EXCLUSIVE PATENT LICENSE AGREEMENT BETWEEN THE UNIVERSITY OF ARIZONA AND PROLX PHARMACEUTICALS CORPORATION

Exhibit 10.21

EXCLUSIVE PATENT LICENSE AGREEMENT
BETWEEN
THE UNIVERSITY OF ARIZONA
AND
PROLX PHARMACEUTICALS CORPORATION

        Effective as of the date of the last signature to this Agreement, the Arizona Board of Regents on behalf of the University of Arizona, having its principal offices in Tucson, Arizona 85721 (the "LICENSOR"), and PROLX PHARMACEUTICALS CORPORATION, having a principal place of business at 221 E. 6 ^th St. Tucson, AZ 85705 ("LICENSEE"), agree as follows:

1. BACKGROUND

        1.1   The LICENSOR wishes to exercise its right to administer and license valuable intangible property rights in Technology described in patents and patent applications identified in the attached Schedule A associated with University of Arizona inventors, Garth Powis, D.Phil. and Sarah J. Welsh, Ph.D.

        1.2   The LICENSEE wishes to acquire an Exclusive license from LICENSOR for the purpose of undertaking development, to manufacture, use, import and sell products incorporating said Technology and the LICENSOR is willing to grant such an Exclusive license in order to have the Technology developed into products and marketed at the earliest possible time for use and benefit to the public and the LICENSOR.

2. DEFINITIONS

        2.1   " Exclusive " means that, subject to certain rights to the United States Government, LICENSOR has not granted and shall not grant further licenses under the Licensed Patents so long as this Agreement is in effect, and shall not make or have made Licensed Products for use by third parties for commercial use nor sell or offer to sell Licensed Products to third parties for commercial use.

        2.2   " First Commercial Sale " means the first sale after regulatory approval of a Licensed Product in an arms length transaction with a third party unaffiliated with any party to this Agreement.

        2.3   " Licensed Patent(s )" means the patents and patent applications identified in Schedule A including all divisionals, continuations, reissues, and reexaminations thereof, and applications claiming priority therefrom, but excluding continuations-in-part, and any and all existing or future foreign counterparts as well as any U.S. or foreign patents actually issued or granted from the same.

        2.4   " Licensed Product(s )" means any compound, product or part thereof, device, kit, method or service for which the creation, manufacture, use, import or sale is covered by a valid claim of an issued, unexpired Licensed Patent(s). A claim of an issued, unexpired Licensed Patent(s) shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken.

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        2.5   " LICENSEE " is understood to include ProlX Pharmaceuticals Corporation and any and all of its Affiliates. An Affiliate of LICENSEE shall mean any corporation or other business entity controlled by, controlling, or under common control with LICENSEE during the term of this Agreement. For this purpose, "control" means direct or indirect beneficial ownership:

•         (a)   of at least fifty percent (50%) of the voting stock; or

          (b)   of at least fifty percent (50%) interest in the income of such corporation or other business.

        2.6   " Net Sales " means the gross invoice price generated by sale or use, including provision of service involving the use, of the Licensed Product(s) after regulatory approval in the form in which it is sold or used, less the following items:

•         (a)   Import, export, excise, value added and sales taxes, plus custom duties;

          (b)   Costs of insurance, packing and transportation from the place of manufacture to the customer's premises or point of installation;

          (c)   Normal and customary quantity and cash discounts; and

          (d)   Credit for returns, allowances, or trades actually given.

        For Licensed Products sold or otherwise provided in combination with other products or services, or provided in other than a sale transaction, Net Sales shall be based on the quantity of products or services provided times the price for a similar product or service when sold or otherwise provided separately by LICENSEE in an arms-length transaction in similar quantities.

        2.7   " Regulatory Approval " means any approval, allowance or clearance by any governmental agency or agencies having authority to regulate the use or sale of any Licensed Product(s) in the pertinent jurisdiction or territory.

        2.8   " Royalty Payment " means obligation arising as a result of sale of marketed Licensed Product by Licensee or Sublicensee.

        2.9   " Technical Information " means the information in Licensed Application(s) and Licensed Patents as well as any technical data and material provided to LICENSEE by LICENSOR or its employees or contractors including, without limitation, any biochemical, preclinical, clinical, manufacturing, formulation, and scientific research information of a confidential nature whether patentable or unpatentable, relating to, but limited to the general subject matter described or claimed in Licensed Patent(s).

        2.10 " Verifiable Research Costs " means any costs of research and development of Licensed Product, but excluding costs that are paid for or reimbursed by research grants, contracts with third parties, or other non-contractual agreements.

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        2.11 " LICENSOR " means the Arizona Board of Regents on behalf of the University of Arizona.

3. GRANT

        3.1   LICENSOR hereby grants under LICENSOR'S valuable intangible property rights and subject to the terms of this Agreement, and LICENSEE hereby accepts, an Exclusive worldwide license to make, have made, use, sell, have sold, offer for sale, import, and otherwise obtain or provide Licensed Product(s) and a non-exclusive worldwide license to use Technical Information. For the avoidance of doubt, nothing in the preceding grant shall be interpreted as limiting LICENSOR'S retained right to use Licensed Patents for educational and research purposes. LICENSEE shall have a first option to license future patents by Inventors solely owned by LICENSOR which are dominated by claims in any patents derived from the above referenced patent applications and not otherwise obligated by third party funding agreements with LICENSOR.

        3.2   LICENSOR grants LICENSEE the right to grant sublicenses to third parties so long as the grant to any sublicense is within the scope of the grant of Article 3.1 to LICENSEE and as long as LICENSEE possesses an Exclusive License under this Agreement. Any and all sublicense agreements granted by LICENSEE shall also include all of the rights and obligations due under this Agreement by LICENSEE to LICENSOR and, if applicable, the United States government. These rights due LICENSOR in all sublicenses include, but are not limited to, the right of LICENSOR to receive all royalties and fees under Articles 4 and 5.

        LICENSEE shall notify the LICENSOR of each sublicense granted hereunder and provide LICENSOR with a copy of each sublicense, redacted to remove confidential information of sublicensee. LICENSEE shall collect and pay all fees and royalties due LICENSOR and guarantee all such payments due from sublicensees. LICENSEE shall require sublicensees to provide payments with royalty reports, and LICENSEE shall collect and summarize for LICENSOR all such reports due from sublicensees. LICENSEE shall monitor sublicensees and assure license terms are met and product quality is equal to or greater than that required by this Agreement. Upon termination of this Agreement for any reason, LICENSOR shall acknowledge in writing, not later than thirty days following such termination, the continued effectiveness of each sublicense agreement (with the caveat that LICENSOR shall take the place of LICENSEE in any such sublicense), unless LICENSOR has a reasonable, good faith belief that the sublicensee under such sublicense has not satisfactorily performed its obligations thereunder.

4. FEES, MILESTONES AND ROYALTIES PAYMENTS

        4.1   LICENSEE agrees to pay [+].

        4.2   LICENSEE agrees to cover the costs incurred in connection with the preparation, filing, prosecution and the maintenance of Licensed Patents. After the effective date, and during the term of this Agreement, LICENSEE agrees to assume responsibility for future patent prosecution and maintenance costs as provided in the following Article 7.1.

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        4.3   LICENSEE shall pay to LICENSOR, within thirty (30) days after achieving milestone, payments relating to Regulatory Approval for Licensed Product as follows:

        [+]

        LICENSEE may investigate more than one Licensed Product through Phase II tests without paying more than one set of milestone royalties.

        4.4   [+]

        4.5   [+]

        4.6   The royalty on sales in currencies other than U.S. Dollars shall be calculated using the appropriate foreign exchange rate for such currency quoted by the Wall Street Journal , on the close of business on the last banking day of each calendar quarter. Royalty payments to LICENSOR shall be in U.S. Dollars.

5. REPORTS, PAYMENTS AND ACCOUNTING

        5.1     Quarterly Royalty Payment and Report.     LICENSEE shall make written reports and royalty payments to LICENSOR within ninety (90) days after the end of each calendar quarter following the First Commercial Sale. This report shall state the number, description, and aggregate Net Sales of Licensed Product(s) during such completed calendar quarter, and resulting calculation of earned royalty payment due the LICENSOR for such completed calendar quarter. Concurrent with the making of each such report, LICENSEE shall include payment due LICENSOR of royalties for the calendar quarter covered by such report.

        All Payments pursuant to the License shall be made and sent to the following address:

• • Director
    Attention: UA #04-034; UA # 06-011
    Office of Technology Transfer
    The University of Arizona
    P.O. Box 210158
    Tucson, AZ 85721-0158

        5.2     Annual Progress Reports .    LICENSEE, within thirty (30) days of the end of a calendar year, shall provide to LICENSOR annual written progress reports prior to the first Quarterly Report for each calendar year after the effective date of this agreement. The reports shall include sufficient detail to allow LICENSOR to determine progress on research and development, manufacturing, sublicensing, marketing and sales during the previous twelve (12) months as well as plans for the coming year.

        5.3     Accounting .    LICENSEE agrees to keep records for a period of seven (7) years showing the manufacturing, sales, use, and other disposition of products sold or otherwise disposed of under the license herein granted in sufficient detail to enable the royalties payable hereunder by

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LICENSEE to be determined, and further agrees to permit its books and records to be examined from time to time by a certified public accountant of a nationally recognized accounting firm (the "Auditor"), who is selected and paid for by LICENSOR, but no more than once per calendar year to the extent necessary to verify reports provided for in Paragraph 5.1. The information obtained shall be treated as confidential information pursuant to Article 9.

        5.4   If the Auditor determines that LICENSEE has, for any reason, failed to pay the full royalties as due under this Agreement, the Auditor shall inform LICENSOR and LICENSEE. LICENSEE shall immediately upon notice thereof pay to LICENSOR any owed royalties plus interest at the rate of [+] per annum above the average prime rate for that calendar year, compounded daily, calculated from the date upon which such royalties should have been paid to the date of actual payment of LICENSOR. If the Auditor determines that LICENSEE has overpaid royalties due under this Agreement, such overpayments shall be credited against future royalties due LICENSOR. In the event that underpayments of royalties due exceed [+], then the cost of the next two examinations of LICENSEE'S books and records shall be borne by LICENSEE.

6. REPRESENTATIONS

        6.1   LICENSOR represents that it has the right to grant LICENSEE the License granted herein and that it has not granted any license to the Licensed Patents or any rights in any Licensed Product(s) to any third party, except for United States government rights which may have been required by law.

        6.2   LICENSOR represents that, to LICENSOR'S knowledge, information and belief at the time of execution of this Agreement:

•         (a)   there are no other patents, applications, or invention disclosures naming one or more of the inventors of Licensed Patents owned or assigned to LICENSOR which dominate or are dominated by the claimed subject matter of Licensed Patents; and

          (b)   other than the LICENSEE and LICENSOR, there are no other co-owners of the Licensed Patents, except as set forth herein.

        6.3   LICENSEE represents to LICENSOR that LICENSEE shall diligently perform all of its obligations under the Agreement.

        6.4   EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENTED RIGHTS CLAIMS, ISSUED OR PENDING.

        6.5   EXCEPT FOR ITS OBLIGATIONS OF COOPERATION AS SET FORTH IN SECTION 8 HEREOF, NOTHING IN THIS AGREEMENT, EITHER EXPRESS OR IMPLIED, OBLIGATES LICENSOR EITHER TO BRING OR PROSECUTE ACTIONS OR SUITS

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AGAINST THIRD PARTIES FOR PATENT INFRINGEMENT OR TO FURNISH ANY KNOW-HOW OR TRADE SECRETS NOT PROVIDED IN LICENSOR'S PATENT RIGHTS.

        6.6   IN NO EVENT SHALL LICENSOR BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE EXERCISE OF THIS LICENSE OR THE USE OF THE TECHNICAL INFORMATION OR LICENSED PRODUCTS.

        6.7   NO WARRANTY OR REPRESENTATION IS MADE THAT ANYTHING MADE, USED, OR SOLD UNDER THE TERMS OF THIS AGREEMENT WILL BE FREE FROM INFRINGEMENT OF ANY THIRD PARTY PATENTS.

        6.8   THIS AGREEMENT DOES NOT CONFER BY IMPLICATION, ESTOPPEL, OR OTHERWISE ANY LICENSE OR RIGHTS TO ANY OTHER PATENT OF LICENSOR OTHER THAN PATENT RIGHTS AS EXPRESSLY STATED HEREIN, REGARDLESS OF WHETHER SUCH PATENTS ARE DOMINANT OR SUBORDINATE TO PATENT RIGHTS.

7. PROSECUTION OF LICENSED PATENTS

        7.1   LICENSEE agrees to accept liaison and financial responsibilities, as hereinafter set forth, for the prosecution, by a patent lawyer in independent practice, who shall be nominated by LICENSEE and approved by LICENSOR, of the Licensed Patents listed in Schedule A, and additional applications as the parties may subsequently agree. Said financial responsibilities shall not only include the costs of prosecution but also the payment of maintenance fees, where required, to maintain said patent applications and patents, if issued, in force and effect for as long as possible. It is further agreed that the patent lawyer selected and paid by LICENSEE and approved by LICENSOR shall be required, if so desired by LICENSOR, to keep LICENSOR informed of all steps in the prosecution and maintenance of said Licensed Patents. Notice of prosecution and maintenance of said Licensed Patents shall be sent by express courier delivery to:

• • Internal IP Counsel
    Attn: UA #04-034; UA # 06-011
    Office of Technology Transfer
    The University of Arizona
    888 N. Euclid Avenue, Room 204
    Tucson, AZ 85721
    Tel: 520-621-5000

        If, for any reason, prosecution or maintenance of a particular patent application or patent in a particular country is to be abandoned by LICENSEE, LICENSOR will be notified in sufficient time to assume prosecution should LICENSOR desire to do so. LICENSEE shall bear all cost to maintain the patent prosecutio