Exhibit 10.4
Confidential Treatment Requested. ***
indicates material has been omitted pursuant to a Confidential
Treatment Request filed with the Securities and Exchange
Commission. A complete copy of this agreement has been filed
separately with the Securities and Exchange Commission.
EXCLUSIVE LICENSE
AGREEMENT
Re: Baylor OTA # 04-107 Entitled “Serum
Proteomic Methods and Biomarkers for Diagnosis of Neurodegenerative
Disease and Differential Diagnosis of Alzheimer’s,
Parkinson’s Lou Gehrig’s (ALS) Diseases, and other
Motor Neuron and Neurological Disorders”
This Exclusive License Agreement
(hereinafter called “Agreement”), to be effective as of
the 28th day of June, 2004 (hereinafter called “Agreement
Date”), is by and between Baylor College of Medicine
(hereinafter called “BAYLOR”), a Texas nonprofit
corporation having its principal place of business at One Baylor
Plaza, Houston, Texas 77030, and Power3 Medical
Products, Inc., a corporation organized under the laws of New
York and having a principal place of business at 3400 Research
Forest Drive, Suite B2-3, The Woodlands, Texas 77381, and its
Affiliates (hereinafter, collectively referred to as
“LICENSEE”).
WITNESSETH:
WHEREAS, BAYLOR and LICENSEE each
own an undivided interest in and to the Patent Rights as defined
below; and
WHEREAS, BAYLOR is willing to grant
a royalty bearing, worldwide, exclusive license to the Patent
Rights to LICENSEE on the terms set forth herein; and
WHEREAS, LICENSEE desires to obtain
said exclusive license under the Patent Rights.
NOW, THEREFORE, for and in
consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto expressly agree as
follows:
1.
DEFINITIONS AS USED
HEREIN
1.1 The term
“Affiliates” shall mean any corporation, partnership,
joint venture or other entity of which the common stock or other
equity ownership thereof is twenty five percent (25%) or more owned
by LICENSEE.
1.2 The term
“Confidential Information” shall mean all information
relating to the business of a Party that is not available to the
general public, including but not limited to its technical and
business information, products, assets, inventions, know-how,
research programs, biological materials, software, trade secrets,
designs, personnel, financial condition, business plans or
prospects, protocols, clinical parameters or markers and other
information associated with this Agreement, whether or not
patentable or copyrightable, delivered or communicated to the other
Party.
Confidential Information includes
not only written information, but information transferred orally,
visually, electronically or by any other means, that is designated
as being confidential. Confidential Information also includes
any copies, notes or summaries prepared from the Confidential
Information provided by either Party.
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1.3 The term
“Field” shall mean all fields.
1.4 The term
“Inventors” shall mean Stanley Appel, Ericka Simpson
and Albert Yen, employees of BAYLOR, and Ira Goldknopf and Essam
Sheta, employees of LICENSEE.
1.5 The term “Legal
Costs” shall mean all legal fees and expenses, filing or
maintenance fees, assessments and all other costs and expenses
related to prosecuting, obtaining and maintaining patent protection
on the Patent Rights in the United States and foreign
countries.
1.6 The term “Licensed
Product(s)” shall mean any product, process or service that
incorporates, utilizes or is made with the use of the Patent
Rights.
1.7 The term “Net
Sales” shall mean the gross amount of monies or cash
equivalent or other consideration which is paid by unrelated third
parties to LICENSEE or sublicensees for the Licensed Products by
sale or other mode of transfer, less all trade, quantity and cash
discounts actually allowed, credits, and allowances actually
granted on account of rejections, returns or billing errors,
duties, transportation and insurance, taxes and other governmental
charges actually paid. The term “Net Sales” in
the case of non-cash sales, shall mean the fair market value of all
equivalent or other consideration received by LICENSEE for the
Licensed Products.
1.8 The term
“Party” shall mean either LICENSEE or BAYLOR, and
“Parties” shall mean LICENSEE and BAYLOR.
1.9 The term “Patent
Rights” shall mean United States Patent Application Serial
No. TBA, entitled “Biomarkers for Neurodegenerative
Disease,” filed TBA, which was developed by the Inventors,
the inventions described and claimed therein, and all other pending
United States patent applications or parts thereof and any United
States patent which issues from any such pending applications and
any and all divisions, reissues, re-examinations, renewals,
continuations, continuations-in-part to the extent the claims are
directed to subject matter specifically described in the
aforementioned patent application and are dominated by the claims
of the existing Patent Rights, and extensions thereof, and all
other counterpart, pending or issued patents in all other
countries.
1.10 The term
“Sublicensing Revenue” shall mean all (i) cash,
(ii) sublicensing fees and (iii) all other payments and
the cash equivalent thereof, which are paid to LICENSEE by the
sublicensees of its rights hereunder, other than research and
development money paid to LICENSEE to conduct research.
2.
GRANT OF LICENSE
2.1 Subject to the
reservations of rights set forth in Paragraph 2.2, BAYLOR hereby
grants to LICENSEE an exclusive, worldwide, sublicensable license
under the Patent Rights to make, have made, use, market, sell,
offer to sell, lease and import Licensed Products in the
Field.
2.2 The grant in
Section 2.1 shall be further subject to, restricted by and
non-exclusive with respect to:
(i) the making or use of the
Patent Rights by BAYLOR for non-commercial research, patient care,
teaching and other educationally related purposes;
(ii) the making or use of the
Patent Rights by the BAYLOR Inventors for non-commercial research
purposes at academic or research institutions;
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(iii) any non-exclusive license
of the Patent Rights that BAYLOR grants to other academic or
research institutions for non-commercial research purposes;
and
(iv) any non exclusive license
of the Patent Rights that BAYLOR is required by law or regulation
to grant to the United States of America or to a foreign state
pursuant to an existing or future treaty with the United States of
America.
2.3 Government
Reservation. Rights under this Agreement are subject to
rights required to be granted to the Government of the United
States of America pursuant to 35 USC Section 200-212,
including a nonexclusive, nontransferable, irrevocable, paid-up
license to practice or have practiced for or on behalf of the
United States the subject inventions throughout the
world.
3.
MARKETING EFFORTS
LICENSEE shall use reasonable
efforts, as defined herein, to effect assiduously the introduction
of Licensed Products into the commercial market as soon as
practicable. Such efforts shall include, but not be limited
to: (i) diligence in the patent filings and prosecution as
described in Section 8 and (ii) working with
Dr. Stan Appel to increase the clinical data and relevance of
the diagnostic processes.
4.
PAYMENTS
4.1 As partial
consideration for the rights conveyed by BAYLOR under this
Agreement, LICENSEE shall pay BAYLOR a license fee of
*** upon execution of this Agreement.
4.2 In addition to
the foregoing, LICENSEE shall pay BAYLOR a royalty of
***. Such royalties shall be payable as provided in
Section 5.
4.3 After the first
commercial sale, if the royalties paid in any calendar year do not
reach the minimum amount of *** , LICENSEE shall pay an
additional amount with the payment due for the period ending
December 31 of such year, so that the total amount paid for
such year shall reach such minimum amount.
4.4 LICENSEE shall
also pay BAYLOR the following milestone payment set forth
below:
(i) First FDA approval in the United
States
***
LICENSEE shall notify BAYLOR in writing within
thirty (30) days upon the achievement of the milestone, such notice
to be accompanied by payment of the appropriate milestone
payment. Milestones are to be paid regardless of whether
LICENSEE or LICENSEE’s sublicensee attains such
milestone.
4.5 In addition to
the foregoing fees and royalties, LICENSEE agrees to pay to
BAYLOR *** .
4.6 LICENSEE will
be responsible for all Legal Costs incurred after the Agreement
Date.
4.7 Should LICENSEE
fail to make any payment whatsoever due and payable to BAYLOR
hereunder, BAYLOR may, at its sole option, terminate this Agreement
as provided in Section 10.
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5.
REPORTING
5.1 No later than
sixty (60) days after December 31 of each calendar year,
LICENSEE shall provide to BAYLOR a written annual Progress Report
describing progress on research and development, regulatory
approvals, manufacturing, sublicensing, marketing and sales during
the most recent twelve (12) month period ending December 31
and plans for the forthcoming year. If multiple technologies
are covered by the license granted hereunder, the Progress Report
shall provide the information set forth above for each
technology. LICENSEE shall also provide any reasonable
additional data BAYLOR requires to evaluate LICENSEE’s
performance.
5.2 LICENSEE shall
report to BAYLOR the date of first sale of Licensed Products in
each country within thirty (30) days of occurrence.
5.3 LICENSEE shall
submit to BAYLOR within thirty (30) days after March 31,
June 30, September 30 and December 31, a Royalty
Report setting forth for such calendar quarter at least the
following information:
(i)
the number of Licensed Products sold
by LICENSEE and sublicensees in each country;
(ii)
total billings for such Licensed
Products;
(iii)
deductions applicable to determine
the Net Sales thereof;
(iv)
the amount of Sublicensing Revenue
received by LICENSEE;
(v)
the amount of royalty due thereon,
or, if no royalties are due to BAYLOR for any reporting period, the
statement that no royalties are due; and
(vi)
the amount of other payments due
BAYLOR, including but not limited to, milestone payments and
minimum royalty payments.
Such report shall be certified as
correct by an officer of LICENSEE and shall include a detailed
listing of all deductions from royalties and other payments.
After termination or expiration of this Agreement, a final payment
shall be made by LICENSEE covering the whole or partial calendar
quarter.
5.4 LICENSEE shall
pay to BAYLOR with each such Royalty Report the amount of royalties
and other payments due with respect to such calendar quarter.
If multiple technologies are covered by the license granted
hereunder, LICENSEE shall specify which Patent Rights are utilized
for each Licensed Product included in the Royalty Report by citing
the applicable OTA number listed on the front page of
the Agreement.
5.5 All payments
due hereunder shall be deemed received when funds are credited to
BAYLOR’s bank account and shall be payable by check or wire
transfer in United States dollars. For sales of Licensed
Products in currencies other than the United States, LICENSEE shall
use exchange rates published in The Wall Street Journal on
the last business day of the calendar quarter that such payment is
due. No transfer, exchange, collection or other charges,
including any wire transfer fees , shall be deducted from
such payments.
5.6 Late payments
shall be subject to a charge of one and one-half percent (1.5%) per
month, the interest being compounded annually, or two hundred fifty
dollars ($250.00), whichever is greater. LICENSEE shall
calculate the correct late payment charge, and shall add it to each
such late payment.
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Said late payment charge and the payment and
acceptance thereof shall not negate or waive the right of BAYLOR to
seek any other remedy, legal or equitable, to which it may be
entitled because of the delinquency of any payment.
5.7 If payments are
sent by check, they shall be sent to the address listed in
Paragraph 14.1. If payments are sent by wire transfer, they
shall be sent using the wiring instructions sent by
BAYLOR.
5.8 In the event of
acquisition, merger, change of corporate name, or change of
make-up, organization, or identity, LICENSEE shall notify BAYLOR in
writing within thirty (30) days of such event.
5.9 If LICENSEE or
sublicensee (or optionee) does not qualify as a “small
entity” as provided by the United States Patent and Trademark
Office, LICENSEE must notify BAYLOR immediately.
6.
RECORDS AND
INSPECTION
LICENSEE shall maintain or cause to
be maintained a true and correct set of records pertaining to the
Net Sales of Licensed Products by LICENSEE under this
Agreement. During the term of this Agreement and for a period
of two (2) years thereafter, LICENSEE agrees to permit an
accountant selected and paid by BAYLOR and reasonably acceptable to
LICENSEE to have access during ordinary business hours to such
records as are maintained by LICENSEE as may be necessary, in the
opinion of such accountant, to determine the correctness of any
report and/or payment made under this Agreement. In the event
that the audit reveals an underpayment of royalty by more than five
percent (5%), the cost of the audit shall be paid by
LICENSEE. If the underpayment is less than five percent (5%)
but more than two percent (2%), LICENSEE and BAYLOR shall each pay
fifty percent (50%) of the cost of the independent audit.
Such accountant shall maintain in confidence, and shall not
disclose to BAYLOR, any information concerning LICENSEE or its
operations or properties other than information directly relating
to the correctness of such reports and payments. BAYLOR will
be entitled to no more than one examination per year without
LICENSEE’s written consent.
7.
SUBLICENSES
All sublicenses granted by LICENSEE
of its rights hereunder shall be subject to the terms of this
Agreement. LICENSEE shall be responsible for its sublicensees
and shall not grant any rights which are inconsistent with the
rights granted to and obligations of LICENSEE hereunder. Any
act or omission of a sublicensee which would be a breach of this
Agreement if performed by LICENSEE shall be deemed to be a breach
by LICENSEE of this Agreement. Each sublicense agreement
granted by LICENSEE shall include an audit right by BAYLOR of the
same scope as provided in Section 6 hereof with respect to
LICENSEE. No such sublicense agreement shall contain any
provision which would cause it to extend beyond the term of this
Agreement. LICENSEE shall give BAYLOR prompt notification of
the identity and address of each sublicensee with whom it concludes
a sublicense agreement and shall supply BAYLOR with a copy of each
such sublicense agreement.
8.
PATENTS AND
INFRINGEMENT
8.1 From the
Agreement Date and for the term of this Agreement, LICENSEE shall
have primary responsibility using patent counsel of its choice
reasonably acceptable to BAYLOR for filing, prosecuting and
maintaining all patent applications and patents included in the
Patent Rights licensed hereunder, except that BAYLOR may assume
responsibility at its sole expense for pursuing any protection
which LICENSEE declines to prosecute pursuant to Paragraph 8.2 of
this Agreement.
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8.2 During the term
of this Agreement, if LICENSEE decides not to file any or all
United States and foreign applications or to continue prosecution
of a patent application to issuance or maintain any United States
or foreign patent application or patent, LICENSEE shall timely
notify BAYLOR in writing in order that BAYLOR may file the United
States and foreign applications and continue the prosecution or
maintenance of such patent applications at its own expense.
If LICENSEE fails to notify BAYLOR in sufficient time for BAYLOR to
assume the cost, LICENSEE shall be considered in default of this
Agreement.
8.3 During the term
of this Agreement, LICENSEE agrees to prosecute with good faith and
due diligence all such patent applications and to take all actions
reasonably necessary to maintain and enforce the patents and
proprietary rights in and to the Patent Rights.
8.4 During the term
of this Agreement LICENSEE shall instruct counsel for LICENSEE to
keep BAYLOR reasonably informed, at LICENSEE’s expense, of
prosecutions pursuant to this Section 8 including submitting
to BAYLOR copies of all official actions and responses
thereto.
8.5 BAYLOR agrees
to cooperate with LICENSEE to whatever extent is necessary to
procure patent protection of any rights, including fully agreeing
to execute any and all documents to give LICENSEE the full benefit
of the licenses granted herein.
8.6 During the term
of this Agreement, each Party shall promptly inform the other of
any suspected infringement of any claims in the Patent Rights or
the misuse, misappropriation, theft or breach of confidence of
other proprietary rights in the Patent Rights by a third party, and
with respect to such activities as are suspected. Any action
or proceeding against such third party shall be instituted as
following:
(i)
BAYLOR and LICENSEE may agree to
jointly institute an action for infringement, misuse,
misappropriation, theft or breach of confidence of the proprietary
rights against such third party. Such joint action shall be
brought in the names of both BAYLOR and LICENSEE. If BAYLOR
or LICENSEE decide to jointly prosecute an action or proceeding
after it has been instituted by one Party, the action shall be
c
