EXCLUSIVE LICENSE AGREEMENT

1.1

“Affiliate(s)” shall mean every corporation or entity, which, directly or indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with Licensee, as well as every officer and director of any such corporation or entity.  For the purposes of this definition, the term “control” means (a) beneficial ownership of at least fifty percent (50%) of the voting securities of a business organization with voting securities, or (b) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or business organization without voting securities.

1.2

"Associate(s)" means any University employee working under the direction, supervision, and/or control of the Investigator(s).

1.3

"Investigator(s)" means Dr. Charles Dinarello and/or Dr. Leland Shapiro, as long as each Investigator remains employed by University.

Associates and which is directly related to the practice of the licensed Patent Rights, including, but not limited to, technical information, specifications, standards, devices, models, techniques, processes, methods, formulae, documents, drawings and materials ("Technical Information").  Know-How specifically includes, without limitation, any Technical Information that relates to the discovery of the underlying technology covered by the Patent Rights.

1.7

“Licensed Process(es)” shall mean any process, art, or method which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights or that incorporates or makes use of Know-How.

1.8

“Licensed Product(s)” shall mean any:

a.

product or part thereof that is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights or that incorporates or makes use of Know-How; or

b.

product, chemical composition, apparatus, or part thereof that is manufactured or discovered by using a Licensed Process(es) or is employed to practice a Licensed Process(es); or

c.

product produced, discovered, manufactured or created through the use of any Licensed Product defined in §1.8(a) or §1.8(b).

 1.9

“Net Sales” shall mean the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee, its Affiliates and sublicensees, and from leasing, renting, or otherwise making Licensed Products available to others without sale or other dispositions, whether invoiced or not, less returns and allowances, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced and paid), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted.  No deductions shall be made for commissions, or for the costs of collections.  Net Sales shall also include the fair market value of any non-cash consideration received by Licensee, its Affiliates and sublicensees, for the sale, lease, or transfer of Licensed Products or Licensed Processes.

1.10

“Patent Rights” shall mean all of the following University intellectual property and any utility applications, PCT applications, continuations, improvements and divisional applications thereof, patents issuing on any of the foregoing and all reissues, reexaminations or extensions of any of the foregoing, and any and all foreign patents and patent applications relating to any of the foregoing:

a.

the United States and foreign patents and/or patent applications and/or provisional patent applications listed in Exhibit B ;

b.

United States and foreign patents issued from the applications listed in Exhibit B and from divisionals and continuations of these applications;

c.

claims of U.S. and foreign continuation-in-part applications, and of the resulting patents, which are directed to subject matter specifically described in the U.S. and foreign applications listed in Exhibit B ;

d.

claims of all foreign patent applications, and of the resulting patents, which are directed to subject matter specifically described in the United States patents and/or patent applications described in this Subsection; and

e.

any reissues of United States patents described in this Subsection.

2.1

University hereby grants and Licensee and Affiliates accept, during the term and subject to the terms and conditions of this Agreement

a.

a nonexclusive, royalty-bearing license to use the Know-How in the Territory and within the Fields of Use; and

b.

an exclusive, royalty-bearing license to University’s Patent Rights in the Territory to make, use, sell, lease, offer to sell, and import any Licensed Products in the Fields of Use and to practice any Licensed Processes in the Fields of Use.

2.2

All Know-How due under this Agreement shall be delivered to Licensee prior to or on the Effective Date in written, oral or other form of communication. University shall use commercially reasonable efforts to ensure that Licensee is provided with all Know-How due under this Agreement.

2.3

Notwithstanding the terms as set forth in Section 2.2, if, at any time during the Term of this Agreement University discovers Know-How that should have been provided pursuant to Section 2.2, University shall promptly provide written notification to Licensee of the omission and provide any such Know-How due under Section 2.2 to Licensee within thirty days of such written notice.

2.4

Notwithstanding the terms as set forth in Section 2.2, if, at any time during the Term of this Agreement, Licensee discovers Know-How that should have been provided pursuant to Section 2.2, Licensee shall request the Know-How in writing from University and University shall provide any such Know-how due under Section 2.2 to Licensee within thirty days of the written request.

2.5

This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of University other than licensed Patent Rights regardless of whether such patents are dominant or subordinate to licensed Patent Rights.

2.6

The license grant pursuant to Section 2.1 shall remain in effect regardless of any change in status of the Investigators, including without limitation, absence or withdrawal of one or both Investigators from further development or execution of the Patent Rights.

3.1

Improvements :  In the event that University develops any Improvements to the inventions claimed in the Patent Rights, then each such Improvement will be considered part of this Agreement for no additional consideration.

3.2

Independent Inventions :

a.

Provided that the Investigator(s) is/are at the time obligated to assign intellectual property to University and is/are involved as employee(s), board member(s), consultant to or 10% or greater shareholder of Licensee, in the event that the Investigator(s) or any Associate(s),  make any invention in the Field of Use, the practice of which would not require the practice of an invention claimed in or covered by the Licensed Patent Rights (“Independent Invention”), then provided such Independent Invention is not subject to any prior contractual or legal

obligations, the University hereby grants to Licensee an exclusive option (“Option”) to obtain the exclusive, worldwide, commercial rights to each Independent Invention on terms and conditions to be negotiated in good faith by the parties following the exercise by Licensee of the Option.  .

b.

University shall disclose each Independent Invention to Licensee in reasonable written detail after the University’s Technology Transfer Office receives notification from the inventor(s) that such Independent Invention has been made, and Licensee shall have ninety (90) days (the “Option Period”) following receipt of such invention disclosure to exercise the Option with respect to such Independent Invention by delivering to University written notice indicating that Licensee desires to exercise the Option.  Upon such notice, the parties shall negotiate in good faith for a period of up to sixty (60) days commercially reasonable terms and conditions for a license under the intellectual property rights relating to such Independent Invention

4.1

Licensee may sublicense to one or more third parties, the rights granted in Section 2 subject to the following limitations:

a.

Licensee agrees that any sublicenses granted by it shall impose restrictions and conditions upon sublicensees equivalent in scope to those imposed upon Licensee;

b.

Licensee agrees that, in the event University terminates this Agreement pursuant to Subsection 13.2(b), any sublicenses granted shall be directly enforceable by University;

c.

Licensee agrees that any sublicenses granted shall adequately protect University's security and property interest in University's Know-How and Patent Rights; and

d.

Any sublicenses granted by Licensee shall provide only for cash consideration from sublicensees unless University has expressly consented otherwise in writing in advance.   Any sublicenses made in other than arm’s-length transactions, the value of the transaction attributed under this Section to such a transaction shall be that which would have been received in an arm’s-length transaction, based on a like transaction at that time.

4.2

Licensee agrees to forward to University a copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of such agreement.

5.1

Government Rights :

a.

Notwithstanding any use of descriptive terms within this Agreement such as “exclusive”, this Agreement is subject to all of the terms and conditions of Title 35 U.S.C. §§ 200-204, et seq., (“Bayh-Dole Act”) and 37 C.F.R. 401, as such may be amended.

b.

Further, Licensee agrees to take all reasonable action necessary to enable University to satisfy its obligations hereunder.

a.

University shall have the right to practice the Patent Rights and Know-How for its own research and education, including sponsored research, which right shall be transferable to other nonprofit or educational institutions; provided that University takes reasonable steps to avoid the loss of any Patent Rights or any other intellectual property that Licensee does not want disclosed, as a result of such activities and takes reasonable steps to avoid disclosure of Know-How.

b.

University recognizes the need for Licensee to protect any information and Know-How included in the Patent Rights.  University shall have the right to publish any information included in the Patent Rights and the Know-How provided that University, prior to submission to a third party for publication of any information or Know-How included in the Patent Rights ("Proposed Submission"), provides written notice of any Proposed Submission to Licensee, such written notice to include specifics regarding the information to be disclosed in the Proposed Submission and a copy of the Proposed Submission.  Licensee shall have twenty (20) days to review the Proposed Submission and provide to the University written approval or disapproval for the Proposed Submission.  If Licensee disapproves the Proposed Submission, the Parties have thirty (30) days from the date of the written notice to negotiate terms for submission.  In the event that the Parties, at the expiration of this thirty (30) day period, fail to agree upon terms for submission, then the dispute will be resolved in accordance with Section 14.7 herein.

c.

University shall have the right to publish any information included in the Patent Rights and the Know-How provided that University takes reasonable steps to avoid the loss of any patent rights as a result of University exercising its rights under this Paragraph.  University shall make a reasonable effort to provide Licensee with ten (10) days’ advance notice of any such publication, including a copy of the information proposed to be published.

6.1

As consideration for the grant of rights under this Agreement,

a.

Licensee agrees to pay to University a nonrefundable and non-creditable license fee as set forth in Exhibit C .

b.

Licensee agrees to pay to University an annual, nonrefundable minimum royalty as set forth in Exhibit C .  The minimum annual royalty is due and payable on first

business day of each calendar year and may be credited against any earned royalties due for Net Sales made that year;

 c.

Licensee agrees to pay University royalties as set forth in Exhibit C ;

6.2

No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Patent Rights.

6.3

On sales of Licensed Products by Licensee to sublicensees or on sales made in other than arm’s-length transactions, the value of the Net Sales attributed under this Section to such a transaction shall be that which would have been received in an arm’s-length transaction, based on a like transaction at that time.

6.4

Payment Due Date :

a.

Unless otherwise provided herein, all payments required under this Agreement shall be due within thirty (30) days of written notice from University.

b.

Payments past due shall bear interest at the rate of one and one-half percent (1 1/2%) per month compounded, or the maximum interest rate allowed by applicable law, whichever is less.

c.

All payments to Colorado are in United States Dollars, made payable to “The Regents of the University of Colorado” and mailed to:

                        Office of Technology Transfer

                        University of Colorado, 588 SYS

                        Suite 100, 4740 Walnut Street

                        Boulder, CO  80309 

           ATTN: Accounts Receivable

7.1

Reports :

a.

Licensee shall, without request by University, within sixty (60) days following the end of each fiscal quarter of Licensee and sixty (60) days following the end of Licensee’s fiscal year, render to University written reports of the Net Sales of Licensed Products and/or Licensed Processes subject to royalty hereunder made during the prior three (3) month period and shall simultaneously pay to University the royalties due on such Net Sales, if any, in United States Dollars.  Licensee shall not be required to provide any such reports during the period prior to its initial sale of Licensed Products and/or Licensed Processes.

b.

Minimum annual royalties, if any, which are due University for any fiscal year, shall be paid by Licensee along with the written report due under this Agreement with respect to such fiscal year.

c.

Unless otherwise agreed to by the Parties, the written report shall be in the substantially the same form as Exhibit D .

a.

Licensee shall keep accurate records and shall compel its Affiliates and sublicensees to keep accurate records, in sufficient detail to reflect its operations

under this Agreement and to enable the royalties accrued and payable under this Agreement to be determined.

b.

Such records shall be retained for at least three (3) years after the close of the period to which they pertain, or for such longer time as may be required to finally resolve any question or discrepancy raised by University.

7.3

Audits :

a.

Upon the request of University, with reasonable notice, but not more frequently than once a year, Licensee shall permit an independent public accountant selected and paid by University to have access during regular business hours to such records as may be necessary to verify the accuracy of royalty payments made or payable hereunder.

b.

Said accountant shall disclose information acquired to University only to the extent that it should properly have been contained in the royalty reports required under this Agreement.

c.

If an inspection shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then Licensee shall reimburse University for the cost of the inspection and pay the amount of the underpayment including any interest as required by this Agreement.

8.1

Both University and Licensee (hereinafter, “Party” or “Parties”) shall vigilantly protect the confidential information related to the Patent Rights and Know-How from disclosure to third parties; and no such disclosure shall be made without the disclosing Party’s written permission.

8.2

All written documents containing confidential information and other material in tangible form received by either Party under this Agreement shall remain the property of the disclosing Party, and such documents and materials, together with copies of excerpts thereof, shall promptly be returned to disclosing Party upon request, except one copy may be retained for archival purposes.

8.3

Licensee acknowledges that University is subject to the Colorado Open Records Act (C.R.S. § 24-72-201, et seq.).  All plans and reports marked “Confidential” shall be treated by University as confidential to the extent permitted under § 24-72-204.

9.1

Licensee shall use commercially reasonable efforts to bring Licensed Products and Licensed Processes to market through a thorough, vigorous and diligent program for exploitation of the Patent Rights, to develop internal or external manufacturing capabilities, to continue active, diligent marketing efforts, and to satisfy the needs of such market with the Licensed Products and Licensed Processes throughout the life of this Agreement.

9.2

Licensee acknowledges and agrees to the performance and diligence Milestones defined in Exhibit E,   provided however , that specific dates for such milestones may be adjusted if required due to developments beyond the reasonable control of Licensee. It may be necessary to repeat or redesign an experiment (defined for the purpose of this Section 9.2

as "Experimental Delays").  Unive