EXCLUSIVE LICENSE AGREEMENT for PROCESSES FOR MICROFLUIDIC FABRICATION AND OTHER INVENTIONS

A.   Certain inventions, generally characterized as Processes for Microfluidic Fabrication (collectively "Invention"), were made in the course of research at the University of California, Merced and for UC Case No. 2008-341 at both the University of California, Merced and University of California, Berkeley, by Dr. Michelle Khine and others and are claimed in Patent Rights as defined below.

B.   To the extent of the actual knowledge of the licensing officer responsible for the administration of this Agreement, as of the Effective Date, no federal funds were used in the development of the Invention.  In the event that the development of the Invention was sponsored by the United States Federal Government, then, as a consequence, this license would be subject to overriding obligations to the United States Federal Government under 35 U.S.C. §§ 200-212 and applicable regulations including a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced the Invention for or on behalf of the United States Government throughout the world.

C.   To the extent of the actual knowledge of the licensing officer responsible for the administration of this Agreement, as of the Effective Date, the Invention having UC Case No. 2009-041, characterized as " Apparatus and Method for Culturing Stem Cells", and the Invention having UC Case No. 2009-402, characterized as “Honeycomb Shrink Wells for Stem Cell Culture” , were sponsored in part by the California Institute for Regenerative Medicine ("CIRM") and are subject to CIRM Grant Nos.  RS1-00239-1 and 442120-MK-18213 granted by CIRM to The Regents.  Under the terms of  CIRM’s Intellectual Property Requirements for Non-Profit Organizations (17 Cal.Code of Regs. Section 100300), The Regents agrees i) to make its CIRM-funded patented inventions readily accessible on reasonable terms, either directly or through a licensee, to other Grantee Organizations for non-commercial purposes upon request from such Grantee Organization; ii) if The Regents grants an exclusive license, The Regents is required to document the development and commercialization capabilities of the intended licensee and to include terms in the license agreement addressing all relevant therapeutic and diagnostic uses for which the invention is applicable and the licensee agrees to diligently develop and to include commercial development milestones and benchmarks so that development can be assessed and monitored; iii) if The Regents grants an exclusive license, the licensee must have a plan in place at the time of commercialization to provide access to resultant therapies and diagnostics for uninsured California patients and the exclusive licensee must agree to provide drugs at prices negotiated pursuant to the California Discount Prescription Drug Program (commencing with California Health and Safety Code section 130500 et seq.) to eligible Californians under that program and CIRM may make such plan available for review by the ICOC on an annual basis; iv) The Regents is required to monitor development activities of the licensee and to make reports of monitoring activities annually to CIRM; v) The Regents is required to report to CIRM administrative action to modify or terminate license rights where necessary; vi) The Regents is required to notify CIRM prior to any press release that refers to research findings, collaborations, inventions, patents or licensing activities that arise as a consequence of CIRM funding and CIRM may decide to participate in a joint press release; and vii) with regard to CIRM-funded patented inventions, CIRM has certain March-in Rights.  The CIRM Intellectual Property Requirements for Non-profit Organizations is attached in Appendix A.   [Need to discuss these requirements – may need to make modifications to agreement to accommodate]

D.       The Licensee has evaluated the Invention under a Secrecy Agreement with The Regents ( UC Control No. 2009-20-0554 ) with an effective date of April 9, 2009.

E.       The Licensee and The Regents have executed an Option Agreement ( UC Control No. 2008-11-0618 ) with an effective date of June 16, 2008.

F.       The Licensee and The Regents, acting on behalf of the University of California, Merced, have entered into a research agreement on June 16, 2008 (“Research Agreement”).

G.       The Licensee wishes to obtain certain rights from The Regents for the commercial development of the Invention, in accordance with the terms and conditions set forth herein and The Regents is willing to grant those rights so that the Invention may be developed and the benefits enjoyed by the general public.

H.       The scope of such rights granted by The Regents is intended to extend to the scope of the patents and patent applications in Patent Rights, but only to the extent that The Regents has proprietary rights in and to the Valid Claims of such Patent Rights.

I.       The Licensee is a "small business firm" as defined in 15 U.S.C. §632.

J.       Both parties recognize and agree that Earned Royalties are due under this Agreement with respect to products, services and methods and that such royalties will be paid with respect to both pending patent applications and issued patents, in accordance with the terms and conditions set forth herein.

K.       Both parties recognize and agree that Earned Royalties due under this Agreement will be based on the Licensee's or a Sublicensee's last act of infringement of Patent Rights within the control of the Licensee or a Sublicensee, regardless of whether the Licensee or a Sublicensee had control over prior infringing acts; the parties intend that Earned Royalties due under this Agreement will be calculated based on the Net Sales of the product or service resulting from the last act of infringement by the Licensee and its Sublicensees.

1.   DEFINITIONS

1.1   "Affiliate" of the Licensee means any entity which, directly or indirectly, Controls the Licensee, is Controlled by the Licensee or is under common Control with the Licensee.  "Control" means (i) having the actual, present capacity to elect a majority of the directors of such affiliate; (ii) having the power to direct at least forty percent (40%) of the voting rights entitled to elect directors; or (iii) in any country where the local law will not permit foreign equity participation of a majority, ownership or control, directly or indirectly, of the maximum percentage of such outstanding stock or voting rights permitted by local law.

1.2   "Attributed Income" means the total gross proceeds (exclusive of Earned Royalties of Sublicensees but including, without limitation, any license fees, maintenance fees, or milestone payments), whether consisting of cash or any other forms of consideration and whether any rights other than Patent Rights are granted, which gross proceeds are received by or payable to the Licensee, any Affiliate and/or Joint Venture from any Sublicensee in consideration of the grant of a sublicense under this Agreement. Notwithstanding the foregoing, Attributed Income shall not include proceeds attributed in such sublicense or such agreement, arrangement or other relationship to bona fide (i) debt financing; (ii) equity (and conditional equity, such as warrants, convertible debt and the like) investments in the Licensee at market value; (iii) reimbursements of Patent Prosecution Costs actually incurred by the Licensee; and (iv) reimbursement for the actual cost of documented research and/or development services undertaken by the Licensee prior to the effective date of the sublicense for the applicable field of use of such sublicense and reimbursement for the actual cost of research and/or development services provided after the effective date of the sublicense by Licensee for the applicable Sublicensee under such sublicense on the basis of full-time equivalent ("FTE") efforts of personnel at or below commercially reasonable and standard FTE rates.  For the avoidance of doubt, any gross proceeds meeting the definition set forth above in this Article 1.2 shall be “Attributed Income” irrespective of whether such gross proceeds are received under one or more separate agreements and irrespective of how such gross proceeds are referred to or characterized by the Licensee or the Sublicensee.  Also for avoidance of doubt, once a research and development expense is deducted from Attributed Income for any sublicense it can not be deducted again for that sublicense or any other sublicense.

1.3   "Combination Product" means a combined Product that contains or uses a Licensed Product or Licensed Service and at least one other Product or process (a "Combination Product Component"), where (i) such Combination Product Component is not a Licensed Product or Licensed Service, (ii) if such Combination Product Component were removed from such combined Product or service, the manufacture, use, Sale or import of the resulting Product or service in or into a particular country would infringe, but for a license, the same Valid Claim in the country where such manufacture, use, Sale or import occurs as such combined Product or service, (iii) such Combination Product Component and such Licensed Product or Licensed Service are Sold separately from such combined Product or service by the Licensee or any Affiliate, Joint Venture or Sublicensee, and (iv) the market price of such combined Product is higher than the market price for such Licensed Product or Licensed Service as a result of such combined Product or serviced containing or using such Combination Product Component.

1.4   "Earned Royalty" means Sublicensee Royalty (as defined in Paragraph 8.2 ) and Royalty (as defined in Paragraph 9.1 )

1.5   "Field of Use" means all fields unless otherwise amended by the parties to this Agreement.

1.6   “First Commercial Sale” means a bona fide good faith Sale of a Licensed Product in quantities sufficient to meet market demand.

1.7   "Joint Venture" means any separate entity established pursuant to an agreement between a third party and the Licensee and/or Sublicensee to constitute a vehicle for a joint venture, in which the separate entity manufactures, uses, purchases, Sells or acquires Licensed Products from the Licensee or Sublicensee.

1.8   "Licensed Method" means any process, art or method the use or practice of which, but for the license granted in this Agreement, would infringe, or contribute to, or induce the infringement of, any Patent Rights in any country were they issued at the time of the infringing activity in that country.

1.9   "Licensed Product" means any Product, including, without limitation, a Product for use or used in practicing a Licensed Method and any Product made by practicing a Licensed Method, the manufacture, use, Sale, offer for Sale or import of which, but for the license granted in this Agreement, would infringe, or contribute to, or induce the infringement of, any Patent Rights in any country were they issued at the time of the infringing activity in that country.

1.10   "Licensed Service" means any service provided for consideration (whether in cash or any other form), when such service (i) involves the use of a Licensed Product; or (ii) involves the practice of a Licensed Method.

1.11   "Net Invoice Price" means:

1.12   "Net Sale" means:

1.13   "New Developments" means inventions, or claims to inventions, which constitute advancements, developments or improvements, whether or not patentable and whether or not the subject of any patent application, which are not sufficiently supported by the specification of a previously-filed patent or patent application within the Patent Rights to be entitled to the priority date of the previously-filed patent or patent application.

1.14   "Patent Prosecution Costs" is defined in Paragraph 22.3 .

1.15   "Patent Rights" means the Valid Claims of, to the extent assigned to or otherwise obtained by The Regents, the following United States patents and patent applications:

1.16   "Product" means any kit, article of manufacture, composition of matter, material, compound, component or product.

1.17   “Reacquisition Sale or Exploitation” means those instances where the Licensee or a Sublicensee acquires a Licensed Product or Licensed Service and then subsequently Sells or otherwise exploits such Licensed Product or Licensed Service.

1.18   "Related Party" means a corporation, firm or other entity with which, or individual with whom, the Licensee and/or any Sublicensee (or any of its respective stockholders, subsidiaries or Affiliates) have any agreement, understanding or arrangement (for example, but not by way of limitation, an option to purchase stock or other equity interest, or an arrangement involving a division of revenue, profits, discounts, rebates or allowances) unrelated to the Sale or exploitation of the Licensed Products or Licensed Services without which such other agreement, understanding or arrangement, the amounts, if any, charged by the Licensee or any Sublicensee  to such entity or individual for the Licensed Product or Licensed Service, would be higher than the Net Invoice Price actually received, or if such agreement, understanding or arrangement results in the Licensee or any Sublicensee extending to such entity or individual lower prices for such Licensed Product or Licensed Service than those charged to others without such agreement, understanding or arrangement buying similar products or services in similar quantities.

1.19   "Relationship-Influenced Sale" means a Sale of a Licensed Product or Licensed Service, or any exploitation of the Licensed Product or Licensed Method, between the Licensee and/or any Sublicensee and (i) an Affiliate; (ii) a Joint Venture; (iii) a Related Party or (iv) the Licensee or a Sublicensee.

1.20   "Relationship-Influenced Sale Purchaser" means the purchaser of Licensed Product or Licensed Service in a Relationship-Influenced Sale.

1.21   "Sale" means the act of selling, leasing or otherwise transferring, providing, or furnishing for use for any consideration.  Correspondingly, "Sell" means to make or cause to be made a Sale and "Sold" means to have made or caused to be made a Sale.

1.22   "Sublicensee" means any person or entity (including any Affiliate or Joint Venture) to which any of the license rights granted to the Licensee hereunder are sublicensed.

1.23   "Sublicense Fee" is defined in Paragraph 8.1 .

1.24   "Valid Claim" means a claim of a patent or patent application in any country that (i) has not expired; (ii) has not been disclaimed; (iii) has not been cancelled or superseded, or if cancelled or superseded, has been reinstated; and (iv) has not been revoked, held invalid, or otherwise declared unenforceable or not allowable by a tribunal or patent authority of competent jurisdiction over such claim in such country from which no further appeal has or may be taken.

2.   GRANT

2.1   Subject to the limitations and other terms and conditions set forth in this Agreement including, if applicable, the license granted to the United States Government set forth in the Background and in Paragraph 2.3.1 , The Regents grants to the Licensee a license under its rights in and to Patent Rights  to make, use, Sell, offer for Sale and import Licensed Products and Licensed Services and to practice Licensed Methods, in the United States and in other countries where The Regents may lawfully grant such licenses, only in the Field of Use.

2.2   Except as otherwise provided for in this Agreement, the license granted under Patent Rights in Paragraph 2.1 is exclusive.  

2.3   The license granted in Paragraphs 2.1 and 2.2 is subject to the following:

2.4   The license granted in Paragraphs 2.1 and 2.2 is limited to methods and products that are within the Field of Use.  In the event that the Field of Use is amended upon mutual written agreement to exclude certain fields, then the Licensee has no license under this Agreement for such excluded fields.

2.5   The Regents reserves and retains the right (and the rights granted to the Licensee in this Agreement shall be limited accordingly) to make, use and practice the Invention and any technology relating to the Invention and to make and use any Products and to practice any process that is the subject of the Patent Rights (and to grant any of the foregoing rights to other educational and non-profit institutions) for educational, clinical and research purposes, including without limitation, any sponsored research performed for or on behalf of commercial entities and including publication and other communication of any research results.  For the avoidance of doubt, to the extent the Invention and any technology relating to the Invention are not the subject of the exclusive license under the Patent Rights granted to the Licensee hereunder, The Regents shall be free to make, use, Sell, offer to Sell, import, practice and otherwise commercialize and exploit (including to transfer, license to, or have exercised by, third parties) for any purpose whatsoever and in its sole discretion, such Invention and any Products or processes that are the subject of any of the foregoing.

2.6   In the event that the Invention was made under funding provided by the United States Government, then the Licensed Products, the Invention, and any products embodying the Invention sold in the United States will be substantially manufactured in the United States.

2.7   This Agreement will terminate immediately if a claim which includes, in any way, the assertion that any portion of Patent Rights is invalid or unenforceable is filed by the Licensee or an Interested Party.  For the purposes of this Paragraph 2.7 , an Interested Party means any third party who files such a claim on behalf of the Licensee or at the written urging of the Licensee, or is a Sublicensee of Licensee. Notwithstanding the above, if Licensee terminates a Sublicensee who violates this provision within fifteen (15) days following receipt of written notice from The Regents of such violation and the Sublicensee did not violate this provision at Licensee’s urging, then this Agreement will remain in effect.

3.   SUBLICENSES

3.1   The Regents also grants to the Licensee the right to sublicense to third parties (including to Affiliates and Joint Ventures) the rights granted to the Licensee hereunder, with no right to further sublicense except as provided for in Paragraph 3.2 below, as long as the Licensee has current exclusive rights thereto under this Agreement.  Each Sublicensee must be subject to a written sublicense agreement.  All sublicenses will include all of the rights of, and will require the performance of all the obligations due to, The Regents (and, if applicable, the United States Government and other sponsors), other than those rights and obligations specified in Article 6 (License Issue Fee), Article 7 (License Maintenance Fee) and Paragraph 9.5 (Minimum Annual Royalty) and Paragraphs 22.3 and 22.5 (reimbursement of Patent Prosecution Costs).  For the avoidance of doubt, Affiliates and Joint Ventures shall have no licenses under this Agreement unless such Affiliates and Joint Ventures are granted a sublicense. For the purposes of this Agreement, the operations of all Sublicensees shall be deemed to be the operations of the Licensee, for which the Licensee shall be responsible.

3.2   Under the terms of each sublicense, each such Sublicensee shall have the limited right (as described below) to grant three (3) further sublicenses ("Further Sublicenses") to the Sublicensee’s affiliated companies and/or other third parties (each, a “Further Sublicensee”).  Each Further Sublicensee shall also have the limited right to grant two (2) additional further sublicenses ("Additional Further Sublicenses") to an affiliated company and/or other third party (each an "Additional Further Sublicensee").  In each case the term "affiliated company" shall have the same definition as Affiliate in Section 1.1 of this Agreement, with the appropriate sublicensee substituted for Licensee in the definition.  Such Further Sublicenses and Additional Further Sublicenses may only be granted to the extent that such Sublicensee or Further Sublicensee deems that they are reasonably needed for the development and commercialization of Licensed Products and the maximization of sales in accordance with this Agreement.  Each Sublicensee and each permitted Further Sublicensee and Additional Further Sublicensee shall be subject to a written sublicense agreement that shall be consistent with and not in violation of all of the applicable terms, conditions, obligations, restrictions and other terms of this Agreement that protect or benefit The Regents’ (and, if applicable, the U.S. Government’s and other sponsors’) rights and interests.  Licensee shall attach a copy of this Agreement to each sublicense issued under this Paragraph 3.2 and shall specify in the sublicense that the sublicensee must comply with the terms of the Agreement.  Licensee may redact the following information from the Agreement, should it wish to do so: License Issue Fee, License Maintenance Fee, Earned Royalties and Minimum Royalties, Milestone Payments, Fees for Patent Rights Added After Effective Date and the Patent Rights not included in the sublicense.  Licensee agrees that it shall require appropriate audited and auditable reporting from each Sublicensee, its Further Sublicensees and Additional Further Sublicensees to establish all amounts owed hereunder, and shall make such reports available to The Regents.  Licensee shall require each Sublicensee to submit to Licensee progress reports and audited financial reports consistent with the Agreement, and each Sublicensee shall require each Further Sublicensee and Additional Further Sublicensee to submit such progress reports and audited financial reports to Sublicensee which it will deliver to Licensee.  Licensee shall make these reports available to The Regents.  Licensee shall require that each Sublicensee agree to indemnification procedures and insurance coverages consistent with the obligations imposed on Licensee by Article 25 of the Agreement.  Licensee shall also require each Sublicensee to obtain comparable indemnification provisions from each Further Sublicensee and each Additional Further Sublicensee.  

3.3   In the event that The Regents and the Licensee each own an undivided interest in any Patent Rights licensed hereunder, the Licensee will not separately grant a license to any third party under its rights without concurrently granting a license under The Regents' rights on the terms and conditions described in this Article 3 (Sublicenses).

3.4   The Licensee will notify The Regents of each sublicense granted hereunder and will provide The Regents with a complete copy of each sublicense (along with a summary of the material terms of each such sublicense) and each amendment to such sublicense within thirty (30) days after issuance of such sublicense or such amendment.  The Licensee will collect from Sublicensees and pay to The Regents all fees, payments, royalties and the cash equivalent of any consideration due The Regents.  The Licensee will guarantee all monies due The Regents from Sublicensees. For clarity, if the Licensee grants a sublicense that contains a provision for payment of royalties by any Sublicensee in an amount that is less than the Sublicensee Royalty required to be paid under Paragraph 8.2 below, then the Licensee will pay to The Regents a total amount equal to the Sublicensee Royalty based on the Sublicensees’ Net Sales as provided for in Paragraph 8.2 .  The Licensee will require Sublicensees to provide it with copies of all progress reports and royalty reports in accordance with the provisions herein and the Licensee will collect and deliver all such reports due The Regents from Sublicensees.

3.5   If Licensee licenses patent rights assigned to or otherwise acquired by it ("Licensee's Patent Rights"), and it believes, in good faith, that the recipient of such license will infringe Patent Rights in practicing the Licensee's Patent Rights, then the Licensee will not separately grant a license to such recipient under Licensee's Patent Rights without concurrently granting a sublicense under Patent Rights on the terms required under this Agreement.

3.6   Upon any expiration or termination of this Agreement for any reason, all sublicensed rights conveyed to any Sublicensee (but not Further Sublicensees or Additional Further Sublicensees), granted pursuant to Article 3 of this Agreement will remain in effect and will be assumed by The Regents as binding obligations provided that (a) such Sublicensee is not in breach of its sublicense at the time of expiration or termination of this Agreement; (b) all of the terms of this Agreement are agreed to fully in writing by such Sublicensee; and (c) such Sublicensee acquires no rights from or obligations on the part of The Regents other than those that are specifically granted under this Agreement and such Sublicensee  assumes all liability and obligations to The Regents required of Licensee by this Agreement with respect to The Regents' sublicensed rights, including past due obligations existing at the time of assignment of this Agreement by Licensee. Moreover, The Regents will have the sole right to modify each such assigned sublicense to include all of the rights of The Regents (and, if applicable, the United States Government and other sponsors) that are contained in this Agreement, including the payment of Earned Royalties directly to The Regents by the Sublicensee as if it were the Licensee at a rate that is no lower than the rate set forth in Article 9 (Earned Royalties and Minimum Annual Royalties) in accordance with Article 5 (Payment Terms).   If the Sublicensee fails to meet the above provisions described in this Paragraph   3.6 (a – c) then The Regents may terminate its sublicense, in accordance with Article   16 (Termination by The Regents).  The Regents will not be bound to perform any duties or obligations set forth in any sublicense that extend beyond the duties and obligations of The Regents set forth in this Agreement, and the Licensee’s obligations to The Regents hereunder will be binding upon the Sublicensee.

3.7   In the event that the sublicense granted to the Sublicensee under this Agreement terminates or expires while this Agreement remains in effect, all Further Sublicenses and Additional Further Sublicenses shall automatically terminate or expire, as appropriate.

4.   MANDATORY SUBLICENSING

4.1   Commencing on the date that is eighteen (18) months after the Effective Date, if The Regents (as represented by the actual knowledge of the licensing professional responsible for administration of this Agreement) becomes aware of, or if a third party becomes aware of and notifies such licensing professional of, an application or use for Products within the licensed Field of Use but for which Licensed Products have not been developed or are not, at such time, being developed by Licensee (“New Application”), then The Regents, through the Office of Technology Transfer, may give written notice to Licensee thereof.

4.2   Within ninety (90) days of such notice, Licensee shall give The Regents written notice stating whether Licensee agrees to develop and commercialize Licensed Products for such New Application ("New Licensed Products").  Such notice shall be accompanied by (i) a detailed development schedule, including specific diligence requirements and development milestones, for the development of New Licensed Products; and (ii) a detailed business plan for the development, marketing and commercialization of New Licensed Products (collectively, the "Development Plan").  If Licensee has not notified The Regents within such ninety (90) day period, in accordance with the foregoing, that Licensee agrees to develop and commercialize such New Licensed Products, or if the Development Plan is not reasonably acceptable to The Regents, then Licensee shall be deemed to not so agree.

4.3   If Licensee agrees, as set forth in Paragraph 4.2 , to develop and commercialize such New Licensed Products, then Licensee shall in accordance with the Development Plan (i) diligently proceed with the development, manufacture and commercialization of such New Licensed Products and (ii) after such New Licensed Product has been developed, earnestly and diligently endeavor to market the same in quantities sufficient to meet market demand.  Licensee shall submit a written progress report setting forth in detail the status of such development, manufacture and commercialization every six (6) months to The Regents.

4.4   If Licensee does not agree, as set forth in Paragraph 4.2 to develop and commercialize such New Licensed Products, or if Licensee fails to diligently pursue the development and commercialization thereof in accordance with the Development Plan, then The Regents shall have the right to seek one or more third parties for the development and commercialization of such New Licensed Products and refer such third party to Licensee so that such third party may request a sublicense allowing for development and commercialization of such New Licensed Products.  If the third party requests a sublicense, then Licensee shall report such request, together with the terms and conditions thereof, to The Regents within thirty (30) days from the date of such request.

4.5   If Licensee does not grant a sublicense to the third party for the New Application within a reasonable time after such request (and, in any event, within one hundred (100) days after such request), or refuses to grant such sublicense, then Licensee shall promptly, or, in the event of such refusal, within thirty (30) days after such refusal, submit to The Regents a written report.  Such report will include a written justification for the Licensee's refusal or failure to grant such sublicense and the license terms proposed by the third party, if any.  The Regents, at its sole discretion, shall have the right to grant to the third party (and the rights granted to Licensee in this Agreement shall be limited accordingly) a license to make, have made, use, sell, offer for sale and import Licensed Products, to provide Licensed Services and to practice the Licensed Methods within the New Application under terms that The Regents determines to be reasonable.  All amounts received by The Regents pursuant to such license, after recovery by The Regents of its expenses in obtaining the license, shall be divided between The Regents and the Licensee as follows:  sixty percent (60%) to The Regents and forty percent (40%) to the Licensee.  The Regents shall deliver to Licensee its portion thereof.

5.   PAYMENT TERMS

5.1   Paragraphs 1.8 , 1.9 , 1.10 and 1.15 define Licensed Method, Licensed Product, Licensed Service and Patent Rights, so that Earned Royalties are payable on products and methods covered by both pending patent applications and issued patents.  Earned Royalties will accrue in each country for the duration of Patent Rights in that country and will be payable to The Regents when Licensed Products or Licensed Services are invoiced, or if not invoiced, when delivered or otherwise exploited by the Licensee or Sublicensee in a manner constituting a Net Sale as defined in Paragraph 1.12 .  Sublicense Fees with respect to any Attributed Income shall accrue to The Regents within thirty (30) days of the date that such Attributed Income is due to the Licensee.

5.2   The Licensee will pay to The Regents all Earned Royalties, Sublicense Fees and other consideration payable to The Regents quarterly on or before February 28 (for the calendar quarter ending December 31), May 31 (for the calendar quarter ending March 31), August 31 (for the calendar quarter ending June 30) and November 30 (for the calendar quarter ending September 30) of each calendar year.  Each payment will be for Earned Royalties, Sublicense Fees and other consideration which has accrued within the Licensee's most recently completed calendar quarter.

5.3   All consideration due The Regents will be payable and will be made in United States dollars by check payable to "The Regents of the University of California" or by wire transfer to an account designated by The Regents.  The Licensee is responsible for all bank or other transfer charges.  When Licensed Products or Licensed Services are Sold for monies other than United States dollars, the Earned Royalties and other consideration will first be determined in the foreign currency of the country in which such Licensed Products or Licensed Services were Sold and then converted into equivalent United States dollars.  The exchange rate will be the average exchange rate quoted in the The Wall Street Journal during the last thirty (30) days of the reporting period.

5.4   Sublicense Fees and Earned Royalties on Net Sales of Licensed Products or Licensed Services and other consideration accrued in, any country outside the United States may not be reduced by any taxes, fees or other charges imposed by the government of such country, except those taxes, fees and charges allowed under the provisions of Paragraph 1.12 (Net Sales).

5.5   Notwithstanding the provisions of Article 29 (Force Majeure) if at any time legal restrictions prevent the prompt remittance of Earned Royalties or other consideration owed to The Regents by the Licensee with respect to any country where a sublicense is issued or a Licensed Product or Licensed Service is Sold or otherwise exploited, then the Licensee shall convert the amount owed to The Regents into United States dollars and will pay The Regents directly from another source of funds in order to remit the entire amount owed to The Regents.

5.6   In the event that any patent or claim thereof included within the Patent Rights is held invalid in a final decision by a court of competent jurisdiction and last resort and from which no appeal has or can be taken, then all obligation to pay royalties based on that patent or claim or any claim patentably indistinct therefrom will cease as of the date of final decision.  The Licensee will not, however, be relieved from paying any royalties that accrued before such final decision and the Licensee shall be obligated to pay the full amount of royalties due hereunder to the extent that The Regents licenses one or more Valid Claims within the Patent Rights to the Licensee with respect to Licensed Products or Licensed Services.

5.7   If applicable, no Earned Royalties will be collected or paid hereunder to The Regents on Li