LICENSE AGREEMENT

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This Agreement is effective on the date of the last signature (“Effective Date”).

WHEREAS, the inventions disclosed in UCSD Case Docket No. SD1998-0088 and titled “MACROMOLECULAR CARRIER FOR DRUG AND DIAGNOSTIC AGENT DELIVERY“ ("Invention"), were made in the course of research at UCSD by Dr. Dave Vera (hereinafter and collectively, the "Inventor ") and are covered by Patent Rights as defined below;

WHEREAS, the research was sponsored in part by the Government of the United States of America and as a consequence this license is subject to overriding obligations to the Federal Government under 35 U.S.C. §§ 200-212 and applicable regulations;

WHEREAS, the Inventor is an employee of UCSD, and is obligated to assign all of his right, title and interest in the Invention to UNIVERSITY;

WHEREAS, LICENSEE entered into a secrecy agreement (UC Control No 1999-20-0208) with UNIVERSITY, effective July 17, 1998 ("Secrecy Agreement"), for the purpose of evaluating the Invention;

WHEREAS, UNIVERSITY is desirous that the Invention be developed and utilized to the fullest possible extent so that its benefits can be enjoyed by the general public;

WHEREAS, LICENSEE is desirous of obtaining certain rights from UNIVERSITY for commercial development, use, and sale of the Invention, and use of the Invention in Combination Products in the field of Scintigraphy and intraoperative use in Scintillation Counting and the UNIVERSITY is willing to grant such rights; and

WHEREAS, LICENSEE understands that UNIVERSITY may publish or otherwise disseminate information concerning the Invention at any time and that LICENSEE is paying consideration thereunder for its early access to the Invention, not continued secrecy therein.

NOW, THEREFORE, the parties agree:

The terms, as defined herein, shall have the same meanings in both their singular and plural forms.

2.1   License. Subject to the limitations set forth in this Agreement and Sponsor's Rights, UNIVERSITY hereby grants to LICENSEE and Affiliates, and LICENSEE hereby accepts, a license under Patent Rights to make, use, sell, offer for sale, and import Licensed Products and to practice Licensed Methods and to use the Technology in the Field within the Territory and during the Term.

The license granted herein is exclusive for Patent Rights and UNIVERSITY shall not grant to third parties a further license under Patent Rights in the Field, within the Territory and during the Term.

2.2 Sublicense.  

(a)   The license granted in Paragraph 2.1 includes the right of LICENSEE to grant sublicense to third parties during the Term but only for as long the license is exclusive.

(b)   With respect to sublicense granted pursuant to Paragraph 2.2(a), LICENSEE shall:

(1) not receive, or agree to receive, anything of value in lieu of cash as considerations from a third party under a sublicense granted pursuant to Paragraph 2.2(a) without the express written consent of UNIVERSITY;

(2) to the extent applicable, include all of the rights of and obligations due to UNIVERSITY (and, if applicable, the Sponsor's Rights) and contained in this Agreement;

(3) promptly provide UNIVERSITY with a copy of each sublicense issued; and

(4) collect and guarantee payment of all payments due, directly or indirectly, to UNIVERSITY from Sublicensees and summarize and deliver all reports due, directly or indirectly, to UNIVERSITY from Sublicensees.

(c) Upon termination of this Agreement for any reason, UNIVERSITY, at its sole discretion, shall determine whether LICENSEE shall cancel or assign to UNIVERSITY any and all sublicenses.

2.3   Reservation of Rights. UNIVERSITY reserves the right to:

(a)   use the Invention, Technology and Patent Rights for educational and research purposes;

(b)   publish or otherwise disseminate any information about the Invention and Technology at any time; and

(c)   allow, in compliance with University policy, other nonprofit institutions to use Invention, Technology and Patent Rights for educational and research purposes in their facilities.

3.1   Fees and Royalties. The parties hereto understand that the fees and royalties payable by LICENSEE to UNIVERSITY under this Agreement are partial considerations for the license granted herein to LICENSEE under Patent Rights. Subject to the provisions of this Agreement   LICENSEE shall pay UNIVERSITY:

(a)   a license issue fee of Twenty-Five Thousand Dollars ($25,000) within thirty (30) days of the Effective Date this Agreement;

(b)   license maintenance fees of Twenty-Five Thousand Dollars ($25,000) per year. The first license maintenance fee shall be due no later than August 8, 2003 and shall include an additional two thousand Dollars ($2,000) as interest, and shall be non-transferable and survive termination. The second license maintenance fee shall be due on the second anniversary of the effective date of the license. Subsequent license maintenance fees shall be payable on the third anniversary of the Effective Date and annually thereafter on each anniversary; provided however, that LICENSEE's obligation to pay this fee shall end on the date when LICENSEE is commercially selling a Licensed Product;

(c)   milestone payments in the amounts payable according to the following schedule or events:

(i) if LICENSEE is required to license the intellectual property of a Third Party to make, have made, use, sell, offer to sell or import Licensed Products, the earned royalty due hereunder shall be reduced in the proportion of one half percent (0.5%) for every one percent (1.0%) of royalty due to such Third Party.

(ii) the earned royalty due on Net Sales of Combination Product by LICENSEE and/or its Affiliate(s) shall be calculated as below:

Earned Royalties due UNIVERSITY = A/(A+B+C . . .) x Royalty Rate on Net Sales of the Licensed Products applicable in (i) or (ii) x Net Sales of Combination Product, where:

A is the separately listed sale price of the Licensed Product or Licensed Product components; and

B and C . . . are the separately listed sale prices of the individual products or product components, respectively, that satisfied the requirements outlined in Paragraph 1.13. If LICENSEE does not separately sell any of the B, C . . . products or product components used in Combination Product, the purchase price paid by LICENSEE in the procurement of said products or product components shall be used.

(e)   [*]% of all sublicense fees received by LICENSEE from its Sublicensees that are not earned royalties, excluding research support, received by LICENSEE, provided however that such research support shall not include executive and clerical salaries, legal expenses, or other costs not directly related to research;

(f)   on each and every sublicense royalty payment received by LICENSEE from its Sublicensees on sales of Licensed Product by Sublicensee, fifty percent (50%) of the royalties received by LICENSEE;

(g)   beginning the calendar year of commercial sales of the first License Product by LICENSEE, its Sublicensee, or an Affiliate and if the total earned royalties paid by LICENSEE under Paragraphs 3.1(d) and (f) to UNIVERSITY in any such year cumulatively amounts to less than Twenty-Five Thousand Dollars ($25,000) (“ minimum annual royalty ”), LICENSEE shall pay to UNIVERSITY a minimum annual royalty on or before February 28 following the last quarter of such year the difference between amount noted above and the total earned royalty paid by LICENSEE for such year under Paragraphs 3.1(d) and (f); provided, however, that for the year of commercial sales of the first Licensed Product, the amount of minimum annual royalty payable shall be pro-rated for the number of months remaining in that calendar year.

All fees and royalty payments specified in Paragraphs 3.1(a) through 3.1(g) above shall be paid by LICENSEE pursuant to Paragraph 4.3 and shall be delivered by LICENSEE to UNIVERSITY as noted in Paragraph 10.1.

3.2 Patent Costs. LICENSEE shall reimburse UNIVERSITY all past (prior to the Effective Date) and future (on or after the Effective Date) Patent Costs plus a fifteen percent (15%) patent service fee within thirty (30) days following receipt by LICENSEE of an itemized invoice from UNIVERSITY.

3.3 Due Diligence.

(a) LICENSEE shall:

(1)   diligently proceed with the development, manufacture and sale of Licensed Products;

(2)   market Licensed Products in the United States within six (6) months of receiving regulatory approval to market such Licensed Product's;

(3)   reasonably fill the market demand for Licensed Products following commencement of marketing at any time during the term of this Agreement; and

(4)   obtain all necessary governmental approvals for the manufacture, use and sale of Licensed Products.

(b)   If LICENSEE fails to perform any of its obligations specified in Paragraphs 3.1(c) and 3.3(a)(1)-(4), then UNIVERSITY shall have the right and option to either terminate this Agreement as outlined in Paragraph 7.1 or change LICENSEE's exclusive license to a nonexclusive license provided that LICENSEE has not cured such failure to perform within ninety (90) days written notice from UNIVERSITY of said failure. This right, if exercised by UNIVERSITY, supersedes the rights granted in Article 2.

4.1   Reports.  

(a)   Progress Reports .

(1)   Beginning January 1, 2002 and ending on the date of first commercial sale of a Licensed Product in the United States, LICENSEE shall submit to UNIVERSITY semi-annual progress reports covering LICENSEE's (and Affiliate's and Sublicensee's) activities to develop and test all Licensed Products and obtain governmental approvals necessary for marketing the same. Such reports shall include a summary of work completed; summary of work in progress; current schedule of anticipated events or milestones; market plans for introduction of Licensed Products; and summary of resources (dollar value) spent in the reporting period.

(2)   LICENSEE shall also report to UNIVERSITY, in its immediately subsequent progress report, the date of first commercial sale of a Licensed Product in each country.

(b)   Royalty Reports. After the first commercial sale of a Licensed Product anywhere in the world, LICENSEE shall submit to UNIVERSITY quarterly royalty reports on or before each February 28, May 31, August 31 and November 30 of each year. Each royalty report shall cover LICENSEE's (and each Affiliate's and Sublicensee's) most recently completed calendar quarter and shall show:

(1)   the gross sales, deductions as provided in Paragraph 1.11, and Net Sales during the most recently completed calendar quarter and the royalties, in US dollars, payable with respect thereto;

(2)   the number of each type of Licensed Product sold;

(3)   sublicense fees and royalties received during the most recently completed calendar quarter in US dollars, payable with respect thereto;

(4)   the method used to calculate the royalties; and

(5)   the exchange rates used.

If no sales of Licensed Products has been made and no sublicense revenues has been received by LICENSEE during any reporting period, LICENSEE shall so report.

4.2   Records & Audits.  

(a)   LICENSEE shall keep, and shall require its Affiliates and Sublicensees to keep, accurate and correct records of all Licensed