Exhibit 10.4
EXCLUSIVE LICENSE
AGREEMENT
This
Exclusive License Agreement (the Agreement) is made and entered into this
15 of May 2006 (the "Effective Date") by and between the Regents of
the University of Colorado, a body corporate, having its principal
office at 201 Regent Hall, Regent Drive, Boulder, CO 80309
(hereinafter "University") and APRO Bio Pharmaceutical Corporation,
a Utah corporation having its principal office at 5820 Tolcate
Woods Lane, Salt Lake City, Utah 84121 (hereinafter
"Licensee").
WHEREAS, University is the owner of
certain Patent Rights (as later defined herein) invented by
University employee Leland Shapiro, and has the right to grant
licenses under said Patent Rights, and;
WHEREAS, Licensee is interested in
licensing and further developing the Patent Rights for commercial
applications, and;
WHEREAS, University desires to have the
Patent Rights developed and commercialized to benefit the public
and is willing to grant a license hereunder;
NOW, THEREFORE,
in consideration of
the promises and the mutual covenants contained herein, the parties
hereto agree as follows:
For the purposes of this
Agreement, the following words and phrases shall have the following
meanings:
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"Affiliate(s)" shall mean every
corporation or entity, which, directly or indirectly, or throughone
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.
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"Fields of Use" shall mean the
fields of use identified in Exhibit A.
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"Improvement" shall mean any
invention, the practice of which would also require the practice of
an invention claimed in or covered by the Patent Rights and which
is a modification of the inventions claimed in or covered by the
Patent Rights, made by Dr. Leland Shapiro, or University
researchers working in the laboratory of Leland Shapiro.
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"Know-How" shall mean
University's proprietary information which has been created,
developed, or fixed in any tangible medium of expression including,
but not limited to, technical information, devices, models,
methods, documents, and materials, and which is directly related to
the use of, or esirable for the practice of, the licensed
Patent Rights.
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"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.
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"Licensed Product(s)" shall mean
any:
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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
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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
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product produced, discovered,
manufactured or created through the use of any Licensed Product
defined in §1.06(a) or §1.06(b).
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1.7
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"Net Sales" shall mean the total
gross receipts for sales of Licensed Products or practice
ofLicensed 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.
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1.8
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"Patent Rights" shall mean all
of the following University intellectual property and any
utilityapplications, 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:
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the United States and foreign
patents and/or patent applications and/or provisional patent
applications listed in Exhibit B;
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United States and foreign
patents issued from the applications listed in Exhibit
B and from divisionals and continuations of these
applications;
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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 fisted in Exhibit
B;
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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
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any reissues of United States
patents described in this Subsection.
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1.9
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"Territory" shall mean the
geographical area identified in Exhibit A.
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SECTION 2. GRANT OF
LICENSE
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2.1
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University hereby grants and
Licensee and Affiliates accept, during the term and subject tothe
terms and conditions of this Agreement
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an exclusive, royalty-bearing license to use
the Know-How in the Territory and within the Fields of Use;
and
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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.
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2..2
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All Know-How due under this
Agreement shall be delivered to Licensee prior to or on
theEffective Date in written, oral or other form of communication.
No additional Know-How shall be due after the Effective
Date.
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2.3
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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.
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SECTION 3. IMPROVEMENTS &
INDEPENDENT INVENTIONS
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3.1
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Improvements:
In the event that
University develops any improvements to the inventions claimed in
the Patent Rights or to any other preexisting patent application or
patent that is dominated by the Patent Rights, then each such
improvement or addition will be considered part of this Agreement
for no additional consideration.
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3.2
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Independent Inventions:
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Provided that Leland Shapiro is
at the time obligated to assign intellectual property to University
and is involved as an employee, board member, consultant to or 10%
or greater shareholder of Licensee, in the event that Leland
Shapiro or anybody working in a laboratory under the supervision or
direction of Leland Shapiro, makes 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. In addition, Licensee shall have such further rights to
future Independent Inventions as may be set forth in the sponsored
research agreement described in Exhibit E to be entered into
between the Parties.
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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
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SECTION 4.
SUBLICENSING
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4.1
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Upon prior written approval by
University, such approval not to be unreasonable withheld,Licensee
may sublicense to one or more third parties, the rights granted in
Section 2 subject to the following limitations:
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Licensee agrees that any
sublicenses granted by it shall impose restrictions and conditions
upon sublicensees equivalent in scope to those imposed upon
Licensee;
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Licensee agrees that, in the
event University terminates this Agreement pursuant to Subsection
13,2(b), any sublicenses granted, in University's sole discretion,
shall be directly enforceable by University;
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Licensee agrees that any
sublicenses granted shall adequately protect University's security
and property interest in University's Know-How and Patent Rights;
and
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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.
For purposes of this Agreement,
the term "sublicense" shall mean the license by Licensee to a third
party of all or a portion of the intellectual property rights
licensed to it by University hereunder in consideration of payments
from such sublicensee to Licensee, and shall not include Licensee's
engagement of or joint venture with subcontractors to perform
various services for Licensee in connection with its development of
the Licensed Products and Licensed Processes, including, but not
limited to, laboratory work, pre-clinical and clinical testing,
assistance with the regulatory approval process, manufacturing,
marketing and other similar product development services provided
that such services are for the sole benefit of Licensee and such
third party does not have any independent use of the Patent Rights
or Know-How. Licensee agrees to assume all obligations for
protecting the University's security and property interest in
University's Know-How and Patent Rights in any such joint venture
work consistent with the terms of this Agreement.
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4.2
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Licensee agrees to forward to
University a copy of each fully executed sublicenseagreement
postmarked within thirty (30) days of the execution of such
agreement.
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SECTION 5. RETAINED
RIGHTS 5.1 Government
Rights:
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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.
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Further, Licensee agrees to take
all reasonable action necessary to enable University to satisfy its
obligations hereunder.
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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 prevent the
commercial use of any products or processes resulting from such
research and education and to avoid the loss of any patent rights
as a result of such activities.
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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 provide Licensee
with ten (10) days' advance notice of any such publication,
including a copy of the information proposed to be
published.
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SECTION 6. FEES &
ROYALTIES
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6.1
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As consideration for the
disclosure of University's Know-How as well as the licenses
andrights under University's Patent Rights,
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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;
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Licensee agrees to pay
University royalties as set forth in Exhibit
C;
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6.2
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No multiple royalties shall be
payable because any Licensed Products or Licensed
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Processes are covered by more
than one of the Patent Rights.
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6.3
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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.
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Unless otherwise provided
herein, all payments required under this Agreement shall be due
within thirty (30) days of written notice from
University.
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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.
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SECTION 7. REPORTS, RECORDS, AND
AUDITS 7.1
Reports:
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Licensee shall, without request
by University, within sixty (60) days following the
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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.
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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.
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Unless otherwise agreed to by
the Parties, the written report shall be in the substantially the
same form as Exhibit D.
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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.
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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.
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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.
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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.
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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.
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SECTION 8. CONFIDENTIAL
INFORMATION
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8.1
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Both University and Licensee
(hereinafter, "Party" or "Parties") shall vigilantly protect
theconfidential 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.
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8..2
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All written documents containing
confidential information and other material in tangible
formreceived 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.
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8.3
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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.
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SECTION 9. LICENSEE DUE
DILIGENCE OBLIGATIONS
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9.1
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Licensee shall use commercially
reasonable efforts to bring Licensed Products andLicensed 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.
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9.2
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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. No changes
to the dates of such milestones will be made without the consent,
which will not be unreasonably denied, of University.
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9.3
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Licensee agrees to use
commercially reasonable efforts to develop a sublicensing programto
commercialize Licensed Products and Licensed Processes in any Field
of Use or Territory that Licensee decides not to exploit for its
own benefit.
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SECTION 10. PATENT
ADMINISTRATION
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10.1
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Licensee shall reimburse
University within thirty (30) days from the Effective Date
twentythousand dollars ($20,000) representing all patent expenses
incurred by University prior to the Effective Date.
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Licensee shall control the
preparation, filing, prosecution, and maintenance of any and all
patent applications or patents included in the Patent Rights on or
after the Effective Date and shall furnish copies of relevant
patent-related documents to University. Licensee shall provide
University with advance written notice of its plans to file or
prosecute any such patent applications or patents. University shall
cooperate with Licensee in providing any additional scientific and
other information reasonably necessary for Licensee to prepare,
file, prosecute and maintain such patent applications and
patents.
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(i)
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University shall have thirty
(30) business days to review and comment on patent-related
documents pr
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