Patent Assignment Agreement

Exhibit 10.3

PATENT ASSIGNMENT AGREEMENT

     This Patent Assignment Agreement (this “Assignment Agreement”), effective the 28 ^th day of June, 2005 (the “Effective Date”), is by and between the Board of Regents (“ Board ” or “Assignor”) of The University of Texas System, an agency of the State of Texas, whose address is 201 West 7th Street, Austin, Texas 78701 (“ System ”), through its component institution, The University of Texas Medical Branch at Galveston, having a business address at 301 University Blvd., Galveston, Texas 77555 (“ University ”) and OrthoLogic Corp., a Delaware corporation, having a principal place of business located at 1275 West Washington Street, Tempe, AZ 85281 (“ OLGC ” or “ Assignee ”).

W I T N E S S E T H:

     WHEREAS, Assignor owns certain Patent Rights related to Licensed Subject Matter, as set forth in a Patent License Agreement (“License Agreement”) dated April 27, 2004, attached hereto as Appendix A , which were developed at University, and some of which may be jointly owned with Monsanto Company, a Delaware corporation (“Monsanto”); and

     WHEREAS, Assignee has represented to Assignor, to induce Assignor to enter into this Assignment Agreement, that OLGC or Assignee, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”), by and between Chrysalis Biotechnology, Inc. (“CBI”) and OLGC, bought substantially all of the assets of CBI and desires to acquire the Patent Rights from the Assignor for additional consideration to be paid to Assignor in the form of both an up-front payment and an increased royalty rate.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the adequacy and legal sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

     a. Terms defined above and elsewhere in this Assignment Agreement shall have their specified meanings. Capitalized terms used herein but not defined herein shall have the meanings specified by the License Agreement.

     b. The following terms shall have the following meanings:

     “Assignee” means OLGC, its successors and assigns.

     “Assignee Product” means Licensed Product as such term is defined in the License Agreement.

     “Assignee Process” means Licensed Process as such term is defined in the License Agreement.

     “Monsanto Agreement” that license agreement described in Recital B of the License Agreement and attached to the License Agreement as Exhibit 1.

     “Sublicensee” means the same as set forth in the License Agreement, but shall also include any licensee of Assignee of the Licensed Subject Matter or Patent Rights after the Effective Date of this Assignment Agreement.

     “Term” has the meaning given to it in Section 6 of this Assignment Agreement.

2. Assignment.

     Assignor hereby sells, assigns, transfers, and sets over unto Assignee, with only those warranties set forth in the License Agreement related to warranty of title, including the same limitations therein, its entire right, title, and interest, if any, in, to, and under the Patent Rights and the inventions claimed therein, together with any and all claims Assignor may have for damages by reason of past infringement of the Patent Rights by third parties, along with the right to sue for and collect the same; provided that the foregoing shall not include the Monsanto Agreement or the Assignor’s rights therein or thereunder, which agreement and rights therein and thereunder shall continue to be sublicensed to Assignee pursuant to the License Agreement unless assigned to Assignee by Monsanto.

3. Confirmatory Assignment.

     Assignor agrees to execute a confirmatory assignment of the Patent Rights substantially in the form attached as Appendix B hereto for recordation with the United States Patent and Trademark Office and, as required, in foreign patent offices. Assignor agrees to fully cooperate with Assignee in transferring its rights to the Patent Rights to Assignee in accordance herewith and to execute all lawful documents, which may be reasonably required, all at the sole cost and expense of Assignee, including all documents in the U.S. and foreign jurisdictions, in recordable form, necessary to vest title to the Patent Rights in Assignee.

4. Intent of Assignment.

     Assignor and Assignee agree that this Assignment Agreement is intended only to cover the Patent Rights as defined in the License Agreement (other than the Assignor’s rights in and under the Monsanto Agreement) and those added thereto in the two (2) year period after the Effective Date as set forth in the Purchase Agreement. This Assignment Agreement shall not cover any new technology patent applications or patents as described and defined in Section 5.5 of the License Agreement. Assignee hereby acknowledges and agrees this Assignment Agreement does not include or cover in any way, other inventions, patent applications, patents, or other intellectual property rights owned or licensed by Board, System, or University.

5.  Payment and Records.

     a. At the time of execution of this Assignment Agreement Assignee hereby pays and delivers to Assignor an amount of Four Hundred Thousand Dollars ($400,000). From the Effective Date of this Assignment Agreement until the expiration of the Term, Assignee also shall pay to the Assignor running royalties of 3.0% (3.3% if Monsanto’s interest in the Monsanto Agreement shall already have been assigned to Assignee as contemplated in Section 6.2(c) of the License Agreement) of Net Sales of each Assignee Product or Assignee Process manufactured, imported, exported, used, leased, or sold by and/or for Assignee and/or its Sublicensees. Upon the assignment by Monsanto to Assignee of Monsanto’s interests in the patent rights subject to the Monsanto Agreement as contemplated by and within the time specified in Section 6.2(c) of the License Agreement, Assignee shall pay to Assignor an amount equal to One Hundred Thousand Dollars ($100,000) and the rate of running royalties payable under this Section 5.a shall be increased to 3.3% from the date of such assignment.

     It is understood and agreed by the parties that the payment of royalties pursuant to this Section 5.a shall be made only on the first sale of an Assignee Product or Assignee Process by Assignee, a Subsidiary or a Sublicensee, and that subsequent sales of the same Assignee Product or Assignee Process for which royalties have been accrued pursuant to this Section 5.a shall not be subject to any additional accrual of royalties (for example, and for illustration purposes only, if a royalty accrues due to a sale by Assignee of an Assignee Product to a Sublicensee or a pharmaceutical distributor, a subsequent sale by such Sublicensee or such pharmaceutical distributor shall not generate a royalty payable to Assignor).

     b. Assignee shall further pay to Assignor five percent (5%) of all cash and the fair market value (determined in accordance with Section 6.6 of the License Agreement) of non-cash consideration received by Assignee during the Term from a Licensee as a result of a license or sublicense for each Assignee Product or Assignee Process including but not limited to licensing or option fees, marketing fees, milestone payments, bonus payments and the like, but excluding (i) payments received by Assignee for research development pursuant to research grants; (ii) royalty payments received by Assignee calculated on the basis of Net Sales of the Licensee or Sublicensee; and (iii) payments received by Assignee as consideration for an assignment of substantially all of the assets of Assignee or a controlling majority of the stock of Assignee.

     c. If Assignee fails to timely pay royalties as required and fails to timely cure the same within 30 days from Assignor’s written notice thereof to Assignee, Assignee agrees and acknowledges that Assignor immediately shall receive a vested security interest in Assignee’s interests in the Patent Rights, and Assignee will immediately execute, in a form Assignor may record, a Security Agreement substantially similar to the Security Agreement attached hereto as Appendix C to secure the payment of all such Assignee’s payment obligations hereunder. Assignee also shall cooperate, timely and fully, with Assignor in further securing its interest in the Patent Rights pursuant to the Security Agreement and all other rights related thereto. In any such action in which Assignor is the prevailing party, Assignor shall be entitled to recover from Assignee its reasonable attorneys fees and other direct out-of-pocket costs incurred in connection therewith, and, in the case of the enforcement of any failure to pay amounts due under Section 5.a or b hereof, Assignee shall pay to Assignor a late fee equal to the greater of $10,000 ($20,000 if such $10,000 fee has become payable hereunder at least twice) or 10% of the payment amount for each such payment not made within the applicable cure period, plus interest on such unpaid

amounts from the due date thereof until paid at a per annum rate equal to the prime rate of interest, as published by the Wall Street Journal, plus three percentage points.

     d. During the Term and for three (3) years thereafter, Assignee shall keep complete and accurate records of its and its Sublicensees’ Sales and Net Sales of each Assignee Product and each Assignee Process under this Assignment Agreement in sufficient detail to enable the royalties payable to Assignor hereunder accurately to be determined. Assignee shall permit Assignor or its representatives, at Assignor’s expense, to periodically examine its books, ledgers, and records during regular business hours solely for the purpose of and to the extent necessary to verify any report required under this Assignment Agreement. In the event that the amounts due to Assignor are determined to have been underpaid, Assignee shall immediately pay the Assignor the difference, together with interest thereon at a per annum rate equal to the prime rate of interest, as published by the Wall Street Journal, plus three percentage points and if the amount underpaid is greater than two percent (2%) of the total royalty, Assignee shall reimburse Assignor for all costs of such examination.

     e. Within thirty (30) days after each March 31, June 30, September 30, and December 31, Assignee shall deliver to Assignor a true and accurate report, giving such particulars of the business conducted by Assignee and its Sublicensee(s), if any exist, during the preceding three (3) calendar months under this Assignment Agreement as are pertinent to an account for payments hereunder. Such report shall include at least: (a) the total Sales of Assignee Product and Assignee Process by Assignee and by Sublicensees; (b) the total Net Sales; (c) the calculation of royalties thereon; and (d) the total royalties so computed and due Assignor. Assignee will report royalties to the University in categories (specified by the University) based on the University intellectual property for which the royalties are attributed. Simultaneously with the delivery of each such report, Assignee shall pay to Assignor the amount, if any, due for the period of such report. If no payments are due, it shall be so reported. Minimum royalties, however, will be due and payable with the September 30 report to the extent not covered by other payments hereunder during the preceding year. It is understood and agreed that if multiple patents of the Patent Rights cover a single Assignee Product or Assignee Process, only a single royalty shall be paid.

     f. All amounts payable hereunder by Assignee shall be payable in United States funds without deductions for taxes, assessments, fees, wire transfer charges, or charges of any kind and shall be payable either by checks made payable to The University of Texas Medical Branch and mailed to The University of Texas Medical Branch at Galveston, Research Development Services, P.O. Box 4786-750, Houston, TX 77210-4786, or pursuant to wire transfer information or as otherwise designated by Assignor within thirty (30) days written notice to Assignee.

     g. Noncash payments received by Assignee, which are subject to royalty payments under this Assignment Agreement, shall be valued at the fair market value (“ FMV ”) thereof. FMV shall be determined as follows:

     (i) By mutual agreement between the parties if possible;

     (ii) If the parties cannot reach a mutual agreement on FMV, then the parties shall agree on an impartial third party mediator having at least ten (10) years of accounting experience to assist the parties in determining FMV, and the parties shall share equally in the fees and costs of any such mediator; and

     (iii) In the event the parties fail to reach an agreement on FMV pursuant to mediation, then either party may submit the determination of FMV to binding arbitration by a panel of three (3) arbitrators each having at least ten (10) years of accounting experience and providing each party an opportunity to present evidence of FMV to the arbitration panel. Unless otherwise agreed by the parties, each of the University and Assignee shall select one (1) arbitrator for the panel and the third arbitrator shall be selected by the two other arbitrators designated by the Assignor and Assignee. The decision of the arbitrators in determining FMV shall be final and binding on Assignor and Assignee.

6. Term

     The term of this Assignment Agreement, unless terminated in accordance with this Assignment Agreement (the “Term”), shall extend until the last patent included in the Patent Rights has expired or has been found to be invalid or unenforceable by a court of competent jurisdiction from which no appeal is available. Assignee acknowledges and agrees that in no event, shall Assignee take any action or omit to take any action that causes any of the Patent Rights to lapse or fees not be paid to avoid royalties hereunder or without providing Assignor the opportunity to assume Assignee’s rights therein, including all right, title and interest in any such Patent Rights thereafter.

7. Notice .

     Any notice required by this License Agreement shall be given by personal delivery or prepaid, first class, certified mail, return receipt requested, addressed in the case of Assignor to:

or such other addresses as may be given from time to time under the terms of this notice provision. Notice shall be deemed given upon actual receipt.

8. Texas Law.

     Assignor and Assignee agree that this Assignment Agreement shall be construed in accordance with the laws of the State of Texas and shall be binding upon the parties, and, if any, their successors, assignees, or transferees.

     IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Assignment Agreement in duplicate on the dates indicated below.

APPENDIX A

Patent License Agreement

APPENDIX B

ASSIGNMENT

     WHEREAS, The Board of Regents of the University of Texas System, an agency of the State of Texas (“Assignor”) may have certain ownership rights to and interests in the following (collectively, the “Patent Rights”):

1. Patents and Patent Applications: All of the patent and patent applications attached hereto as Appendix B1 and the inventions claimed therein;

2. All substitutions for and divisions, continuations, continuations-in-part, renewals, reissues, extensions, and the like of the Patents and Patent Applications and like grant, including, without limitation, those obtained or permissible under past, present and future laws and statutes;

3. All rights of action on account of past, present, and future unauthorized use of the Patent Rights and for infringement of the patents and patent applications, and like protection;

4. The right of Assignee (as hereinafter defined) to file and have patents issued or granted in its name applications for patents and like protection for the Patent Rights in any country or countries; and

5. All international rights of priority associated with the Patent Rights, patents, patent applications, and like protection.

     WHEREAS, Orthologic Corp., a Delaware corporation (“Assignee”), desires to acquire all of the rights to and interests of Assignor in the Patent Rights;

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby sell, assign, transfer, and set over unto Assignee all of its rights, titles and interests in, to, and under the Patent Rights and the inventions claimed therein, together with all claims for damages by reason of past infringement of such Patent Rights by third parties, with the right to sue for and collect the same. The assignment made hereby is made without any warranty whatsoever, including but not limited to warranties of ownership or title.

     SUBSCRIBED to before me by                                                              ,                                          (Title),                                          (Board), known by me to be the same, on this the                      day of                                                              , 2005.

Appendix B1