case of Licensee to:

ImmunoCellular Therapeutics, Ltd.

11 th Floor

1999 Avenue of the Stars

Los Angeles, California 90067

Fax: (310) 201-4746

with a copy to

Sanford J. Hillsberg

Troy & Gould Professional Corporation

1801 Century Park East, Suite 1600

Los Angeles, California 90067

Fax: (310) 201-4746

or to such other address or to such other person(s) as may be given from time to time under the terms of this Section 13.1.

13.2 Compliance with Laws. Each party shall comply with all applicable federal, state and local laws and regulations in connection with its activities pursuant to this Agreement.

13.3 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the United States of America and of the State of California, irrespective of choice of laws provisions. The parties agree that Los Angeles, California shall be the situs of any legal proceeding arising out of or relating to this Agreement.

13.4 Waiver. Failure of any party to enforce a right under this Agreement shall not act as a waiver of that right or the ability to assert that right relative to the particular situation involved.

13.5 Enforceability. If any provision of this Agreement shall be found by a court of competent jurisdiction to be void, invalid or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the validity or enforceability of the remainder of this Agreement.

 

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13.6 Modification. No change, modification, or addition or amendment to this Agreement, or waiver of any term or condition of this Agreement, is valid or enforceable unless in writing and signed and dated by the authorized officers of the parties to this Agreement.

13.7 Entire Agreement. This Agreement, the Schedules hereto (which are incorporated herein by this reference as if fully set forth herein) and the Stock Purchase Agreement constitute the entire agreements among the parties with respect to the subject matter hereof and thereof, and replace and supersede as of the date hereof and thereof any and all prior agreements and understandings, whether oral or written, between the parties with respect to the subject matter of such agreements.

13.8 Successors. Except as otherwise expressly provided in this Agreement, this Agreement shall be binding upon, inures to the benefit of, and is enforceable by, the parties and their respective heirs, legal representatives, successors and permitted assigns.

13.9 Construction. This Agreement has been prepared, examined, negotiated and revised by each party and their respective attorneys, and no implication shall be drawn and no provision shall be construed against any party to this Agreement by virtue of the purported identity of the drafter of this Agreement or any portion thereof.

13.10 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall constitute one and the same instrument. This Agreement may be executed by facsimile.

13.11 Attorneys’ Fees. In the event of any action at law or in equity between the parties hereto to enforce any of the provisions hereof, the unsuccessful party to such litigation shall pay to the successful party all reasonable costs and expenses, including reasonable attorneys’ fees, incurred therein by such successful party; and if such successful party shall recover a judgment in any such action or proceeding, such reasonable costs, expenses and attorneys’ fees may be included in and as part of such judgment.

13.12 Assignment. This Agreement shall be binding upon and shall inure to the benefit of each party and its respective successors and permitted assigns. This Agreement is personal to Licensee and only assignable by Licensee in accordance with Section 2.2, or in connection with the merger, consolidation or sale of all or substantially all of Licensee’s assets or that portion of its business to which this Agreement relates; provided, however, that if the company involved in the merger, consolidation or sale does not have an annual revenue or market capitalization for its equity securities of at least One Hundred Million Dollars ($100,000,000), Licensee must first obtain CSMC’s consent as provided in Section 2.2. CSMC shall have the right to assign its rights hereunder as part of any reorganization or bond financing.

13.13 Further Assurances. At any time and from time to time after the Effective Date, each party shall do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, assignments or assurances as may be reasonably required to consummate the transactions contemplated by this Agreement.

 

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13.14 Survival. The following sections shall survive any expiration or earlier termination of this Agreement: Section 2.1(c) (retention of certain non-exclusive rights by CSMC), Section 8 (“Indemnification”), Section 9 (“Use of Names”) and Section 10 (“Confidentiality”). The provisions set forth in Schedule G also shall survive any expiration or earlier termination of this Agreement, to the extent set forth therein.

13.15 Force Majeure. Neither party will be responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, earthquake, acts of terrorism, war or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove these causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the delaying causes are removed.

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written.

 

Date: November 17, 2006     “LICENSEE”:
   

IMMUNOCELLULAR THERAPEUTICS, LTD.,

A DELAWARE CORPORATION

    By:     /s/ David Wohlberg
        David Wohlberg
        President
    “CSMC”:
   

CEDARS SINAI MEDICAL CENTER,

A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION

    By:   /s/ Richard S. Katzman
        Richard S. Katzman
        Vice President for Academic Affairs
Date: November 17, 2006     By:   /s/ Edward M. Prunchunas
        Edward M. Prunchunas
        Senior Vice President for Finance and CFO

 

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ACKNOWLEDGED AND AGREED:
“INVENTOR”:
/s/ John Yu
John Yu, M.D.

 

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SCHEDULE LISTING

 

Schedule A

   Patent Rights

Schedule B

   Technical Information

Schedule C

   Peptide Sequences

Schedule D

   Milestones

Schedule E

   Form of Stock Purchase Agreement

Schedule F

   Licensee Capitalization Table

Schedule G

   Royalty Provisions

 

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SCHEDULE G

ROYALTY PROVISIONS

All capitalized terms not otherwise defined in this Schedule G shall have the meanings ascribed to them in the Exclusive License Agreement to which this Schedule G is attached (the “Agreement”).

1. Royalties. Licensee shall pay, or cause to be paid, to CSMC aggregate royalty fees (each, a “Royalty” and collectively, the “Royalties”) equal to (i) [ * * * ] of the amount of the Gross Sales Price (as defined in Paragraph 6(a) below) received by Licensee or its Affiliates from the Sale (as defined in Paragraph 6(b) below) of Products or Intellectual Property (as defined in Paragraph 6(d) below) to non-Affiliate parties, and (ii) [ * * * ] of all Sublicense Income (as defined in Paragraph 6(c) below) received from any sublicensee.

Licensee may not sell Products to any distributor or other third party other than for a reasonable price arrived at through arms’-length negotiations.

2. No Duplicative Royalties. Subject to the provisions of Paragraph 1 above, in those circumstances in which a Royalty is payable to CSMC from the sale of a Product by an Affiliate of Licensee, and in which a royalty is also payable to Licensee from the Sale of the same Product by the same Affiliate, then Licensee shall not be required to pay a Royalty to CSMC with respect to the royalties so received by Licensee on the same Product, if and to the extent the required royalty is received by CSMC from the Affiliate. This exclusion is intended to avoid the payment of duplicative royalties, shall be strictly construed, and shall not apply to other forms of compensation paid to Licensee by its Affiliates.

3. Reduction in Royalty Rates; Suspension of Obligations.

(a) In the event that no patent with respect to any Patent Rights issues within ten (10) years after the first commercial sale of a Product, but at least one claim within the Patent Rights is still pending in one or more patent applications, then the Royalty payable on the Sale of a Product shall be reduced to [ * * * ] of the amount of the Gross Sales Price received by Licensee or its Affiliates. This reduction shall apply prospectively only and shall continue only until such time, if ever as a patent covering any such Patent Right is issued.

(b) In the event that Licensee is legally prevented from commercializing one or more Products as a result of patent infringement issues relating to the Patent Rights, all of Licensee’s obligations with respect to such Products, including, without limitation, Royalty and other payment obligations under this Schedule G , milestone and diligence obligations related to that particular Product in that jurisdiction, shall be suspended unless and until such patent infringement issues are resolved. In the event that any such issues are not resolved during the term of the Agreement, or in the event that such issues are resolved in a manner that would continue to prevent Licensee from commercializing such Products, then Licensee shall have no further obligations hereunder with respect to such Products.

 

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4. Payment and Accounting.

(a) Payment Terms and Reports. Royalties shall accrue and be payable by Licensee on a quarterly basis within forty five (45) days following the end of each calendar quarter in which any Sale of a Product or receipt of Sublicense Income occurs. Each payment of Royalties shall be accompanied by a statement setting forth in reasonable detail (i) with respect to Sales of Products, the number and each type of Product sold and the Gross Sales Price applicable thereto, (ii) with respect to Sales of Intellectual Property, the nature of the Sale and revenues applicable thereto, (iii) the party paying the Sublicense Income and the nature and amount of such income, and (iv) such additional details as may be reasonably requested by CSMC for the determination of Royalties payable hereunder. Except as otherwise provided in Paragraph 4(c) or (e) of this Schedule G , all Royalties shall be paid in United States dollars and shall be made without set off (except as expressly provided in Paragraph 6 below) and free and clear of (and without any deduction or withholding for) any taxes, duties, levies, imposts or similar fees or charges.

(b) Records and Audits. Licensee shall create and maintain complete and accurate records and documentation concerning all Sales of Products or Intellectual Property by Licensee and its Affiliates and all Sublicensing Income from sublicensees in sufficient detail to enable the Royalties payable hereunder to be determined. Licensee shall retain such records and documentation for not less than seven (7) years from the date of their creation. For a period of three (3) years after any quarterly Royalty period, CSMC and its representatives shall have the right to audit such records and documentation for that period as shall pertain to the determination and payment of Royalties. Such examiners shall have reasonable access during regular business hours to Licensee’s offices and the relevant records, files and books of account, and shall have the right to examine any other records reasonably necessary to determine the accuracy of the calculations provided by Licensee under this Schedule G . The costs of any such audit shall be borne by CSMC, unless as a result of such inspection it is determined that the amounts payable by Licensee for any period are in error by five percent (5%), in which case the costs of such audit shall be borne by Licensee. CSMC shall report the results of any such audit to Licensee within forty five (45) days of completion. Thereafter, Licensee shall promptly pay to CSMC the amount of any underpayment discovered in such audit, or CSMC shall credit to Licensee against future Royalty payments the amount of any overpayment discovered in such audit, as the case may be. Any amounts owed by CSMC to Licensee due to any overpayment of the required Royalty not recovered within six months through the credit described in the preceding sentence shall promptly be paid by CSMC to Licensee. In addition, Licensee shall pay interest on any underpayment at the rate that is the lower of (i) two percent (2%) over the rate of interest announced by Bank of America in Los Angeles, California (or any successor in interest thereto or any commercially equivalent financial institution if no such successor exists) to be its “prime rate”, or (ii) the highest rate permitted by applicable law, from the date such amount was underpaid to the date payment is actually received.

(c) Currency Transfer Restrictions. If any restrictions on the transfer of currency exist in any country or other jurisdiction so as to prevent Licensee from making payments to CSMC, Licensee shall take all commercially reasonable steps to obtain a waiver of such restrictions or to otherwise enable Licensee to make such payments. If Licensee is unable to do so, Licensee shall make such payments to CSMC in a bank account or other

 

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depository designated by CSMC in such country or jurisdiction, which payments shall be in the local currency of such country or jurisdiction, unless payment in United States dollars is permitted. Any payment by Licensee to CSMC on the basis of Sales of Products or Intellectual Property in currencies other than United States dollars shall be calculated using the appropriate foreign exchange rate for such currency quoted in the California edition of The Wall Street Journal for the close of business of the last banking day of the calendar quarter in which such payment is being made.

(d) Late Charges. A service charge of two percent (2%) per month, not to exceed the maximum rate allowed by applicable law, shall be payable by Licensee on any portion of Licensee’s outstanding Royalty balance that is not paid to CSMC within thirty (30) days past the due date.

(e) Taxes. Licensee shall pay, or cause to be paid, any and all taxes required to be paid or withheld on any sales, licenses or other transfers for value of Products or Intellectual Property (other than taxes imposed on the income or revenues of CSMC). Where applicable, the amounts of any such withholding or similar taxes shall be deducted or withheld from the total amount of payments otherwise due to CSMC hereunder. Upon CSMC’s request, Licensee shall secure and send to CSMC proof of any such taxes withheld and paid by Licensee or its Affiliates.

5. Right of Offset. In the event that Licensee reasonably determines that any Product infringes upon the rights of a third party (because of the use of the Patent Rights or the Technical Information in the manufacture, use or sale of such Product) and, as a result, Licensee, its Affiliate or a sublicensee becomes obliged to obtain a license from such third party to such rights, then, in lieu of any other right or remedy, Licensee shall have the right to deduct from the Royalties otherwise payable hereunder with respect to such Product the amount, up to a maximum of [ * * * ] of the Royalties otherwise payable, that Licensee is obliged to pay under the license in order to obtain from the third party whose rights are so infringed the right to such Product.

6. Certain Definitions.

(a) “Gross Sales Price” means the gross amount of all revenues (whether in the form of cash, property or otherwise) received by Licensee or its Affiliates from the sale, license or other transfer for value of Products or Intellectual Property less (but only to the extent separately itemized as a part of the gross price charged): (i) transportation, handling, insurance and sales taxes, (ii) rebates and other allowances actually paid or allowed and which are standard and customary in the industry, and (iii) sales commissions to third party distributors actually paid; provided, however, that no other deduction shall be made for royalties, commissions, costs of collection or similar items payable with respect to the Royalty Bearing Products or Intellectual Property. For the purposes of the definition of “Gross Sales Price”, it is acknowledged and agreed by the parties that Sales to wholly-owned subsidiaries of Licensee shall not be included. In the event that Product is sold in the form of a Combination Product (a fixed-dose combination product containing two or more separate drug components in a single dosage form) then the Gross Sales Price for such Combination Product will be calculated by multiplying the actual Gross Sales Price of such Combination Product by the fraction A/(A+B+C) where: A is the average sales price of the Product contained in the

 

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Combination Product if sold separately by Licensee or its Affiliate, B is the average sales price of any other active ingredients in the Combination Product if sold separately by Licensee or its Affiliate or a third party, and C is the cost of combining Product with the other active ingredient(s). In the event that the Product is sold in the form of a Combination Product containing one or more active ingredients other than the Product and one or more such active ingredients of the Combination Product are not sold separately, then the parties shall jointly select an individual pricing expert who shall set the formula for determining the Gross Sales Price for such Combination Product and such expert’s determination shall be binding. The cost of retaining the expert shall be shared equally between the parties.

(b) “Sales” means the sale, license or other transfer for value. Sales do not include the sale of Products at or below the fully burdened cost of manufacturing solely for research or clinical testing or for indigent or similar public support or compassionate use programs.

(c) “Sublicense Income” means payments that Licensee receives from a sublicensee in consideration of the sublicense of the rights granted Licensee under Section 2.1 of the Agreement, including without limitation license fees, royalties and milestone payments, but excluding the following payments: (i) payments made in consideration for the issuance of equity or debt securities of Licensee, (ii) payments specifically committed under the terms of Licensee’s agreement with the sublicensee for the development by Licensee of Products, and (iii) milestone payments based on achievement of milestones for which Licensee is required to make payments to CSMC pursuant to Section 4.3 of the Agreement.

(d) “Intellectual Property” means the Patent Rights, Future Patent Rights, Technical Information and Future Technical Information.

 

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EXHIBIT 10.2

AGREEMENT

This Agreement (“Agreement”) is made and entered into as of this 17th day of November 2006 by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation (“the Company”), and Dr. John Yu (“Dr. Yu”).

A. Cedars-Sinai Medical Center (“CSMC”) is the sole owner of certain provisional patents and other proprietary intellectual property, relating to the work of Dr. Yu with cellular therapies or diagnostics utilizing cellular therapies, including dendritic cell based vaccines for brain tumors and other cancers (the “Field of Use”). The Field of Use is further described and specifically limited to the intellectual property listed in Exhibit A hereto (the “Immunocellular Technology”).

B. Dr. Yu and others are inventors of the Immunocellular Technology, and Dr. Yu has significant expertise and experience in the field of the Immunocellular Technology.

C. The Company has entered into an agreement with CSMC (the “License Agreement”) to license the Immunocellular Technology from CSMC for the purpose of developing and commercializing products based on the Immunocellular Technology in the Field of Use.

D. The Company wishes to have Dr. Yu serve as a director of the Company and its Chief Scientific Officer, and Dr. Yu is willing to serve in those capacities on the terms and conditions described herein.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Company and Dr. Yu hereby agree as follows:

1. Effective Date . The grant of the option to purchase shares of the Company’s common stock to Dr. Yu described in Section 2 and the commencement of the term of Dr. Yu’s services to the Company described in Section 3 shall occur on the date on which the license granted under the License Agreement becomes effective (the “Effective Date”).

2. Grant of Option . On or prior to the Effective Date, Dr. Yu and the Company shall enter into the Securities Agreement and Registration Rights Agreement (collectively, the “Securities Agreements”) in the forms attached hereto as Exhibit B. On the Effective Date, the Company shall grant to Dr. Yu an option (the “Yu Option”) to purchase the number of shares of the Company’s common stock set forth in the Securities Agreements on the terms and conditions set forth in the Securities Agreements. The consideration for the purchase price for the Yu Option shall consist of (a) with respect to 150,000 shares covered by the Yu Option, Dr. Yu’s assignment of his royalty interest in the Immunocellular Technology to CSMC to facilitate CSMC’s license of that technology to the Company under the License Agreement, and (b) with respect to the balance of the shares covered by the Yu Option, Dr. Yu’s agreement to provide services under Section 3 hereof.

 

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3. Services . Dr. Yu agrees to provide to the Company services in the capacity of the Company’s Chief Scientific Officer (the “Services”). Dr. Yu will report directly to and be responsible to the Company’s Chairman of the Board. Dr. Yu will perform the Services primarily at the Company’s office (which shall be within a ten-mile radius from CSMC), and, if required in particular circumstances, from time to time at such other locations as the Company’s Chairman of the Board may reasonably request. The Services will be those customarily performed by a Chief Scientific Officer for a company such as the Company; provided, however that Dr. Yu shall provide the Services on a part-time basis. The Company acknowledges that Dr. Yu is a full-time employee of CSMC and that Dr. Yu has pre-existing obligations to CSMC and will continue to be subject to the policies and procedures of CSMC. Pursuant to the Full Time Faculty Consulting Guidelines of CSMC, Dr. Yu has received the consent of CSMC to participate in the activities of the Company. A copy of the Consent Memorandum has been provided to the Company. Company and Dr. Yu agree that each will comply with the Consent Memorandum and, in the event of a conflict between this agreement and the Consent Memorandum, the terms and conditions of the Consent Memorandum shall control

4. Term . The term for which the Services shall be performed shall commence on the Effective Date and shall terminate one year thereafter, unless sooner terminated by Dr. Yu or the Company as set forth in Section 12.

5. Management . Dr. Yu shall be elected to the Company’s Board of Directors on the Effective Date. For so long as Dr. Yu owns or has fully vested and immediately exercisable options to acquire an aggregate of at least 2,000,000 shares of the Company’s common stock, the Company shall use its commercially reasonable efforts to enable Dr. Yu to serve as a director of the Company. For so long as Dr. Yu owns or has fully vested and immediately exercisable options to acquire an aggregate of at least 4,000,000 shares of the Company’s common stock, the Company shall use its commercially reasonable efforts to enable Dr. Yu to designate one additional member of the Company’s Board of Directors in addition to himself. For so long as Dr. Yu owns or has fully vested and immediately exercisable options to acquire an aggregate of at least 5,000,000 shares of the Company’s common stock, the Company shall use its commercially reasonable efforts to enable Dr. Yu to designate two additional members of the Company’s Board of Directors in addition to himself. On the Effective Date, the Company’s Board of Directors shall consist of Dr. Yu, Manfred Mosk, Ph.D. (“Mosk”), Sanford Hillsberg, Esq. and two of the Company’s other current directors. Dr. Yu shall have the right at any time to designate one or two of the Company’s directors in addition to himself, as set forth in this Section 5. The Company shall use commercially reasonable efforts to maintain directors and officers liability insurance with limits of liability of not less than $3,000,000 at all times. David Wohlberg and C. Kirk Peacock shall continue to serve on a part-time basis as the Company’s President and Chief Financial Officer, respectively, subject to their replacement on 30-days notice by the Company’s Board of Directors.

 

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6. Compensation and Benefits .

6.1 Compensation . With the exception of the Yu Option, the Company shall have no obligation to pay any compensation or grant any stock options to Dr. Yu in consideration of his providing the Services or serving as a director of the Company.

6.2 Expenses . The Company shall reimburse Dr. Yu for necessary and reasonable out-of-pocket business expenses incurred by Dr. Yu in the performance of this Agreement in accordance with the reimbursement policies of the Company in effect from time to time.

6.3 No Benefits . Dr. Yu acknowledges and agrees that he will not be eligible for any Company employee benefits and, to the extent he otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, Dr. Yu hereby expressly declines to participate in such Company employee benefits.

6.4 Withholding; Indemnification . Dr. Yu shall have full responsibility for applicable withholding taxes for all compensation paid to him under this Agreement. Dr. Yu agrees to indemnify, defend and hold the Company harmless from any liability for, or assessment of, any claims or penalties with respect to such withholding taxes, labor or employment requirements, including any liability for, or assessment of, withholding taxes imposed on the Company by the relevant taxing authorities with respect to any compensation paid to Dr. Yu.

7. Dr. Yu Representations . Dr. Yu represents and warrants that, to the best of his knowledge, (i) CSMC is the sole owner of the Immunocellular Technology and the patent applications and inventions listed in Exhibit A to this Memorandum; that the patent applications listed in Exhibit A to this Agreement have been validly applied for, and (ii) that CSMC has not received notice from any third party that the Immunocellular Technology infringes the proprietary rights of any third party. Dr. Yu represents and warrants that he can enter into this Agreement and perform the services contemplated by this Agreement without violating any other contract or arrangement that he has with CSMC or any other third party.

8. Company Representations . The Company represents and warrants to Dr. Yu that (a) the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of California and has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder; (b) the execution and delivery of this Agreement by the Company and the performance by the Company of its obligations hereunder have been duly authorized by all necessary corporate action; and (c) neither the execution or delivery of this Agreement by the Company, nor the performance by the Company of its obligations hereunder, (i) requires the consent or approval of any third party other than the approval by the shareholders of the Company of the grant of the Yu Option and the issuance of shares of the Company common stock to CSMC and Dr. Yu, which has been obtained; (ii) shall constitute a default under any material contract by which the Company or any of its material assets is bound (or any event which, with notice or lapse of time, or both, would constitute a default); or (iii) shall constitute a violation of any judgment, order or decree of any court, arbitrator, governmental agency or authority binding upon the Company. The Company also represents and warrants to Dr. Yu that ownership of the Company’s spectral molecular imaging technology (including all contractual and other obligations directly related to that technology) was transferred to Dr. Daniel Farkas prior to the date of this Agreement.

 

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9. Proprietary Rights . All inventions, improvements, discoveries, copyrightable or patentable works, intellectual property, whether or not patentable or copyrightable, and all other work performed and all materials developed or prepared by Dr. Yu, in connection with the Services provided to the Company in connection with the Immunocellular Technology, whether developed or prepared solely or jointly by Dr. Yu with others, are the property of the Company and, as between Dr. Yu and the Company, all rights, title and interest therein shall vest in the Company and shall be deemed to be works made for hire and made in the course of the services described above. To the extent that title to any such works may not, by operation of law, vest in the Company or such works may not be considered works made for hire, all rights, title and interest therein are hereby irrevocably assigned to the Company. All such materials shall belong exclusively to the Company, and the Company shall have the right to obtain and to hold in its own name, copyrights, trademarks, patents, other registrations, or such other protection as may be appropriate to the subject matter, and any extensions and renewals thereof. Dr. Yu agrees to give the Company and any person designated by the Company such reasonable assistance, at the Company’s expense, as is required to perfect the rights defined in this Section. Dr. Yu agrees to return to the Company all materials developed or prepared for the Company by Dr. Yu upon the termination of this Agreement, along with all materials and other property of the Company in Dr. Yu’s possession at the time of termination of this Agreement.

10. Confidential Information .

10.1 Confidentiality Obligations . “Confidential Information” means, collectively: (a) business or technical information of the Company, including but not limited to information relating to the Company’s product plans, designs, costs, product prices and names, finances, marketing plans, business opportunities, personnel, research, development or know-how; (b) any information designated by the Company as “confidential” or “proprietary” or which, under the circumstances taken as a whole, would reasonably be deemed to be confidential; and (c) the terms and conditions of this Agreement. Dr. Yu hereby agrees that, except with respect to any required disclosure to CSMC (which he shall disclose in writing to the Company, including a description of the Confidential Information required to be disclosed, before making such disclosure to CSMC, unless such disclosure relates to a patient safety issue (in which case he shall promptly advise the Company in writing after making such safety issue disclosure to CSMC)), he (x) will not disclose to any third party or use any Confidential Information disclosed to him by the Company except as expressly permitted in this Agreement; (y) will not disclose to the Company any Confidential Information of any third party disclosed to him by such third party without the prior written consent of such third party; and (z) will take all reasonable measures to maintain the confidentiality of all Confidential Information of the Company in his possession or control.

10.2 Exclusions . “Confidential Information” will not include information that is: (i) already lawfully known by the receiving party prior to this Agreement without restriction, (ii) in the public domain due to no fault of the receiving party, (iii) rightfully obtained by the receiving party without similar restriction from such party, (iv) independently developed by the

 

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receiving party without reference to the other party’s confidential information, or (v) provided by the disclosing party to another party without similar restriction.

11. Indemnity . Dr. Yu agrees to indemnify and hold the Company harmless from and against any and all claims, demands, causes of action, losses, damages, liabilities, costs, and expenses, including attorneys’ fees, arising from a breach of any of his representations and warranties herein or attributable to or resulting from his gross negligence or willful misconduct in rendering the Services. The Company agrees to indemnify and hold Dr. Yu harmless from and against any and all claims, demands, causes of action, losses, damages, liability, costs and expenses, including attorneys fees arising out of his services hereunder, other than those arising from Dr. Yu’s breach of any of his representations and warranties hereunder or Dr. Yu’s gross negligence or willful misconduct.

12. Termination of Services . The term for which the Services will be provided will terminate in advance of the times specified in Section 4 as follows:

12.1 Death . The term of the Services shall terminate immediately upon Dr. Yu’s death.

12.2 Termination by the Company . In the event that Dr. Yu shall become either physically or mentally incapacitated so as to be incapable of performing his duties as required hereunder, and if such incapacity shall continue for a period of 45 consecutive days, the Company may, at its option, terminate the term of the Services and Dr. Yu’s duties hereunder by written notice to Dr. Yu at that time or at any time thereafter while such incapacity continues. The Company may terminate the term of the Services for Cause (as hereinafter defined) at any time upon written notice to Dr. Yu. “Cause” as used in this Agreement means that Dr. Yu, (i) after reasonable notice and warning, has failed to perform his assigned duties to the Company as determined by the Board of Directors, (ii) has materially breached any of the terms or conditions of this Agreement and has failed to correct such breach within 15 days following written notice from the Company of such breach, or (iii) has been charged with a felony or any intentionally fraudulent act that materially damages, or could reasonably be expected to materially damage, the business or reputation of the Company.

12.3 Termination by Dr. Yu . Dr. Yu may terminate the term of the Services at any time upon written notice to the Company if (a) at any time if Dr. Yu is not serving as a director of the Company if he is involuntarily removed, or (b) the Company shall have materially breached any of the provisions of this Agreement and has failed to correct such breach within 15 days following written notice from Dr. Yu of such breach.

13. General Terms .

13.1 Assignment . This Agreement is personal to Dr. Yu. He may not sell, transfer, sublicense, subcontract, hypothecate or assign his rights and duties under this Agreement without the prior written consent of the Company. The Company may freely assign its rights and obligations under this Agreement.

 

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13.2 Notices . Any notices or communications under this Agreement shall be in writing and shall be hand-delivered or sent by certified mail (return receipt requested), or telecopied, or overnight couriered to the party receiving such communication at the address specified below:

 

If to the Company:

  

David Wohlberg, President

ImmunoCellular Therapeutics, Ltd.

11 th Floor

1999 Avenue of the Stars

Los Angeles, CA 90067

If to Dr. Yu:

  

Dr. John Yu

Suite 800E

8631 West Third Street

Los Angeles, CA 90048

or such other address or addressee as either party may in the future specify to the other party.

13.3 California Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, excluding its conflicts of laws provisions.

13.4 Dispute Resolution . Any dispute arising out of or relating to this Agreement shall be decided by binding arbitration by JAMS and shall be held in Los Angeles, California. The ruling of the arbitrator shall be final and may be enforced by any party to such arbitration in any court of competent jurisdiction located in Los Angeles, California.

13.5 Amendment . No modification, amendment, supplement to or waiver of the provisions of this Agreement shall be binding upon the parties hereto unless made in writing and duly signed by both parties.

13.6 Waiver . A failure of either party to exercise any right provided for herein shall not be deemed to be a waiver of any right hereunder.

13.7 Entire Agreement . This Agreement together with the Securities Agreements, sets forth the entire understanding of the parties as to the subject matter therein and may not be modified except in writing executed by both parties.

13.8 Severability . In the event any one or more of the provisions of this Agreement is invalid or otherwise unenforceable, the enforceability of the remaining provisions shall be unimpaired.

13.9 Survival . The following Sections shall survive the termination of this Agreement: 9 (Proprietary Rights), 10 (Confidentiality) and 11 (Indemnity).

13.10 Attorneys Fees . If an arbitration or other legal proceeding is brought to enforce or interpret the provisions of this Agreement or as to the rights or obligations of any party to this Agreement, the prevailing party in such action shall be entitled to recover its reasonable attorneys’ fees and costs.

 

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13.11 Disclosure . The terms of this Agreement may be publicly disclosed by the Company to the extent the Company’s counsel determines that such disclosure is required by law. The Company shall provide CSMC and Dr. Yu with a copy of any such disclosure for their review at least three days prior to making such disclosure.

IN WITNESS WHEREOF, the parties hereto, each acting under due and proper authority, have executed this Agreement as of the date set forth above.

 

    IMMUNOCELLULAR THERAPEUTICS, LTD.
/s/ Dr. John Yu     By:   /s/ David Wohlberg
Dr. John Yu       Name: David Wohlberg
        Title:   President
Date: November 17, 2006     Date: November 17, 2006

 

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EXHIBIT 10.3

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (“Agreement”) is made and entered into by and between Cedars-Sinai Medical Center, a California nonprofit public benefit corporation (“CSMC”) and ImmunoCellular Therapeutics, Ltd., a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”) as of this 17th day of November, 2006.

RECITALS

A. CSMC and the Company have entered into an Exclusive License Agreement dated as of November 17, 2006 (the “License Agreement”).

B. Under the terms of the License Agreement, the Company has agreed to issue certain shares of the Company’s common stock, par value $.0001 per share (the “Company Stock”) to CSMC.

NOW THEREFORE, in consideration of the mutual covenants and premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Sale and Purchase of Shares .

1.1 Sale and Issuance of the Shares . The Company will sell and issue to CSMC and CSMC will purchase from the Company a number of duly authorized, validly issued, fully paid and non-assessable shares of the Company Stock (the “Shares”) that will constitute eight and one-half percent (8.5%) of the total issued and outstanding shares of the Company Stock on the Effective Date (as defined in the License Agreement), as calculated below. The consideration for the purchase price to be paid for the Shares by CSMC shall consist of CSMC’s agreement to enter into the License Agreement and grant the license to the Company described therein without the payment of any other licensing fee by the Company to CSMC. Nothing in the preceding sentence shall act as a limitation on any provisions contained in the License Agreement obligating the Company to pay CSMC Royalties, Sublicense Income, Milestone payments (as such terms are defined therein) or to reimburse CSMC for certain patent costs as provided therein. The number of outstanding shares of Company Stock on the Effective Date shall consist of all shares issued and outstanding on that date, including all of the shares to be issued to Dr. John Yu on that date in connection with the Company and CSMC entering into the License Agreement.

1.2 Closing . The closing of the sale of the Shares shall take place on the Effective Date at the offices of Troy & Gould Professional Corporation, Suite 1600, 1801 Century Park East, Los Angeles, California 90067 at 9:00 a.m., Los Angeles time (such closing being called hereinafter the “Closing”). At the Closing the Company shall issue and deliver to CSMC a stock certificate or certificates in definitive form, registered in the name of CSMC representing the Shares. The parties also shall deliver to each other at the Closing an executed copy of the Registration Rights Agreement described in Section 4.3 hereof.


2. Representations and Warranties of the Company . The Company represents and warrants to CSMC as of the date hereof and as of the Effective Date as follows:

2.1 Corporate Power; Authorization . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of California and has the corporate power and authority to enter into this Agreement and the Registration Rights Agreement, and to perform its obligations hereunder and thereunder. Upon its execution and delivery, each of this Agreement and the Registration Rights Agreement will be a valid and binding obligation of the Company, enforceable in accordance with its respective terms, except as limited by applicable bankruptcy or other laws of general application affecting enforcement of creditors’ rights. The consummation of the sale of the Shares contemplated herein and the fulfillment of the terms hereof, and the performance by the Company of its obligations under the Registration Rights Agreement will not (i) result in a breach of any of the terms or provisions of, or constitute a default under the Company’s Certificate of Incorporation, the Company’s Bylaws, or any material indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or its material assets is bound (or any event which, with notice or lapse of time, or both, would constitute such a default), (ii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any of its assets, or (iii) require the consent or approval of any third party, except the Company’s stockholders, which has been obtained.

2.2 Shares . The Company has full corporate power and lawful authority to issue the Shares to CSMC on the terms and conditions contemplated herein, and when so issued against payment therefor as provided herein, the Shares will be validly authorized and issued, fully paid and non-assessable, and shall constitute eight and one-half percent (8.5%) of the issued and outstanding shares of the Company Stock on the Effective Date. The issuance and delivery of the Shares is not subject to preemptive or any similar rights of the stockholders of the Company.

2.3 Capitalization . The authorized capital stock of the Company consists of (i) 25,000,000 shares of common stock, of which 7,470,717 shares are outstanding as of the date of this Agreement and (ii) 1,000,000 shares of preferred stock, none of which are outstanding. The Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006 discloses as of such date the number of all outstanding options or warrants for the purchase of, or rights to purchase or subscribe for, or securities convertible into, exchangeable for, or otherwise entitling the holder to acquire, shares of Company Stock or other capital stock of the Company, or any contracts or commitments to issue or sell shares of Company Stock or other capital stock of the Company or any such options, warrants, rights or other securities, and from such date to the date hereof there has been, no material change in the amount or terms of any of the foregoing except for the grant of options to purchase shares of Company Stock pursuant to the Company’s stock option plan in effect on the date of this Agreement.

 

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2.4 Approvals, Filings, Etc . No authorization, approval or consent of, or filing with, any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market is required to be obtained or made by the Company for (i) the execution, delivery and performance by the Company of this Agreement or the Registration Rights Agreement, (ii) the issuance and sale of the Shares as contemplated by this Agreement and (iii) the performance by the Company of its obligations under this Agreement and the Registration Rights Agreement, other than (a) as may be required under applicable state securities or “blue sky” laws, and (b) the filing of a Form D with the Securities and Exchange Commission (“SEC”) with respect to the Shares as required under Regulation D promulgated under the Securities Act of 1933, as amended (the “1933 Act”).

2.5 SEC Filings . The Company has timely filed all reports required to be filed under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and any other material reports or documents required to be filed with the SEC since January 31, 2006 (the “SEC Filings”). Except as set forth in the SEC filings, all of such reports and documents complied, when filed, in all material respects, with all applicable requirements of the 1933 Act and the 1934 Act.

2.6 Investment Company . The Company is not an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

2.7 Absence of Brokers, Finders, Etc . With the exception of the Company’s agreement to pay certain consulting fees to Technomedics Management & Systems, Inc., no broker, finder or similar person or entity is entitled to any commission, fee or other compensation by reason of action taken by or on behalf of the Company in connection with the transactions contemplated by this Agreement. The Company shall pay, and indemnify and hold harmless CSMC, its Affiliates (as such term is defined in the License Agreement) and each of their respective officers, directors, trustees, members, employees, agents and representatives (collectively, “CSMC Parties”) from any claim made against any of the CSMC Parties by any person or entity for any such commissions, fee or other compensation.

3. Representations and Warranties of CSMC . CSMC hereby represents and warrants to the Company as of the date hereof and as of the Effective Date as follows:

3.1 Authority . CSMC has the full power and authority to enter into this Agreement and the Registration Rights Agreement, and to perform its obligations hereunder and thereunder. Upon its execution and delivery, each of this Agreement and the Registration Rights Agreement will be a valid and binding obligation of CSMC, enforceable in accordance with its respective terms, except as limited by applicable bankruptcy or other laws of general application affecting enforcement of creditors’ rights.

3.2 Investment Experience . CSMC reasonably believes that it has received all the information it considers necessary or appropriate to enable it to decide whether to purchase the Shares. CSMC has had an opportunity to become aware of the Company’s business affairs and financial conditions, has had an opportunity to ask questions and receive answers, review documents and gather

 

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information about the Company and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. CSMC has such business and financial experience as is required to give it the capacity to protect its own interests in connection with the purchase of the Shares and can bear the economic risk of its investment.

3.3 Investment Intent . CSMC is purchasing the Shares for investment for its own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the 1933 Act. CSMC has no present intention of selling, granting any participation in, or otherwise distributing the Shares, except in compliance with the 1933 Act or pursuant to an available exemption thereunder.

3.4 Restricted Securities . CSMC understands that the Shares have not been registered under the 1933 Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of CSMC’s investment intent as expressed herein. CSMC is familiar with Rule 144 under the 1933 Act, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act.

3.5 No Legal, Tax or Investment Advice . CSMC understands that nothing in this Agreement or any other materials presented to CSMC in connection with the acquisition of the Shares constitutes legal, tax or investment advice. CSMC has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its acquisition of the Shares.

4. Restrictions on Transfer and Registration Rights .

4.1 Restrictions on Transferability . The Shares shall not be transferable in the absence of registration under the 1933 Act and any applicable state securities laws or exemptions therefrom.

4.2 Restrictive Legends . Each certificate representing the Shares shall bear substantially the following legend:

THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SHARES SHALL THEN BE IN EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION WITH RESPECT TO ANY PROPOSED TRANSFER OR DISPOSITION OF SUCH SHARES SHALL BE ESTABLISHED BY AN OPINION OF COUNSEL TO THE HOLDER SATISFACTORY TO COUNSEL FOR THE CORPORATION.

 

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Notwithstanding the above, CSMC (or any authorized subsequent holder of the Shares) may request that the Company remove any such legend from the certificate(s) evidencing the Shares or issue to CSMC (or to such holder) new certificate(s) therefor that are free of such legend if, with such request, the Company shall have received an opinion of counsel, which opinion is reasonably satisfactory to the Company, to the effect that any such transfer by CSMC (or said holder) of the Shares will not violate the securities laws of the United States or any applicable state laws.

4.3 Registration Rights . CSMC shall have the registration rights with respect to the Shares as set forth in the Registration Rights Agreement between CSMC and the Company attached as Exhibit A hereto (the “Registration Rights Agreement”) to be executed and delivered by the parties at the Closing.

5. Miscellaneous .

5.1 Notices . Any notice, request, instruction or other document required by this Agreement shall be in writing and shall be deemed to have been given (a) if mailed with the United States Postal Service by prepaid, first class, certified mail, return receipt requested, at the time of receipt by the intended recipient, (b) if sent by Federal Express ® , Airborne ® , or other overnight carrier, signature of delivery required, at the time of receipt by the intended recipient, or (c) if sent by facsimile transmission, when so sent and when receipt has been acknowledged by appropriate telephone or facsimile receipt, addressed as follows:

In the case of CSMC to:

Cedars Sinai Medical Center

Room 2009, North Tower

8700 Beverly Boulevard

Los Angeles, California 90048-1865

Attention: Senior Vice President for

Academic Affairs

Fax: (310) 423-0119

or in the case of the Company to:

ImmunoCellular Therapeutics, Ltd.

11th Floor

1999 Avenue of the Stars

Los Angeles, California 90067

Fax: (310) 201-4746

 

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with a copy to

Sanford J. Hillsberg

Troy & Gould Professional Corporation

1801 Century Park East, Suite 1600

Los Angeles, California 90067

Fax: (310) 201-4746

or to such other address or to such other person(s) as may be given from time to time under the terms of this Section 13.1.

5.2 Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the United States of America and of the State of California, irrespective of choice of laws provisions. The parties agree that Los Angeles, California shall be the situs of any legal proceeding arising out of or relating to this Agreement.

5.3 Waiver . Failure of any party to enforce a right under this Agreement shall not act as a waiver of that right or the ability to assert that right relative to the particular situation involved.

5.4 Enforceability . If any provision of this Agreement shall be found by a court of competent jurisdiction to be void, invalid or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the validity or enforceability of the remainder of this Agreement.

5.5 Modification . No change, modification, or addition or amendment to this Agreement, or waiver of any term or condition of this Agreement, is valid or enforceable unless in writing and signed and dated by the authorized officers of the parties to this Agreement.

5.6 Entire Agreement . This Agreement, the Registration Rights Agreement and the License Agreement constitute the entire agreements among the parties with respect to the subject matter hereof and thereof, and replace and supersede as of the date hereof and thereof any and all prior agreements and understandings, whether oral or written, between the parties with respect to the subject matter of such agreements.

5.7 Construction . This Agreement has been prepared, examined, negotiated and revised by each party and their respective attorneys, and no implication shall be drawn and no provision shall be construed against any party to this Agreement by virtue of the purported identity of the drafter of this Agreement or any portion thereof.

5.8 Counterparts . This Agreement may be executed simultaneously in one or more counterparts, each of which shall constitute one and the same instrument. This Agreement may be executed by facsimile.

5.9 Attorneys’ Fees . In the event of any action at law or in equity between the parties hereto to enforce any of the provisions hereof, the unsuccessful party to such litigation shall pay to the successful party all reasonable costs and expenses, not limited to taxable costs, and including but not limited to reasonable attorneys’ fees, incurred therein by such successful party; and if such successful party shall recover a judgment in any such action or proceeding, such reasonable costs, expenses and attorneys’ fees may be included in and as part of such judgment.

 

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5.10 Assignment . This Agreement shall be binding upon and shall inure to the benefit of each party and its respective successors and assigns.

5.11 Further Assurances . At any time and from time to time after the Effective Date, each party shall do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, assignments or assurances as may be reasonably required to consummate the transactions contemplated by this Agreement.

5.12 Force Majeure . Neither party will be responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, earthquake, war, acts of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove these causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the delaying causes are removed.

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written.

 

Date: November 17, 2006     “THE COMPANY”:
   

IMMUNOCELLULAR THERAPEUTICS, LTD.,

A DELAWARE CORPORATION

    By:   /s/ David Wohlberg
        David Wohlberg
        President
Date: November 17, 2006     “CSMC”:
   

CEDARS SINAI MEDICAL CENTER,

A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION

    By:   /s/ Shlomo Melmed, M.D.
        Shlomo Melmed, M.D.
        Senior Vice President for
        Academic Affairs

 

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Date: November 17, 2006     By:   /s/ Edward M. Prunchunas
        Edward M. Prunchunas
        Senior Vice President for Finance and CFO

 

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EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 17, 2006, by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”), and Cedars-Sinai Medical Center, a California nonprofit public benefit corporation (“Shareholder”).

RECITALS

WHEREAS, the Company previously has agreed to register the shares of the Company’s common stock and common stock issuable upon exercise of the warrants held by certain of the Company’s securityholders (the “Other Shareholders”); and

WHEREAS, the Company has agreed, pursuant to the terms of the Stock Purchase Agreement, dated November 17, 2006 between the Company and CSMC (the “Stock Purchase Agreement”) to register the shares of the Company’s common stock to be issued to CSMC (the “CSMC Shares”) under the terms of the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

1. Definitions .

As used in this Agreement, the following terms have the respective meanings set forth below:

Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

Exchange Act : shall mean the Securities Exchange Act of 1934, as amended.

Holder and Holders means (i) the Shareholder and the Other Shareholders and (ii) any person holding Registrable Securities to whom the registration rights under this Agreement have been validly transferred.

Person : shall mean an individual, partnership, limited liability company, joint stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof.

Register , Registered and Registration : shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement.

 

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Registrable Securities : shall mean (i) the CSMC Shares, (ii) those shares of the Company’s common stock issued or issuable to the Other Shareholders and to be registered as described above, and (iii) any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of the Company’s common stock referred to in (i) or (ii) above; provided, that Registrable Securities shall not include (a) such securities as are eligible for sale pursuant to Rule 144(k) (or any successor provision thereto) under the Securities Act (“Rule 144(k)”), or (b) such securities as have been registered under the Securities Act and subsequently sold by the Holder.

Registration Expenses : shall mean all expenses incurred by the Company in compliance with Sections 2.1 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, “blue sky” fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

Securities Act : shall mean the Securities Act of 1933, as amended.

Selling Expenses : shall mean all underwriting discounts and selling commissions applicable to the Registrable Securities registered by the Holders.

2. Registration Rights .

2.1 Registration . On or prior to 60 days from the Closing (as defined in the Stock Purchase Agreement), the Company shall file a registration statement (the “Registration Statement”), covering all of the Registrable Securities and thereafter shall use its commercially reasonable best efforts to as soon as practicable effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations).

If requested, the Company shall, together with all Holders proposing to sell their Registrable Securities in such registration in an underwritten distribution (the “Initiating Holders”), enter into an underwriting agreement in customary form with an investment banking firm or firms selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company’s reasonable approval. The Company may, at its option, include shares held by other securityholders of the Company in any such registration statement filed under this Section 2.1. Notwithstanding the foregoing, if in the good faith judgment of the managing underwriter of such public offering, the inclusion of all of the Registrable Securities requested to be registered would materially and adversely affect the successful marketing of the offering, then the amount of the securities to be included in the offering shall be reduced and the Registrable Securities and the other shares to be offered shall participate in such offering as follows: (i) first, the Registrable Securities requested to be included in such registration by the Initiating Holders, and if two or more Initiating Holders are included in the registration, pro rata among the Initiating Holders on the basis of the number of Registrable Securities owned by each such Initiating Holder, and (ii) second, the shares requested to be included in such registration by any stockholder other than the Initiating Holders, in any manner determined by the Company

 

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(including in any manner specified in any agreement between the Company and such other stockholders). If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company.

2.2 Expenses of Registration . All Registration Expenses incurred in connection with the registration pursuant to Section 2.1 shall be borne by the Company, including, but not limited to, printing, legal and accounting expenses, SEC filing fees and “blue sky” fees and expenses; provided, however, that the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of counsel for the Holders in connection with the registration of their Registrable Securities, (ii) any portion of the underwriter’s commissions or discounts, expense allowance or fees or stock transfer taxes attributable to the Registrable Securities being offered and sold by the Holders of Registrable Securities, or (iii) any of such expenses if the payment of such expenses by the Company is prohibited by the laws of a state in which such offering is qualified and only to the extent so prohibited. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

2.3 Registration Procedures . In the case of the registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will:

(a) Prepare and file with the Commission the Registration Statement and such amendments and supplements as may be necessary and use its commercially reasonable best efforts to cause the Registration Statement to become and remain effective until (i) the first anniversary following the date the Registration Statement is declared effective, or (ii) all of the Registrable Securities included in the Registration Statement have been sold, whichever comes first, except that the Company shall be permitted to suspend the use of the Registration Statement during certain periods as set forth below in this Section 2.3; and

(b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

Notwithstanding the foregoing, the Company shall notify each Holder whose securities are included in the registration of the happening of any event which makes any statement made in the Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement or prospectus so that, in the case of the Registration Statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such event, the Company may suspend use of the prospectus on written notice to each participating Holder, in which case each

 

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participating Holder shall not dispose of Registrable Securities covered by the Registration Statement or prospectus until copies of a supplemented or amended prospectus are distributed to the participating Holders or until the participating Holders are advised in writing by the Company that the use of the applicable prospectus may be resumed (the period of such suspension shall be a “Blackout Period”). The Company shall ensure that the use of the prospectus may be resumed as soon as practicable. The Company shall, upon the occurrence of any event contemplated by this paragraph, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In the event that the Company declares one or more Blackout Periods, the one-year anniversary period set forth in Section 2.3(a) shall be extended by the number of days that constitute any such Blackout Periods.

2.4 Indemnification .

(a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder for use therein.

(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its officers and directors, each person who controls the Company within the meaning of Section 15 of the Securities Act, each other holder of the Company’s securities covered by the Registration Statement, and each such holder’s officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state

 

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therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other holders, such officers, directors, or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other holders or their officers, directors, or control persons, only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in the Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company in writing by such Holder. Notwithstanding the foregoing, the liability of each Holder under this Section 2.4(b) shall be limited to an amount equal to the net proceeds from the offering received by such Holder. A Holder will not be required to enter into any agreement or undertaking in connection with any registration under this Section 2 providing for any indemnification or contribution on the part of such Holder greater than the Holder’s obligations under this Section 2.4(b).

(c) Each party entitled to indemnification under this Section 2.4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

3. Termination of Registration Rights . The registration rights granted pursuant to Section 2.1 of this Agreement shall terminate upon the first anniversary of the effective date of the Registration Statement.

 

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4. Transfer of Rights . The rights granted under Section 2 of this Agreement may be assigned to any transferee or assignee in connection with any transfer or assignment by the Holder of such Holder’s Registrable Securities, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) written notice is promptly given to the Company; and (iii) such transferee or assignee agrees in writing to be bound by the provisions of this Agreement and by any other agreement reasonably necessary to ensure compliance with the Federal and state securities laws.

5. Lock-Up . In the event the Company seeks to sell shares of its securities in an underwritten public offering, the Company may, at the request of the underwriter for such offering, impose on each Holder a so-called “lock-up” period in connection with the public offering of not more than 90 days from the effective date of the registration statement for the public offering covering all of the Holder’s shares of the Company’s common stock.

6. Miscellaneous .

6.1 Consent to Jurisdiction . The Company and the Holders (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court and the courts of the State of California located in Los Angeles, California, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each Holder consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.1 shall affect or limit any right to serve process in any other manner permitted by law.

6.2 Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and a majority in interest of the Holders.

6.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., Eastern Standard Time, on a business day, (ii) the first business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., Eastern Standard Time, on any date and earlier than 11:59 p.m., Eastern Standard Time, on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) actual receipt by the party to whom such notice is required to be given.

 

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  (x) if to the Company:

 

    ImmunoCellular Therapeutics, Ltd.
    11th Floor
    1999 Avenue of the Stars
    Los Angeles, California 90067
    Fax: (310) 201-4746

 

  (y) if to CSMC:

 

    Cedars Sinai Medical Center
    Room 2009, North Tower
    8700 Beverly Boulevard
    Los Angeles, California 90048-1865
    Attention: Senior Vice President for Academic Affairs
    Fax: (310) 423-0119

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice.

6.4 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

6.5 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

6.6 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law thereof. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

6.7 Severability . If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.8 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

“THE COMPANY”:

IMMUNOCELLULAR THERAPEUTICS, LTD.,

A DELAWARE CORPORATION

By:   /s/ David Wohlberg
  David Wohlberg
  President
“CSMC”:

CEDARS SINAI MEDICAL CENTER,

A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION

By:   /s/ Shlomo Melmed, M.D.
  Shlomo Melmed, M.D.
  Senior Vice President for
  Academic Affairs
By:   /s/ Edward M. Prunchunas
  Edward M. Prunchunas
  Senior Vice President for Finance and CFO

 

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EXHIBIT 10.4

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 17, 2006, by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”), and Cedars-Sinai Medical Center, a California nonprofit public benefit corporation (“Shareholder”).

RECITALS

WHEREAS, the Company previously has agreed to register the shares of the Company’s common stock and common stock issuable upon exercise of the warrants held by certain of the Company’s securityholders (the “Other Shareholders”); and

WHEREAS, the Company has agreed, pursuant to the terms of the Stock Purchase Agreement, dated November 17, 2006 between the Company and CSMC (the “Stock Purchase Agreement”) to register the shares of the Company’s common stock to be issued to CSMC (the “CSMC Shares”) under the terms of the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

1. Definitions .

As used in this Agreement, the following terms have the respective meanings set forth below:

Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

Exchange Act : shall mean the Securities Exchange Act of 1934, as amended.

Holder and Holders means (i) the Shareholder and the Other Shareholders and (ii) any person holding Registrable Securities to whom the registration rights under this Agreement have been validly transferred.

Person : shall mean an individual, partnership, limited liability company, joint stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof.

 

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Register , Registered and Registration : shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement.

Registrable Securities : shall mean (i) the CSMC Shares, (ii) those shares of the Company’s common stock issued or issuable to the Other Shareholders and to be registered as described above, and (iii) any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of the Company’s common stock referred to in (i) or (ii) above; provided, that Registrable Securities shall not include (a) such securities as are eligible for sale pursuant to Rule 144(k) (or any successor provision thereto) under the Securities Act (“Rule 144(k)”), or (b) such securities as have been registered under the Securities Act and subsequently sold by the Holder.

Registration Expenses : shall mean all expenses incurred by the Company in compliance with Sections 2.1 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, “blue sky” fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

Securities Act : shall mean the Securities Act of 1933, as amended.

Selling Expenses : shall mean all underwriting discounts and selling commissions applicable to the Registrable Securities registered by the Holders.

2. Registration Rights.

2.1 Registration . On or prior to 60 days from the Closing (as defined in the Stock Purchase Agreement), the Company shall file a registration statement (the “Registration Statement”), covering all of the Registrable Securities and thereafter shall use its commercially reasonable best efforts to as soon as practicable effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations).

If requested, the Company shall, together with all Holders proposing to sell their Registrable Securities in such registration in an underwritten distribution (the “Initiating Holders”), enter into an underwriting agreement in customary form with an investment banking firm or firms selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company’s reasonable approval. The Company may, at its option, include shares held by other securityholders of the Company in any such registration statement filed under this Section 2.1. Notwithstanding the foregoing, if in the good faith judgment of the managing underwriter of such public offering, the inclusion of all of the Registrable Securities requested to be registered would materially and adversely affect the successful marketing of the offering, then the amount of the securities to be included in the offering shall be reduced and the Registrable Securities and the other shares to be offered shall participate in such offering as follows: (i) first, the

 

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Registrable Securities requested to be included in such registration by the Initiating Holders, and if two or more Initiating Holders are included in the registration, pro rata among the Initiating Holders on the basis of the number of Registrable Securities owned by each such Initiating Holder, and (ii) second, the shares requested to be included in such registration by any stockholder other than the Initiating Holders, in any manner determined by the Company (including in any manner specified in any agreement between the Company and such other stockholders). If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company.

2.2 Expenses of Registration . All Registration Expenses incurred in connection with the registration pursuant to Section 2.1 shall be borne by the Company, including, but not limited to, printing, legal and accounting expenses, SEC filing fees and “blue sky” fees and expenses; provided, however, that the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of counsel for the Holders in connection with the registration of their Registrable Securities, (ii) any portion of the underwriter’s commissions or discounts, expense allowance or fees or stock transfer taxes attributable to the Registrable Securities being offered and sold by the Holders of Registrable Securities, or (iii) any of such expenses if the payment of such expenses by the Company is prohibited by the laws of a state in which such offering is qualified and only to the extent so prohibited. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

2.3 Registration Procedures . In the case of the registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will:

(a) Prepare and file with the Commission the Registration Statement and such amendments and supplements as may be necessary and use its commercially reasonable best efforts to cause the Registration Statement to become and remain effective until (i) the first anniversary following the date the Registration Statement is declared effective, or (ii) all of the Registrable Securities included in the Registration Statement have been sold, whichever comes first, except that the Company shall be permitted to suspend the use of the Registration Statement during certain periods as set forth below in this Section 2.3; and

(b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

Notwithstanding the foregoing, the Company shall notify each Holder whose securities are included in the registration of the happening of any event which makes any statement made in the Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement or prospectus so that, in the case of the Registration Statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not

 

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misleading, and that in the case of the prospectus, it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such event, the Company may suspend use of the prospectus on written notice to each participating Holder, in which case each participating Holder shall not dispose of Registrable Securities covered by the Registration Statement or prospectus until copies of a supplemented or amended prospectus are distributed to the participating Holders or until the participating Holders are advised in writing by the Company that the use of the applicable prospectus may be resumed (the period of such suspension shall be a “Blackout Period”). The Company shall ensure that the use of the prospectus may be resumed as soon as practicable. The Company shall, upon the occurrence of any event contemplated by this paragraph, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In the event that the Company declares one or more Blackout Periods, the one-year anniversary period set forth in Section 2.3(a) shall be extended by the number of days that constitute any such Blackout Periods.

2.4 Indemnification .

(a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder for use therein.

(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its officers and directors, each person who controls the Company within the meaning of Section 15 of the Securities Act, each other holder of the Company’s securities covered by

 

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the Registration Statement, and each such holder’s officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other holders, such officers, directors, or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other holders or their officers, directors, or control persons, only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in the Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company in writing by such Holder. Notwithstanding the foregoing, the liability of each Holder under this Section 2.4(b) shall be limited to an amount equal to the net proceeds from the offering received by such Holder. A Holder will not be required to enter into any agreement or undertaking in connection with any registration under this Section 2 providing for any indemnification or contribution on the part of such Holder greater than the Holder’s obligations under this Section 2.4(b).

(c) Each party entitled to indemnification under this Section 2.4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

5


3. Termination of Registration Rights . The registration rights granted pursuant to Section 2.1 of this Agreement shall terminate upon the first anniversary of the effective date of the Registration Statement.

4. Transfer of Rights . The rights granted under Section 2 of this Agreement may be assigned to any transferee or assignee in connection with any transfer or assignment by the Holder of such Holder’s Registrable Securities, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) written notice is promptly given to the Company; and (iii) such transferee or assignee agrees in writing to be bound by the provisions of this Agreement and by any other agreement reasonably necessary to ensure compliance with the Federal and state securities laws.

5. Lock-Up . In the event the Company seeks to sell shares of its securities in an underwritten public offering, the Company may, at the request of the underwriter for such offering, impose on each Holder a so-called “lock-up” period in connection with the public offering of not more than 90 days from the effective date of the registration statement for the public offering covering all of the Holder’s shares of the Company’s common stock.

6. Miscellaneous .

6.1 Consent to Jurisdiction . The Company and the Holders (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court and the courts of the State of California located in Los Angeles, California, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each Holder consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.1 shall affect or limit any right to serve process in any other manner permitted by law.

6.2 Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and a majority in interest of the Holders.

6.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., Eastern Standard Time, on a business day, (ii) the first business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., Eastern Standard Time, on any date and earlier than 11:59 p.m., Eastern Standard Time, on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) actual receipt by the party to whom such notice is required to be given.

 

6


  (x) if to the Company:

ImmunoCellular Therapeutics, Ltd.

11th Floor

1999 Avenue of the Stars

Los Angeles, California 90067

Fax: (310) 201-4746

 

  (y) if to CSMC:

Cedars Sinai Medical Center

Room 2009, North Tower

8700 Beverly Boulevard

Los Angeles, California 90048-1865

Attention: Senior Vice President for Academic Affairs

Fax: (310) 423-0119

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice.

6.4 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

6.5 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

6.6 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law thereof. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

6.7 Severability . If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.8 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

7


IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

“THE COMPANY”:
IMMUNOCELLULAR THERAPEUTICS, LTD., A DELAWARE CORPORATION
By:   /s/ David Wohlberg
  David Wohlberg
  President
“CSMC”:

CEDARS SINAI MEDICAL CENTER,

A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION

By:   /s/ Shlomo Melmed, M.D.
  Shlomo Melmed, M.D.
  Senior Vice President for Academic Affairs
By:   /s/ Edward M. Prunchunas
  Edward M. Prunchunas
  Senior Vice President for Finance and CFO

 

8

EXHIBIT 10.5

SECURITIES AGREEMENT

This Securities Agreement (“Agreement”) is made and entered into by and between Dr. John Yu (“Yu”) and ImmunoCellular Therapeutics, Ltd. a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”) as of this 17th day of November, 2006.

RECITALS

A. Yu and the Company have entered into an Agreement dated as of November 17, 2006 (the “Yu Agreement”) relating to Yu’s provision of certain services to the Company and his assignment of his royalty interest in certain technology to Cedars-Sinai Medical Center (“CSMC”), which CSMC in turn has agreed to license to the Company (the “License”).

B. Under the terms of the Yu Agreement, the Company has agreed to grant to Yu an option (the “Yu Option”) to purchase certain shares of the Company’s common stock, par value $.0001 per share (the “Company Stock”).

NOW THEREFORE, in consideration of the mutual covenants and premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Grant of Yu Option .

1.1 Grant of Yu Option . The Company will grant to Yu the Yu Option, which shall be a nonqualified, fully vested stock option in the form attached hereto as Exhibit A to purchase an aggregate of 5,933,424 shares of the Company Stock (the “Yu Shares”) at an exercise price of $1.00 per share, representing the current fair market value per share of the Company’s common stock as determined by the Company’s Board of Directors, and which will constitute approximately 40.9% of the total issued and outstanding shares of the Company Stock on the Effective Date (as defined in the Yu Agreement), as calculated below. The consideration for the grant of the Yu Option shall consist of (a) with respect to 150,000 shares covered by the Yu Option, Yu’s agreement to assign his royalty interest in certain technology to CSMC as described in the Yu Agreement without the payment of any other consideration by the Company to Yu, and (b) with respect to the balance of the shares covered by the Yu Option, Dr. Yu’s agreement to provide services under Section 3 of the Yu Agreement. The number of outstanding shares of Company Stock on the Effective Date shall consist of (i) all shares issued and outstanding on that date, including the amount of the Yu Shares issuable upon exercise of the Yu Option and all of the shares to be issued on that date to CSMC in connection with the Company and CSMC entering into the License Agreement between those parties, and (ii) all shares of Common Stock issuable upon exercise of warrants or options outstanding on the Effective Date with an exercise price of less than $1.00 per share, but shall exclude up to 250,000 shares of the Company Stock that the Company may issue and sell between September 15, 2006 and the Effective Date.


1.2 Closing . The grant of the Yu Option and related transactions shall take place on the Effective Date at the offices of Troy & Gould Professional Corporation, Suite 1600, 1801 Century Park East, Los Angeles, California 90067 at 9:00 a.m., Los Angeles time (such closing being called hereinafter the “Closing”). Neither the Company nor Yu shall have any obligation to grant or accept the Yu Option unless CSMC and the Company concurrently effectuate the License on the Effective Date. At the Closing the Company shall issue and deliver to Yu the Yu Option, registered in the name of Yu. The parties also shall deliver to each other at the Closing an executed copy of the Registration Rights Agreement described in Section 4.3 hereof (the “Registration Rights Agreement”).

2. Representations and Warranties of the Company . The Company represents and warrants to Yu as of the date hereof and as of the Effective Date as follows:

2.1 Corporate Power; Authorization . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of California and has the corporate power and authority to enter into this Agreement, the Yu Option and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. Upon its execution and delivery, this Agreement, the Yu Option and the Registration Rights Agreement each will be a valid and binding obligation of the Company, enforceable in accordance with their respective terms, except as limited by applicable bankruptcy or other laws of general application affecting enforcement of creditors’ rights. The grant of the Yu Option contemplated herein and the fulfillment of the terms hereof and the performance by the Company of its obligations under the Yu Option and the Registration Rights Agreement will not (i) result in a breach of any of the terms or provisions of, or constitute a default under the Company’s Certificate of Incorporation, the Company’s Bylaws, or any material indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or its material assets is bound (or any event which, with notice or lapse of time, or both, would constitute such a default), (ii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any of its assets, or (iii) require the consent or approval of any third party, except the Company’s stockholders, which has been obtained.

2.2 Shares . The Company has full corporate power and lawful authority to grant to Yu the Yu Option and, upon payment therefor, to issue the Yu Shares upon Yu’s exercise of the Yu Option on the terms and conditions contemplated therein, and when so issued against payment therefor as provided therein, the Yu Shares will be validly authorized and issued, fully paid and non-assessable. If the Yu Option were exercised in full on the Effective Date, the Yu Shares would constitute 40.8% of the issued and outstanding shares of the Company Stock on the Effective Date, calculated as described in Section 1.1. The issuance and delivery of the Yu Option and the subsequent delivery of the Yu Shares upon exercise of the Yu Option is not subject to preemptive or any similar rights of the stockholders of the Company.

2.3 Capitalization . The authorized capital stock of the Company consists of (i) 25,000,000 shares of common stock, of which 7,470,717 shares are outstanding as of the date of this Agreement and (ii) 1,000,000 shares of preferred stock, none of which are

 

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outstanding. The Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006 discloses as of such date the number of all outstanding options or warrants for the purchase of, or rights to purchase or subscribe for, or securities convertible into, exchangeable for, or otherwise entitling the holder to acquire, shares of Company Stock or other capital stock of the Company, or any contracts or commitments to issue or sell shares of Company Stock or other capital stock of the Company or any such options, warrants, rights or other securities, and from such date to the date hereof there has been, no material change in the amount or terms of any of the foregoing except for the grant of options to purchase shares of Company Stock pursuant to the Company’s stock option plan in effect on the date of this Agreement. On the Effective Date, the Company’s outstanding trade or other debt (excluding its obligation to pay the fee to Technomedics Management & Systems, Inc. described in Section 2.7 and to reimburse CSMC for certain patent expenses) shall not exceed $75,000.

2.4 Approvals, Filings, Etc . No authorization, approval or consent of, or filing with, any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market is required to be obtained or made by the Company for (i) the execution, delivery and performance by the Company of this Agreement, the Yu Option or the Registration Rights Agreement, (ii) the grant of the Yu Option and the issuance of the Yu Shares as contemplated by this Agreement and (iii) the performance by the Company of its obligations under this Agreement, the Yu Option and the Registration Rights Agreement, other than (a) as may be required under applicable state securities or “blue sky” laws, and (b) the filing of a Form D with the Securities and Exchange Commission (“SEC”) with respect to the Yu Option and the Yu Shares as required under Regulation D promulgated under the Securities Act of 1933, as amended (the “1933 Act”).

2.5 SEC Filings . The Company has timely filed all reports required to be filed under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and any other material reports or documents required to be filed with the SEC since January 31, 2006 (the “SEC Filings”). Except as set forth in the SEC filings, all of such reports and documents complied, when filed, in all material respects, with all applicable requirements of the 1933 Act and the 1934 Act.

2.6 Investment Company . The Company is not an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

2.7 Absence of Brokers, Finders, Etc . With the exception of the Company’s agreement to pay certain consulting fees to Technomedics Management & Systems, Inc., no broker, finder or similar person or entity is entitled to any commission, fee or other compensation by reason of action taken by or on behalf of the Company in connection with the transactions contemplated by this Agreement. The Company shall pay, and indemnify and hold harmless Yu from any claim made against Yu by any person or entity for any such commissions, fee or other compensation.

 

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3. Representations and Warranties of Yu . Yu hereby represents and warrants to the Company as of the date hereof and as of the Effective Date as follows:

3.1 Authority . Yu has the full power and authority to enter into and perform its obligations under this Agreement and the Registration Rights Agreement. Upon its execution and delivery, this Agreement and the Registration Rights Agreement each will be a valid and binding obligation of Yu, enforceable in accordance with their respective terms, except as limited by applicable bankruptcy or other laws of general application affecting enforcement of creditors’ rights.

3.2 Investment Experience . Yu reasonably believes that he has received all the information he considers necessary or appropriate to enable him to decide whether to enter into the Yu Agreement and accept the grant of the Yu Option. Yu has had an opportunity to become aware of the Company’s business affairs and financial conditions, has had an opportunity to ask questions and receive answers, review documents and gather information about the Company and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Yu Option. Yu has such business and financial experience, either alone or in conjunction with his professional advisors, as is required to give him the capacity to protect his own interests in connection with the purchase of the Yu Shares and can bear the economic risk of his investment.

3.3 Investment Intent . Yu has no present intention of selling, granting any participation in, or otherwise distributing the Yu Option, except in compliance with the 1933 Act or pursuant to an available exemption thereunder.

3.4 Restricted Securities . Yu understands that the Yu Options and the Yu Shares have not been registered under the 1933 Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of Yu’s investment intent as expressed herein. Yu is familiar with Rule 144 under the 1933 Act, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act.

3.5 No Legal, Tax or Investment Advice . Yu understands that nothing in this Agreement or any other materials presented to Yu in connection with the acquisition of the Yu Option constitutes legal, tax or investment advice. Yu has consulted such legal, tax and investment advisors as he, in his sole discretion, has deemed necessary or appropriate in connection with his acquisition of the Yu Option.

4. Restrictions on Transfer and Registration Rights .

4.1 Restrictions on Transferability . The Yu Option and the Yu Shares shall not be transferable in the absence of registration under the 1933 Act and any applicable state securities laws or exemptions therefrom.

4.2 Restrictive Legends . Each certificate representing the Yu Option and the Yu Shares shall bear substantially the following legend:

THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS WITH

 

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RESPECT TO SUCH SHARES SHALL THEN BE IN EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION WITH RESPECT TO ANY PROPOSED TRANSFER OR DISPOSITION OF SUCH SHARES SHALL BE ESTABLISHED BY AN OPINION OF COUNSEL TO THE HOLDER SATISFACTORY TO COUNSEL FOR THE CORPORATION.

Notwithstanding the above, Yu (or any authorized subsequent holder of the Yu Option or Yu Shares) may request that the Company remove any such legend from the certificate(s) evidencing the Yu Option or Yu Shares or issue to Yu (or to such holder) new certificate(s) therefor that are free of such legend if, with such request, the Company shall have received an opinion of counsel, which opinion is reasonably satisfactory to the Company, to the effect that any such transfer by Yu (or said holder) of the Yu Option or Yu Shares will not violate the securities laws of the United States or any applicable state laws.

4.3 Registration Rights . Yu shall have the registration rights with respect to the Yu Shares as set forth in the Registration Rights Agreement between Yu and the Company attached as Exhibit B hereto (the “Registration Rights Agreement”) to be executed and delivered by the parties at the Closing.

5. Miscellaneous .

5.1 Notices . Any notice, request, instruction or other document required by this Agreement shall be in writing and shall be deemed to have been given (a) if mailed with the United States Postal Service by prepaid, first class, certified mail, return receipt requested, at the time of receipt by the intended recipient, (b) if sent by Federal Express ® , Airborne ® , or other overnight carrier, signature of delivery required, at the time of receipt by the intended recipient, or (c) if sent by facsimile transmission, when so sent and when receipt has been acknowledged by appropriate telephone or facsimile receipt, addressed as follows:

In the case of Yu to:

Dr. John Yu

Suite 800 E

8631 West Third Street

Los Angeles, California 90048

Fax: (310) 423-1038

 

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or in the case of the Company to:

ImmunoCellular Therapeutics, Ltd.

11th Floor

1999 Avenue of the Stars

Los Angeles, California 90067

Fax: (310) 201-4746

with a copy to

Sanford J. Hillsberg

Troy & Gould Professional Corporation

1801 Century Park East, Suite 1600

Los Angeles, California 90067

Fax: (310) 201-4746

or to such other address or to such other person(s) as may be given from time to time under the terms of this Section 13.1.

5.2 Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the United States of America and of the State of California, irrespective of choice of laws provisions. The parties agree that Los Angeles, California shall be the situs of any legal proceeding arising out of or relating to this Agreement.

5.3 Waiver . Failure of any party to enforce a right under this Agreement shall not act as a waiver of that right or the ability to assert that right relative to the particular situation involved.

5.4 Enforceability . If any provision of this Agreement shall be found by a court of competent jurisdiction to be void, invalid or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the validity or enforceability of the remainder of this Agreement.

5.5 Modification . No change, modification, or addition or amendment to this Agreement, or waiver of any term or condition of this Agreement, is valid or enforceable unless in writing and signed and dated by the authorized officers of the parties to this Agreement.

5.6 Entire Agreement . This Agreement, the Yu Option, the Registration Rights Agreement and the Yu Agreement constitute the entire agreements among the parties with respect to the subject matter hereof and thereof, and replace and supersede as of the date hereof and thereof any and all prior agreements and understandings, whether oral or written, between the parties with respect to the subject matter of such agreements.

5.7 Construction . This Agreement has been prepared, examined, negotiated and revised by each party and their respective attorneys, and no implication shall be drawn and no provision shall be construed against any party to this Agreement by virtue of the purported identity of the drafter of this Agreement or any portion thereof.

 

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5.8 Counterparts . This Agreement may be executed simultaneously in one or more counterparts, each of which shall constitute one and the same instrument. This Agreement may be executed by facsimile.

5.9 Attorneys’ Fees . In the event of any action at law or in equity between the parties hereto to enforce any of the provisions hereof, the unsuccessful party to such litigation shall pay to the successful party all reasonable costs and expenses, not limited to taxable costs, and including but not limited to reasonable attorneys’ fees, incurred therein by such successful party; and if such successful party shall recover a judgment in any such action or proceeding, such reasonable costs, expenses and attorneys’ fees may be included in and as part of such judgment.

5.10 Assignment . This Agreement shall be binding upon and shall inure to the benefit of each party and its respective successors and assigns.

5.11 Further Assurances . At any time and from time to time after the Effective Date, each party shall do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, assignments or assurances as may be reasonably required to consummate the transactions contemplated by this Agreement.

5.12 Force Majeure . Neither party will be responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, earthquake, war, acts of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove these causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the delaying causes are removed.

IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the date first above written.

 

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Date: November 17, 2006     “THE COMPANY”:
   

IMMUNOCELLULAR THERAPEUTICS,

LTD., A DELAWARE CORPORATION

      By:   /s/ David Wohlberg
        David Wohlberg
        President
Date: November 17, 2006     “YU”:
      /s/ Dr. John Yu
      Dr. John Yu

 

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EXHIBIT A

NON-QUALIFIED STOCK OPTION AGREEMENT

 

A - 1


EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 17, 2006, by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”), and Dr. John Yu (“Securityholder”).

RECITALS

WHEREAS, the Company previously has agreed to register the shares of the Company’s common stock and common stock issuable upon exercise of the warrants held by certain of the Company’s securityholders (the “Other Shareholders”); and

WHEREAS, the Company has agreed, pursuant to the terms of the Securities Agreement, dated November 17, 2006 between the Company and Yu (the “Securities Agreement”) to register the shares of the Company’s common stock (the “Yu Shares”) issuable to the Securityholder upon exercise of the option to be issued to him under the terms of the Securities Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

1. Definitions .

As used in this Agreement, the following terms have the respective meanings set forth below:

Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

Exchange Act : shall mean the Securities Exchange Act of 1934, as amended.

Holder and Holders means (i) the Securityholder and the Other Shareholders and (ii) any person holding Registrable Securities to whom the registration rights under this Agreement have been validly transferred.

Person : shall mean an individual, partnership, limited liability company, joint stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof.

Register , Registered and Registration : shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement.

 

B - 1


Registrable Securities : shall mean (i) the Yu Shares, (ii) those shares of the Company’s common stock issued or issuable to the Other Shareholders and to be registered as described above, and (iii) any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of the Company’s common stock referred to in (i) or (ii) above; provided, that Registrable Securities shall not include (a) such securities as are eligible for sale pursuant to Rule 144(k) (or any successor provision thereto) under the Securities Act (“Rule 144(k)”), or (b) such securities as have been registered under the Securities Act and subsequently sold by the Holder.

Registration Expenses : shall mean all expenses incurred by the Company in compliance with Sections 2.1 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

Securities Act : shall mean the Securities Act of 1933, as amended.

Selling Expenses : shall mean all underwriting discounts and selling commissions applicable to the Registrable Securities registered by the Holders.

2. Registration Rights .

2.1 Registration . On or prior to 60 days from the Closing (as defined in the Securities Agreement), the Company shall file a registration statement (the “Registration Statement”), covering all of the Registrable Securities and thereafter shall use its commercially reasonable best efforts to as soon as practicable effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations).

If requested, the Company shall, together with all Holders proposing to sell their Registrable Securities in such registration in an underwritten distribution (the “Initiating Holders”), enter into an underwriting agreement in customary form with an investment banking firm or firms selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company’s reasonable approval. The Company may, at its option, include shares held by other securityholders of the Company in any such registration statement filed under this Section 2.1. Notwithstanding the foregoing, if in the good faith judgment of the managing underwriter of such public offering, the inclusion of all of the Registrable Securities requested to be registered would materially and adversely affect the successful marketing of the offering, then the amount of the securities to be included in the offering shall be reduced and the Registrable Securities and the other shares to be offered shall participate in such offering as follows: (i) first, the Registrable Securities requested to be included in such registration by the Initiating Holders, and if two or more Initiating Holders are included in the registration, pro rata among the Initiating Holders on the basis of the number of Registrable Securities owned by each such Initiating Holder, and (ii) second, the shares requested to be included in such registration by any stockholder other than the Initiating Holders, in any manner determined by the Company (including in any manner specified in any agreement between the Company and such other stockholders). If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company.

 

B - 2


2.2 Expenses of Registration . All Registration Expenses incurred in connection with the registration pursuant to Section 2.1 shall be borne by the Company, including, but not limited to, printing, legal and accounting expenses, SEC filing fees and “blue sky” fees and expenses; provided, however, that the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of counsel for the Holders in connection with the registration of their Registrable Securities, (ii) any portion of the underwriter’s commissions or discounts, expense allowance or fees or stock transfer taxes attributable to the Registrable Securities being offered and sold by the Holders of Registrable Securities, or (iii) any of such expenses if the payment of such expenses by the Company is prohibited by the laws of a state in which such offering is qualified and only to the extent so prohibited. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

2.3 Registration Procedures . In the case of the registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will:

(a) Prepare and file with the Commission the Registration Statement and such amendments and supplements as may be necessary and use its commercially reasonable best efforts to cause the Registration Statement to become and remain effective until (i) the first anniversary following the date the Registration Statement is declared effective, or (ii) all of the Registrable Securities included in the Registration Statement have been sold, whichever comes first, except that the Company shall be permitted to suspend the use of the Registration Statement during certain periods as set forth below in this Section 2.3; and

(b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

Notwithstanding the foregoing, the Company shall notify each Holder whose securities are included in the registration of the happening of any event which makes any statement made in the Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement or prospectus so that, in the case of the Registration Statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such event, the Company may suspend use of the prospectus on written notice to each participating Holder, in which case each

 

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participating Holder shall not dispose of Registrable Securities covered by the Registration Statement or prospectus until copies of a supplemented or amended prospectus are distributed to the participating Holders or until the participating Holders are advised in writing by the Company that the use of the applicable prospectus may be resumed (the period of such suspension shall be a “Blackout Period”). The Company shall ensure that the use of the prospectus may be resumed as soon as practicable. The Company shall, upon the occurrence of any event contemplated by this paragraph, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In the event that the Company declares one or more Blackout Periods, the one-year anniversary period set forth in Section 2.3(a) shall be extended by the number of days that constitute any such Blackout Periods.

2.4 Indemnification .

(a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder for use therein.

(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its officers and directors, each person who controls the Company within the meaning of Section 15 of the Securities Act, each other holder of the Company’s securities covered by the Registration Statement, and each such holder’s officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state

 

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therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other holders, such officers, directors, or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other holders or their officers, directors, or control persons, only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in the Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company in writing by such Holder. Notwithstanding the foregoing, the liability of each Holder under this Section 2.4(b) shall be limited to an amount equal to the net proceeds from the offering received by such Holder. A Holder will not be required to enter into any agreement or undertaking in connection with any registration under this Section 2 providing for any indemnification or contribution on the part of such Holder greater than the Holder’s obligations under this Section 2.4(b).

(c) Each party entitled to indemnification under this Section 2.4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

3. Termination of Registration Rights . The registration rights granted pursuant to Section 2.1 of this Agreement shall terminate upon the first anniversary of the effective date of the Registration Statement.

 

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4. Transfer of Rights . The rights granted under Section 2 of this Agreement may be assigned to any transferee or assignee in connection with any transfer or assignment by the Holder of such Holder’s Registrable Securities, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) written notice is promptly given to the Company; and (iii) such transferee or assignee agrees in writing to be bound by the provisions of this Agreement and by any other agreement reasonably necessary to ensure compliance with the Federal and state securities laws.

5. Lock-Up . In the event the Company seeks to sell shares of its securities in an underwritten public offering, the Company may, at the request of the underwriter for such offering, impose on each Holder a so-called “lock-up” period in connection with the public offering of not more than 90 days from the effective date of the registration statement for the public offering covering all of the Holder’s shares of the Company’s common stock.

6. Miscellaneous .

6.1 Consent to Jurisdiction . The Company and the Holders (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court and the courts of the State of California located in Los Angeles, California, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each Holder consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.1 shall affect or limit any right to serve process in any other manner permitted by law.

6.2 Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and a majority in interest of the Holders.

6.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., Eastern Standard Time, on a business day, (ii) the first business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., Eastern Standard Time, on any date and earlier than 11:59 p.m., Eastern Standard Time, on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) actual receipt by the party to whom such notice is required to be given.

 

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(x)

   if to the Company:
   ImmunoCellular Therapeutics, Ltd.
   11th Floor
   1999 Avenue of the Stars
   Los Angeles, California 90067
   Fax: (310) 201-4746

(y)

   if to Yu:
   Dr. John Yu
   Suite 800 E
   8631 West Third Street
   Los Angeles, California 90048
   Fax: (310) 423-1038

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice.

6.4 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

6.5 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

6.6 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law thereof. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

6.7 Severability . If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.8 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

“THE COMPANY”:

IMMUNOCELLULAR THERAPEUTICS, LTD.,

A DELAWARE CORPORATION

By:   /s/ David Wohlberg
  David Wohlberg
 

President

“YU”:

/s/ Dr. John Yu

Dr. John Yu

 

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EXHIBIT 10.6

IMMUNOCELLULAR THERAPEUTICS, LTD.

NON-QUALIFIED STOCK OPTION AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (“Agreement”), is made as of the 17th day of November, 2006 by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation (the “Company”), and Dr. John Yu (“Optionee”).

R E C I T A L

Pursuant to a Securities Agreement, dated as of November 17, 2006, by and between the Company and Optionee, the Company has agreed to grant to the Optionee, and Optionee has agreed to acquire, an option (the “Option”) to purchase an aggregate of 5,933,424 shares of the Company’s Common Stock (the “Shares”) at an exercise price of $1.00 per share.

A G R E E M E N T

NOW, THEREFORE, in consideration of the promises and of the undertakings of the parties hereto contained herein, it is hereby agreed:

1. Number of Shares; Option Price . The Company hereby grants to Optionee this Option to purchase an aggregate of 5,933,424 Shares at an exercise price of $1.00 per share (the “Exercise Price”).

2. Term . This Option shall expire on the day before the tenth anniversary of the date of grant of this Option (the “Expiration Date”).

3. Shares Subject to Exercise . This Option shall be fully vested and immediately exercisable as to all of the Shares and shall be exercisable in whole or in part from time to time throughout the term of this Option through the Expiration Date.

4. Method and Time of Exercise . This Option may be exercised by written notice delivered to the Company at its principal executive office stating the number of Shares with respect to which this Option is being exercised together with:

(a) a check or money order made payable to the Company in the amount of the exercise price and any withholding tax, as provided under Section 5 hereof; or

(b) the tender to the Company of shares of the Company’s Common Stock owned by Optionee or surrender of shares of Common Stock then issuable upon exercise of this Option having a fair market value not less than the exercise price, plus the amount of applicable federal, state and local withholding taxes; or

 

1


(c) in lieu of exercising this Option for cash, the Optionee may elect to receive shares equal to the value (as determined below) of this Option (or the portion thereof being exercised), plus the amount of applicable federal, state and local withholding taxes, in which event the Company shall issue to the Optionee a number of shares of Common Stock computed using the following formula:

 

X

   =    Y (A-B)
          A

 

Where

 

X =

   the number of shares of Common Stock to be issued to the Optionee
 

Y =

   the number of shares of Common Stock purchasable under this Option or, if only a portion of this Option is being exercised, the portion of this Option being exercised (at the date of such calculation)
 

A =

   the fair market value of one share of the Company’s Common Stock (at the date of such calculation)
 

B =

   the Exercise Price (as adjusted to the date of such calculation)

For purposes of the above calculation, fair market value of one share of Common Stock shall be, (i) if traded on a securities exchange, the value shall be deemed to be the closing price of the securities on such exchange on the date notice of exercise is received by ICT prior to the net exercise election; (ii) if traded over-the-counter, the value shall be deemed to be the closing bid price on the date notice of exercise is received by ICT; and (iii) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Company.

Only whole shares may be purchased.

5. Tax Withholding . As a condition to exercise of this Option, the Company may require Optionee to pay over to the Company all applicable federal, state and local taxes which the Company is required to withhold with respect to the exercise of this Option. At the discretion of the Company and upon the request of Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of shares of Common Stock of the Company otherwise issuable to Optionee upon the exercise of this Option.

6. Optionee Not a Stockholder . Optionee shall have no rights as a stockholder with respect to the Common Stock of the Company covered by this Option until the date of issuance of a stock certificate or stock certificates to the Optionee upon exercise of this Option. No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued.

7. No Right to Employment . Nothing in this Option shall interfere with or limit in any way the right of the Company or of any of its affiliates to terminate Optionee’s employment, consulting or advising at any time, nor confer upon Optionee any right to continue in the employ of, or consult or advise with, the Company or any of its affiliates.

 

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8. Restrictions on Sale of Shares . Optionee represents and agrees that upon the Optionee’s exercise of this Option, in whole or in part, unless there is in effect at that time under the Securities Act of 1933 a registration statement relating to the Shares issued to the Optionee, the Optionee will acquire the Shares issuable upon exercise of this Option for the purpose of investment and not with a view to their resale or further distribution, and that upon such exercise thereof the Optionee will furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. Optionee agrees that any certificates issued upon exercise of this Option may bear a legend indicating that their transferability is restricted in accordance with applicable state and federal securities law.

9. Notices . All notices to the Company shall be addressed to the Corporate Secretary at the principal executive office of the Company at 11 th Floor, 1999 Avenue of the Stars, Los Angeles, California 90067, and all notices to Optionee shall be addressed to Optionee at the address of Optionee on file with the Company, or to such other address as either may designate to the other in writing. A notice shall be deemed to be duly given if and when enclosed in a properly addressed sealed envelope deposited, postage prepaid, with the United States Postal Service. In lieu of giving notice by mail as aforesaid, written notices under this Agreement may be given by personal delivery to Optionee or to the Corporate Secretary (as the case may be).

10. Corporate Transactions . In the event of a Corporate Transaction (as defined below), the Company shall notify Optionee at least 30 days prior thereto or as soon as may be practicable. In the event of a Corporate Transaction on or after the second anniversary of the date of grant of this Option with a public company (or in the case of a private company in which more than fifty percent (50%) of the aggregate consideration to Company stockholders is in the form of cash), to the extent not previously exercised, this Option shall terminate immediately prior to the consummation of such Corporate Transaction if the Company, after using its commercially reasonable efforts, is unable to provide that this Option shall be assumed or an equivalent option substituted by an applicable successor corporation or any affiliate of the successor corporation in the event of a Corporate Transaction. A “Corporate Transaction” means a merger or consolidation of the Company with or into another corporation or entity if, as a result of such merger or consolidation, the stockholders of the Company immediately prior to such transaction own less than fifty percent (50%) of the surviving or consolidated entity, a sale of all or substantially all of the assets of the Company, or a purchase or other acquisition of more than 50 percent of the outstanding capital stock of the Company in a single transaction or a series of related transactions by one person or more than one person acting in concert.

11. Adjustment of Exercise Price and Number of Shares . The Exercise Price and the number of shares purchasable upon the exercise of this Option shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 11. Upon each adjustment of the Exercise Price, the Optionee shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment.

11.1 Subdivision or Combination of Stock . In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

 

3


11.2 Dividends, Property, Reclassification . If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Option) shall have received or become entitled to receive, without payment therefor:

(a) Common Stock or any shares of stock or other securities which are at any time directly or indirectly convertible into or exchangeable for any other shares of stock or other securities, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution;

(b) Common Stock or additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, merger, consolidation or other business combination (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 11.1 above), then and in each such case, the Optionee shall, upon the exercise of any portion of this Option, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (a) above and this clause (b)) which Optionee would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

11.3 Certain Events . If any change in the outstanding Common Stock or any other event occurs as to which the other provisions of this Section X are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Optionee in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under this Option, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Optionee upon exercise for the same aggregate Exercise Price the total number, class and kind of shares as he would have owned had this Option been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment.

11.4 Notices of Change .

(a) Immediately upon any adjustment in the number or class of shares subject to this Option and of the Exercise Price, the Company shall give written notice thereof to Optionee, setting forth in reasonable detail and certifying the calculation of such adjustment.

(b) The Company shall give written notice to the Optionee at least ten (10) business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions.

 

4


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

 

IMMUNOCELLULAR THERAPEUTICS, LTD.
By:   /s/ David Wohlberg
  Name:   David Wohlberg
 

Title:

  President
OPTIONEE
By:   /s/ Dr. John Yu
  Dr. John Yu
Address:
  
  
  
  
Social Security Number

 

5

EXHIBIT 10.7

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 17, 2006, by and between ImmunoCellular Therapeutics, Ltd., a Delaware corporation, formerly known as Optical Molecular Imaging, Inc., (the “Company”), and Dr. John Yu (“Securityholder”).

RECITALS

WHEREAS, the Company previously has agreed to register the shares of the Company’s common stock and common stock issuable upon exercise of the warrants held by certain of the Company’s securityholders (the “Other Shareholders”); and

WHEREAS, the Company has agreed, pursuant to the terms of the Securities Agreement, dated November 17, 2006 between the Company and Yu (the “Securities Agreement”) to register the shares of the Company’s common stock (the “Yu Shares”) issuable to the Securityholder upon exercise of the option to be issued to him under the terms of the Securities Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

1. Definitions .

As used in this Agreement, the following terms have the respective meanings set forth below:

Commission : shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

Exchange Act : shall mean the Securities Exchange Act of 1934, as amended.

Holder and Holders means (i) the Securityholder and the Other Shareholders and (ii) any person holding Registrable Securities to whom the registration rights under this Agreement have been validly transferred.

Person : shall mean an individual, partnership, limited liability company, joint stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof.

Register , Registered and Registration : shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement.

 

1


Registrable Securities : shall mean (i) the Yu Shares, (ii) those shares of the Company’s common stock issued or issuable to the Other Shareholders and to be registered as described above, and (iii) any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of the Company’s common stock referred to in (i) or (ii) above; provided, that Registrable Securities shall not include (a) such securities as are eligible for sale pursuant to Rule 144(k) (or any successor provision thereto) under the Securities Act (“Rule 144(k)”), or (b) such securities as have been registered under the Securities Act and subsequently sold by the Holder.

Registration Expenses : shall mean all expenses incurred by the Company in compliance with Sections 2.1 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

Securities Act : shall mean the Securities Act of 1933, as amended.

Selling Expenses : shall mean all underwriting discounts and selling commissions applicable to the Registrable Securities registered by the Holders.

2. Registration Rights .

2.1 Registration . On or prior to 60 days from the Closing (as defined in the Securities Agreement), the Company shall file a registration statement (the “Registration Statement”), covering all of the Registrable Securities and thereafter shall use its commercially reasonable best efforts to as soon as practicable effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations).

If requested, the Company shall, together with all Holders proposing to sell their Registrable Securities in such registration in an underwritten distribution (the “Initiating Holders”), enter into an underwriting agreement in customary form with an investment banking firm or firms selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company’s reasonable approval. The Company may, at its option, include shares held by other securityholders of the Company in any such registration statement filed under this Section 2.1. Notwithstanding the foregoing, if in the good faith judgment of the managing underwriter of such public offering, the inclusion of all of the Registrable Securities requested to be registered would materially and adversely affect the successful marketing of the offering, then the amount of the securities to be included in the offering shall be reduced and the Registrable Securities and the other shares to be offered shall participate in such offering as follows: (i) first, the Registrable Securities requested to be included in such registration by the Initiating Holders, and if two or more Initiating Holders are

 

2


included in the registration, pro rata

among the Initiating Holders on the basis of the number of Registrable Securities owned by each such Initiating Holder, and (ii) second, the shares requested to be included in such registration by any stockholder other than the Initiating Holders, in any manner determined by the Company (including in any manner specified in any agreement between the Company and such other stockholders). If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company.

2.2 Expenses of Registration . All Registration Expenses incurred in connection with the registration pursuant to Section 2.1 shall be borne by the Company, including, but not limited to, printing, legal and accounting expenses, SEC filing fees and “blue sky” fees and expenses; provided, however, that the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of counsel for the Holders in connection with the registration of their Registrable Securities, (ii) any portion of the underwriter’s commissions or discounts, expense allowance or fees or stock transfer taxes attributable to the Registrable Securities being offered and sold by the Holders of Registrable Securities, or (iii) any of such expenses if the payment of such expenses by the Company is prohibited by the laws of a state in which such offering is qualified and only to the extent so prohibited. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

2.3 Registration Procedures . In the case of the registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will:

(a) Prepare and file with the Commission the Registration Statement and such amendments and supplements as may be necessary and use its commercially reasonable best efforts to cause the Registration Statement to become and remain effective until (i) the first anniversary following the date the Registration Statement is declared effective, or (ii) all of the Registrable Securities included in the Registration Statement have been sold, whichever comes first, except that the Company shall be permitted to suspend the use of the Registration Statement during certain periods as set forth below in this Section 2.3; and

(b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

Notwithstanding the foregoing, the Company shall notify each Holder whose securities are included in the registration of the happening of any event which makes any statement made in the Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement or prospectus so that, in the case of the Registration Statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain an untrue statement of a material fact or omit to state a material

 

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fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such event, the Company may suspend use of the prospectus on written notice to each participating Holder, in which case each participating Holder shall not dispose of Registrable Securities covered by the Registration Statement or prospectus until copies of a supplemented or amended prospectus are distributed to the participating Holders or until the participating Holders are advised in writing by the Company that the use of the applicable prospectus may be resumed (the period of such suspension shall be a “Blackout Period”). The Company shall ensure that the use of the prospectus may be resumed as soon as practicable. The Company shall, upon the occurrence of any event contemplated by this paragraph, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In the event that the Company declares one or more Blackout Periods, the one-year anniversary period set forth in Section 2.3(a) shall be extended by the number of days that constitute any such Blackout Periods.

2.4 Indemnification .

(a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder for use therein.

(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its officers and directors, each person who controls the Company within the meaning of Section 15 of the Securities Act, each other holder of the Company’s securities covered by the Registration Statement, and each such holder’s officers and directors and each person controlling such holder within

 

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the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of the Securities Act, the Exchange Act, any state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other holders, such officers, directors, or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other holders or their officers, directors, or control persons, only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in the Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company in writing by such Holder. Notwithstanding the foregoing, the liability of each Holder under this Section 2.4(b) shall be limited to an amount equal to the net proceeds from the offering received by such Holder. A Holder will not be required to enter into any agreement or undertaking in connection with any registration under this Section 2 providing for any indemnification or contribution on the part of such Holder greater than the Holder’s obligations under this Section 2.4(b).

(c) Each party entitled to indemnification under this Section 2.4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

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3. Termination of Registration Rights . The registration rights granted pursuant to Section 2.1 of this Agreement shall terminate upon the first anniversary of the effective date of the Registration Statement.

4. Transfer of Rights . The rights granted under Section 2 of this Agreement may be assigned to any transferee or assignee in connection with any transfer or assignment by the Holder of such Holder’s Registrable Securities, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) written notice is promptly given to the Company; and (iii) such transferee or assignee agrees in writing to be bound by the provisions of this Agreement and by any other agreement reasonably necessary to ensure compliance with the Federal and state securities laws.

5. Lock-Up . In the event the Company seeks to sell shares of its securities in an underwritten public offering, the Company may, at the request of the underwriter for such offering, impose on each Holder a so-called “lock-up” period in connection with the public offering of not more than 90 days from the effective date of the registration statement for the public offering covering all of the Holder’s shares of the Company’s common stock.

6. Miscellaneous .

6.1 Consent to Jurisdiction . The Company and the Holders (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court and the courts of the State of California located in Los Angeles, California, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and each Holder consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.1 shall affect or limit any right to serve process in any other manner permitted by law.

6.2 Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and a majority in interest of the Holders.

6.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., Eastern Standard Time, on a business day, (ii) the first business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., Eastern Standard Time, on any date and earlier than 11:59 p.m., Eastern Standard Time, on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) actual receipt by the party to whom such notice is required to be given.

 

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(x)   

if to the Company:

 

ImmunoCellular Therapeutics, Ltd.

11th Floor

1999 Avenue of the Stars

Los Angeles, California 90067

Fax: (310) 201-4746

(y)   

if to Yu:

 

Dr. John Yu

Suite 800 E

8631 West Third Street

Los Angeles, California 90048

Fax: (310) 423-1038

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice.

6.4 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

6.5 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

6.6 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law thereof. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

6.7 Severability . If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.8 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

“THE COMPANY”:
IMMUNOCELLULAR THERAPEUTICS, LTD., A DELAWARE CORPORATION
By:   /s/ David Wohlberg
  David Wohlberg
  President
“YU”:
/s/ Dr. John Yu
Dr. John Yu

 

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