Exhibit 10.5
Confidential Treatment Requested. ***
indicates material has been omitted pursuant to a Confidential
Treatment Request filed with the Securities and Exchange
Commission. A complete copy of this agreement has been filed
separately with the Securities and Exchange Commission.
PATENT AND TECHNOLOGY LICENSE
AGREEMENT
This twenty-two (22)
page AGREEMENT (“AGREEMENT”) is made on this 1st
day of August, 2004, by and between THE BOARD OF REGENTS
(“BOARD”) of THE UNIVERSITYOF TEXAS SYSTEM
(“SYSTEM”), an agency of the State of Texas, whose
address is 201 West 7th Street, Austin, Texas 78701, on behalf of
THE UNIVERSITY OF TEXAS M. D. ANDERSON CANCER CENTER
(“UTMDACC”), a component institution of SYSTEM, and
Power3 Medical Products, Inc., a corporation organized under
the laws of Nevada and having a principal place of business at 3400
Research Forest Drive, The Woodlands, Texas 77381
(“LICENSEE”).
TABLE OF CONTENTS
1
RECITALS
A.
BOARD owns certain PATENT RIGHTS and
TECHNOLOGY RIGHTS related to LICENSED SUBJECT MATTER developed at
UTMDACC.
B.
BOARD, through UTMDACC, desires to
have the LICENSED SUBJECT MATTER and any DERIVED PRODUCTS developed
in the LICENSED FIELD and used for the benefit of LICENSEE, BOARD,
SYSTEM, UTMDACC, the inventor(s), and the public as outlined in
BOARD’s Intellectual Property Policy.
C.
LICENSEE wishes to obtain a license
from BOARD to practice LICENSED SUBJECT MATTER.
NOW, THEREFORE, in consideration of
the mutual covenants and promises herein contained, the parties
agree as follows:
I.
EFFECTIVE DATE
1.1
This AGREEMENT is effective as of
the date written above (“EFFECTIVE DATE”).
II.
DEFINITIONS
As used in this AGREEMENT, the
following terms have the meanings indicated:
2.1
AFFILIATE means any business entity more than fifty
percent (50%) owned by LICENSEE, any business entity which owns
more than fifty percent (50%) of LICENSEE, or any business entity
that is more than fifty percent (50%) owned by a business entity
that owns more than fifty percent (50%) of LICENSEE.
2.2
DERIVED PRODUCT
means any service or product,
whether or not a LICENSED PRODUCT, that utilizes or is based on
biological markers, proteins or other proteomic information
(including, but not limited to, protein fractions, protein patterns
and protein profiles) identified, discovered, analyzed, developed
or otherwise derived or made
2
possible using LICENSED SUBJECT
MATTER, PATENT RIGHTS and/or TECHNOLOGY RIGHTS.
2.3
LICENSED FIELD
means all fields of use.
2.4
LICENSED PRODUCTS
means any product or service sold by
LICENSEE comprising LICENSED SUBJECT MATTER pursuant to this
AGREEMENT.
2.5
LICENSED SUBJECT
MATTER means inventions
and discoveries covered by PATENT RIGHTS or TECHNOLOGY RIGHTS
within LICENSED FIELD.
2.6
LICENSED TERRITORY
means the entire world.
2.7
NET SALES means the gross revenues received by LICENSEE or
its sublicensee, as appropriate, from a SALE less sales discounts
actually granted, sales and/or use taxes actually paid, import
and/or export duties actually paid, outbound transportation
actually prepaid or allowed, and amounts actually
allowed or credited due to returns (not exceeding the original
billing or invoice amount)(“DEDUCTIONS”). NET SALES
shall also include the gross revenues less DEDUCTIONS received by
LICENSEE or any sublicensee, as appropriate, for any DERIVED
PRODUCTS. All gross revenues and DEDUCTIONS shall be recorded by
LICENSEE or sublicensee, as appropriate, in their respective
official books and records in accordance with generally accepted
accounting practices and consistent with LICENSEE’s or
sublicensee’s, as appropriate, published financial statements
and/or regulatory filings with the United States Securities and
Exchange Commission.
2.8
PATENT RIGHTS
means BOARD’s rights in
information or discoveries claimed in the patents, and/or patent
applications and any letters patent that issue thereon, whether
domestic or foreign, listed on Exhibit I attached
hereto.
3
2.9
SALE OR SOLD
means the transfer or disposition of
a LICENSED PRODUCT or DERIVED PRODUCT for value to a party other
than LICENSEE or AFFILIATE.
2.10
TECHNOLOGY RIGHTS
means BOARD’s rights in any
technical information, know-how, processes, procedures,
compositions, devices, methods, formulae, protocols, techniques,
software, designs, drawings or data created by the inventor(s)
listed in Exhibit I at UTMDACC before the EFFECTIVE DATE,
which are not claimed in PATENT RIGHTS but that are necessary for
practicing PATENT RIGHTS.
III.
LICENSE
3.1
BOARD, through UTMDACC, hereby
grants to LICENSEE a royalty-bearing, exclusive license under
LICENSED SUBJECT MATTER to manufacture, have manufactured, use,
import, offer to sell and/or sell LICENSED PRODUCTS within LICENSED
TERRITORY for use within LICENSED FIELD. The foregoing grants are
subject to Sections 14.2 and 14.3 hereinbelow, the payment by
LICENSEE to UTMDACC of all consideration as provided herein, the
timely payment of all amounts due under any related sponsored
research agreement between UTMDACC and LICENSEE in effect during
this AGREEMENT, and is further subject to the following rights
retained by BOARD and UTMDACC to:
(a)
Publish the general scientific
findings from research related to LICENSED SUBJECT MATTER, subject
to the terms of Article XI - Confidential Information and
Publication; and
(b)
Use LICENSED SUBJECT MATTER for
research, teaching, patient care, and other educationally related
purposes.
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3.2
LICENSEE may extend the license
granted herein to any AFFILIATE provided that the AFFILIATE
consents in writing to be bound by this AGREEMENT to the same
extent as LICENSEE. LICENSEE agrees to deliver such
contract to UTMDACC within thirty (30) calendar days following
execution thereof.
3.3
LICENSEE may grant sublicenses under
LICENSED SUBJECT MATTER for any lawful purpose. Sublicenses may be
granted consistent with the terms of this AGREEMENT provided that
LICENSEE is responsible for its sublicensees relevant to this
AGREEMENT, and for diligently collecting all amounts due LICENSEE
or UTMDACC from sublicensees. If a sublicensee pursuant
hereto becomes bankrupt, insolvent or is placed in the hands of a
receiver or trustee, LICENSEE, to the extent allowed under
applicable law and in a timely manner, agrees to use its best
reasonable efforts to collect all consideration owed to LICENSEE
and to have the sublicense agreement confirmed or rejected by a
court of proper jurisdiction.
3.4
LICENSEE must deliver to UTMDACC a
true and correct copy of each sublicense granted by LICENSEE, and
any modification or termination thereof, within thirty (30)
calendar days after execution, modification, or
termination.
3.5
If this AGREEMENT is terminated
pursuant to Article XIII - Term and Termination, BOARD and
UTMDACC agree to accept as successors to LICENSEE, existing
sublicensees in good standing at the date of termination provided
that each such sublicensee consents in writing to be bound by all
of the terms and conditions of this AGREEMENT.
5
IV.
CONSIDERATION, PAYMENTS AND
REPORTS
4.1
In consideration of rights granted
by BOARD to LICENSEE under this AGREEMENT, LICENSEE agrees to pay
UTMDACC each of the following:
(a)
All out-of-pocket expenses incurred
by UTMDACC in filing, prosecuting, enforcing and maintaining the
PATENT RIGHTS, and all such future expenses incurred by UTMDACC,
for so long as, and in such countries as this AGREEMENT remains in
effect. UTMDACC will invoice LICENSEE within thirty (30) calendar
days of the EFFECTIVE DATE for expenses billed as of that time and
on a quarterly basis thereafter. The billed amount for expenses
incurred prior to the EFFECTIVE DATE will be due and payable by
LICENSEE within ninety (90) calendar days of invoice. The invoiced
amounts for expenses billed after the EFFECTIVE DATE will be due
within thirty (30) calendar days of invoice; and
(b)
A nonrefundable license
documentation fee in the amount of ***, payable in two payments of
$***. This fee will not reduce the amount of any other payments
provided for in this ARTICLE IV. UTMDACC will invoice
LICENSEE for the first payment of $*** after the AGREEMENT is fully
executed by all parties. Said first payment shall be due and
payable within thirty (30) days of invoice. The second payment of
$*** shall be due and payable to UTMDACC on ***; and
(c)
A nonrefundable annual license
maintenance fee of $***. This maintenance fee is due to
UTMDACC beginning on the first anniversary of the
EFFECTIVE
6
DATE and annually thereafter until
***. This fee will not reduce any other payment
provided for in this ARTICLE IV; and
(d)
A running royalty equal to
***. LICENSEE shall be responsible for diligently collecting
and paying UTMDACC any royalties due for any sublicensee’s
NET SALES; and
(e)
After ***, minimum annual royalties
of $***. Any royalties payable under Section 4.1(d) will
be credited toward this amount for each Sales Year. For purposed of
this AGREEMENT, Sales Year means a year measured from the first
SALE or anniversary of such first SALE to the subsequent
anniversary of first SALE. If royalties payable under
Section 4.1(d) exceed *** nothing shall be owed under
this Section 4.1(e); and
(f)
A $*** milestone payment, payable in
two installments, which shall become payable upon ***. The first
installment of $*** shall be due ***, and a second installment of
$*** shall be due ***; and
(g)
*** (***%) of all consideration,
other than research and development money and NET SALES, received
by LICENSEE, from either (i) any sublicensee pursuant to
Sections 3.3 and 3.4, or (ii) any assignee pursuant to
Section 12.1, including, but not limited to, minimum
royalties, up-front payments, bonuses,
7
milestones, marketing fees,
distribution fees, franchise fees, option fees, license fees,
documentation fees, and equity securities.
4.2
Unless otherwise provided, all such
payments are payable within thirty (30) calendar days after
March 31, June 30, September 30, and
December 31 of each year during the term of this AGREEMENT, at
which time LICENSEE will also deliver to UTMDACC a true and
accurate report, giving such particulars of the business conducted
by LICENSEE and its sublicensees, if any exist, during the
preceding three (3) calendar months under this AGREEMENT as
necessary for UTMDACC to account for LICENSEE’s payments
hereunder. This report will include pertinent data, including, but
not limited to:
(a)
the accounting methodologies used to
account for and calculate the items included in the report and any
differences in such accounting methodologies used by LICENSEE since
the previous report; and
(b)
a list of LICENSED PRODUCTS and
DERIVED PRODUCTS produced for the three (3) preceding calendar
months; and
(c)
the total quantities of LICENSED
PRODUCTS and DERIVED PRODUCTS produced; and
(d)
the total SALES; and
(e)
the calculation of NET SALES;
and
(f)
the royalties so computed and due
UTMDACC and/or minimum royalties; and
(g)
all consideration received by each
sublicensee or assignee and payments due UTMDACC; and
(h)
all other amounts due UTMDACC
herein.
8
Simultaneously with the delivery of
each such report, LICENSEE agrees to pay UTMDACC the amount due, if
any, for the period of such report. These reports are required even
if no payments are due.
4.3
During the term of this AGREEMENT
and for one (1) year thereafter, LICENSEE agrees to keep
complete and accurate records of its and its sublicensees’
SALES and NET SALES in sufficient detail to enable the royalties
and other payments due hereunder to be determined. LICENSEE agrees
to permit UTMDACC or its representatives, at UTMDACC’s
expense, to periodically examine LICENSEE’s books, ledgers,
and records during regular business hours for the purpose of and to
the extent necessary to verify any report required under this
AGREEMENT. If any amounts due UTMDACC are determined to have been
underpaid in an amount equal to or greater than five percent (5%)
of the total amount due during the period so exam
