LICENSE AGREEMENT

THIS LICENSE AGREEMENT dated as of January 30, 2009 (this “Agreement”), is entered into between HEALTH DISCOVERY CORPORATION, a Georgia corporation (“LICENSOR”), having a place of business at 2 East Bryan Street, Suite # 601, Savannah, Georgia, and QUEST DIAGNOSTICS, INCORPORATED, a Delaware corporation (“LICENSEE”), having a place of business at 3 Giralda Farms, Madison, New Jersey 07940.

WHEREAS, LICENSOR has rights in the Licensed Technology covering genomic biomarkers related to prostate cancer (as more specifically defined below).

WHEREAS, LICENSEE desires to obtain, and LICENSOR is willing to grant, a non-exclusive license under LICENSOR’S rights in the Licensed Technology to develop and commercialize Licensed Uses (as defined below) for use in the Field (as defined below) in the Territory (as defined below) on the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows:

For purposes of this Agreement, the terms defined in this Article 1 shall have the respective meanings set forth below:

1.1           “ Affiliate ” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person.  A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, at least thirty five percent (35%) of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever.

1.2           “ Combination Use ” means a Licensed Use that is sold together in combination with one (1) or more diagnostic products, processes or services which are not Licensed Uses.

1.3           “ Field ” shall mean clinical diagnostic applications using biomarkers in urine for differentiating clinically significant prostate cancer from other prostate conditions, including without limitation clinical laboratory testing and clinical trials, but expressly excluding manufacture of in vitro diagnostic kits.

1.4           “ First Commercial Sale ” shall mean, with respect to any Licensed Use, the first sale for use or consumption by the general public of such Licensed Use.

1.5           “ Licensed Know-How ” shall mean all information and data owned by or licensed to LICENSOR as of the date of this Agreement relating to the four (4) biomarkers identified in Exhibit B, which is not generally known including, but not limited to, formulae, procedures, protocols, techniques and results of experimentation and testing, which are necessary to practice the inventions claimed in the Licensed Patent Rights; all to the extent and only to the extent that LICENSOR has the right to grant licenses, immunities or other rights thereunder.

1.6           “ Licensed Patent Rights ” shall mean (a) all patent applications listed on Exhibit A hereto which are owned by or licensed to LICENSOR; (b) all patents that have issued or in the future shall issue therefrom, including utility, model and design patents and certificates of invention; and (c) all divisionals, continuations, continuations-in-part, reissues, renewals, reexaminations, extensions or additions to any such patent applications and patents to the extent that the patent applications listed cover the four (4) biomarkers identified in Exhibit B.

1.7           “ Licensed Use ” shall mean a product, process or service, for use in the Field, which,  if made, used, performed, offered for sale, sold or imported in the Territory, would infringe a Valid Patent Claim but for the license granted by this Agreement.  Except in connection with the calculation of royalties pursuant to Section 1.9 and Article 5 below, Licensed Use shall mean either an individual Licensed Use or a Combination Use.

1.8           “ Licensed Technology ” shall mean, collectively, the Licensed Patent Rights and the Licensed Know-How.

1.9           “ Net Sales ” shall mean:

(i)           with respect to Licensed Uses sold or performed individually, the sales price invoiced to Third Parties of all Licensed Uses sold or performed by LICENSEE and/or its Affiliates, less the following items as applicable to such Licensed Uses to the extent actually allowed and taken: (a) contractual allowances such as Medicare, MediCal, and Medicaid; (b) charges for shipping and insurance; (c) discounts customary in the trade; (d) credits or refunds; and (e) bad debt up to 6% of Net Sales; and

(ii)          with respect to Combination Uses, the sales price invoiced to Third Parties of such Combination Uses sold or performed by LICENSEE and/or its Affiliates, less: the allowances and adjustments referred to in Sections 1.9(i)(a)-(e), multiplied by the fraction A/A+B, where A is the list price of the Licensed Use sold separately during the royalty period in question, and B is the list price of the other included diagnostic products, processes or services which are not Licensed Uses sold separately during the royalty period in question.

1.10          “ Person ” shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

1.11          “ Royalty Term ” shall mean, with respect to each Licensed Use, the term for which a Valid Patent Claim remains in effect which would  be infringed by the manufacture, use, offer for sale, sale or import of such Licensed Use but for the license granted by this Agreement.

1.12          “ Territory ” shall mean the United States, its territories and possessions.

1.13          “ Third Party ” shall mean any Person other than LICENSOR, LICENSEE and their respective Affiliates.

1.14          “ Valid Patent Claim ” shall mean either (a) a claim of an issued and unexpired patent included within the Licensed Patent Rights, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent application included within the Licensed Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application.

LICENSOR hereby represents and warrants to LICENSEE as follows:

2.1            Corporate Existence and Power .  LICENSOR (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia; (b) has the corporate power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and to carry on its business as it is now being conducted and (c) is in compliance with all requirements of applicable law, except to the extent that any noncompliance would not have a material adverse effect on the properties, business, financial or other condition of it and would not materially adversely affect its ability to perform its obligations under this Agreement.

2.2            Authorization and Enforcement of Obligations .  LICENSOR (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.  This Agreement has been duly executed and delivered on behalf of LICENSOR, and constitutes a legal, valid, binding obligation, enforceable against LICENSOR in accordance with its terms.

2.3            No Consents .  All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by LICENSOR in connection with this Agreement have been obtained.

2.4            Rights in Licensed Technology .  LICENSOR is the legal and beneficial owner of all right, title and interest in and to the Licensed Technology, having good title thereto, free and clear of any and all mortgages, liens, security interest and charges, and no Person has any claim of ownership with respect to the Licensed Technology.

2.5            No Infringement .  To the best of LICENSOR’s knowledge, neither the use of the Licensed Technology nor the granting of this license practice under the Licensed Technology violates, infringes or otherwise conflicts or interferes with any patent or any other intellectual property or proprietary right of any Third Party.  To the best of LICENSOR’s knowledge,  no Third Party is currently infringing upon the Licensed Technology in the Field.

LICENSEE hereby represents and warrants to LICENSOR as follows:

3.1            Corporate Existence and Power .  LICENSEE (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) has the corporate power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and to carry on its business as it is now being conducted and (c) is in compliance with all requirements of applicable law, except to the extent that any noncompliance would not have a material adverse effect on the properties, business, financial or other condition of it and would not materially adversely affect its ability to perform its obligations under this Agreement.

3.2            Authorization and Enforcement of Obligations .  LICENSEE (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.  This Agreement has been duly executed and delivered on behalf of LICENSEE, and constitutes a legal, valid, binding obligation, enforceable against LICENSEE in accordance with its terms.

3.3            No Consents .  All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by LICENSEE in connection with this Agreement have been obtained.

4.1            Licensed Technology .  LICENSOR hereby grants to LICENSEE and its Affiliates a non-exclusive license (without the right to grant sublicenses) under the Licensed Technology to make, have made, use, sell, offer for sale and import Licensed Uses in the Territory in the Field.

4.2            Research .  LICENSEE shall perform primary testing associated with a validation study of its laboratory-developed test using the Licensed Technology in connection with * or an equivalent academic cancer center (with the exception of tissue biopsy) including expression testing, the PSA and send-out of the PCA-3 (the “Validation Study,” as more specifically outlined on Exhibit C attached hereto).  LICENSEE shall have the right to perform research on remnants after all testing required for the Validation Study is completed, and will be provided reasonable access to the patient data related to the applicable samples.  LICENSOR shall obtain IRB approval for the study with * by February 28, 2009 or, with an equivalent academic institution by June 30, 2009.

4.3            Purchasing Rights .  Upon issuance of FDA clearance or approval of an in vitro diagnostic kit using the Licensed Technology (“IVD Kit”), LICENSEE shall have the obligation to purchase IVD Kits for reference laboratory use from LICENSOR’s designated manufacturer or distributor pursuant to a purchasing agreement between LICENSEE and the applicable manufacturer or distributor, provided however that LICENSOR shall negotiate to cause such manufacturer or distributor to provide Most Favored Terms (similar to the terms described in Section 5.5 below with respect to this Agreement) to LICENSEE.

5.1            Royalties .  In partial consideration for the license granted hereunder, during the Royalty Term, LICENSEE shall pay to LICENSOR running royalties equal to * percent (*%) of Net Sales by LICENSEE or its Affiliates.  Such royalties shall be due and payable on a quarterly basis and shall be submitted by LICENSEE along with the report as specified in Section 6.1 below.

5.2            License Fee .  In partial consideration for the license granted hereunder, within thirty (30) business days of execution of this Agreement, LICENSEE shall pay to LICENSOR an amount equal to * United States Dollars (US$*).

5.3            Milestone Fee .  In partial consideration for the license granted hereunder, LICENSEE shall pay to LICENSOR an amount equal to * United States Dollars (US$*) within thirty (30) days of the later of publication of the Validation Study (as defined in Exhibit C, attached hereto) showing statistically significant performance improvement over PCA-3 (“Study Publication”) or First Commercial Sale of the first Licensed Use.  The following conditions shall apply to this Section 5.3:

5.3.1.     If neither the Study Publication nor the First Commercial Sale occurs, or if the FDA issues its clearance or approval of an IVD Kit (“FDA Clearance”) prior to occurrence of the Study Publication or First Commercial Sale, no Milestone Fee shall be due or payable.

5.3.2.     If, upon FDA Clearance, the Milestone Fee  is determined to have been paid after becoming due and payable during a period of time that occurred between three (3) and six (6) months prior to the date of FDA Clearance, * Dollars ($*) of the Milestone Fee shall be reimbursed to LICENSEE within forty five (45) days of the date of such FDA Clearance.

5.3.3.     If, upon FDA Clearance, the Milestone Fee  had been paid after becoming due and payable  during a period less than three (3) months prior to the date of FDA Clearance, the full Milestone Fee shall be reimbursed to LICENSEE within forty five (45) days of the date of such FDA Clearance.

5.4            Study Fees .  In partial consideration for the license granted hereunder, LICENSEE shall reimburse LICENSOR for fees and costs related to the Validation Study of the Licensed Technology, estimated to be approximately * United States Dollars (US$*) plus an amount equal to * percent (*%) of LICENSOR’s overhead to complete the Validation Study, such portion anticipated to be approximately * United States Dollars (US$*), which shall be paid within thirty (30) days of IRB approval of the study protocol and before any steps are taken toward initiation of the study.  The cost of support vector machine data analysis and support shall be included in the overhead portion, and shall be provided to LICENSEE.

5.5            Most Favored Terms .  The terms and conditions of this Agreement are not, and shall not be, less favorable than the terms and conditions pursuant to which the Licensed Technology is licensed on a non-exclusive basis to any Third Party.  If LICENSOR grants any non-exclusive license to any Third Party on more favorable terms and conditions than those contained herein, this Agreement shall automatically be amended effective as of the date of such other license to contain those more favorable terms and conditions.

5.6            Third Party Licenses .  If LICENSEE is required to take a license under any Third Party patents (other than the RT-PCR technology) to use the Licensed Technology, then fifty percent (50%) of any Third Party royalty, payment or other liability for such license (a “Third Party Payment”) may be deducted from the royalty payments due LICENSOR (if applicable) for that specific Licensed Use; provided, however, that the royalty percentage due under this Agreement may not be reduced by more than fifty percent (50%) of such royalty percentage.

6.1            Reports, Exchange Rates .  During the term of this Agreement following the First Commercial Sale of a Licensed Use, LICENSEE shall furnish to LICENSOR a quarterly written report showing in reasonably specific detail, (a) the gross sales of each Licensed Use sold by LICENSEE and its Affiliates during the reporting period and the calculation of Net Sales from such gross sales; (b) the royalties payable in United States dollars, if any, which shall have accrued hereunder based upon Net Sales of each Licensed Use; (c) the withholding taxes, if any, required by law to be deducted in respect of such sales; (d) the date of the First Commercial Sales of each Licensed Use in each country during the reporting period; and (e) the exchange rates used in determining the amount of United States dollars.  With respect to sales of Licensed Uses invoiced in United States dollars, the gross sales, Net Sales, and royalties payable shall be expressed in United States dollars.  With respect to sales of Licensed Uses invoiced in a currency other than United States dollars, the gross sales, Net Sales and royalties payable shall be expressed in the domestic currency of the Person making the sale together with the United States dollar equivalent of the royalty payable, calculated using the average closing buying rate for such currency quoted in the continental terms method of quoting exchange rates (local currency per US$1) by the Wall Street Journal on the last business day of each month in the calendar quarter prior to the date of payment.  Reports shall be due on the sixtieth (60th) day following the close of each reporting period.  LICENSEE shall keep and require its Affiliates to keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the royalties payable hereunder to be determined.

6.2            Audits .

6.2.1      Upon the written request of LICENSOR and not more than once in each calendar year, LICENSEE shall permit an independent certified public accounting firm selected by LICENSOR and reasonably acceptable to LICENSEE, at LICENSOR’s expense, to have access during normal business hours to such of the records of LICENSEE as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than thirty-six (36) months prior to the date of such request. &n