Exhibit 10.4
EXCLUSIVE LICENSE AGREEMENT
 
PREAMBLE
 
This Agreement is made and entered into, effective as of March 4, 2013,
(“Effective Date”) by and between: Washington University, a corporation
established by special act of the Missouri General Assembly approved February
22, 1853 and acts amendatory thereto, having its principal offices at One
Brookings Drive, St. Louis, Missouri 63130 (hereinafter referred to as "WU");
and Chromadex a corporation organized and existing under the laws of the State
of California, having its principal offices at 10005 Muirlands Blvd. Suite G
Irvine CA 92618 (hereinafter referred to as "Licensee") and the following
correspondence addresses:
 
Attn: Legal/C.F.O
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
tom.varvaro@chromadex.com
Attn: Accounting
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
jamesl@chromadex.com
Attn: Technical
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
tom.varvaro@chromadex.com

 
License Issue Fee: $40,000
 
License Maintenance Fee: $25,000
 
Options for Improvement: 1 yr option; $20,000 additional licensing fee per
improvement.
 
Milestones and Payments:
 
Market
Milestone
Timing
Payment
Field 1 (dietary supplement, sports nutrition, functional foods, skin
care/cosmetic)
Commercial-scale production
12 months
$2K
Cumulative sales >3kg
18 months
$5K
$200K cumulative sales
24 months
$10K
$1M cumulative sales
36 months
$15K
Field 2 (food/beverage with FDA approval)
Cumulative sales >3kg
36 months
$5K
Cumulative sales >20kg
48 months
$10K
Field 3 (consumer foods)
Cumulative sales >3kg
24 months
$5K
$100K cumulative sales
36 months
$10K
$500K cumulative sales
48 months
$15K
Field 4 (research reagents)
$5K cumulative sales
24 months
$500
$10K cumulative sales
36 months
$1k
Field 5 (pharmaceutical)
IND
TBD
$20,000
Phase I initiation
$20,000
Phase II initiation
$25,000
Phase III initiation
$50,000
NDA
$100,000
First Commercial Sale
$250,000

 
 
 
 
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Royalty Rate:
 
a.Patent Royalty Rate
4%
b.Non-Patent Royalty Rate
2%
c. Pass-through for sublicensee(s)
2%

 
Minimum Royalty: $25,000
 
Sublicensee Revenue percentage: 50% if technology is flipped, 25% if significant
value is added to the technology such as an IND filing or additional enabling
technology.
 
Patents: Listed in Exhibit E herein, below; all patent expenses to be paid by
Licensee.
 
All past patent expenses authorized by Chromadex.
 
Field: dietary supplements, sports nutrition, functional foods, skin care and
cosmetics, food and beverage, research reagents, medical foods, and
pharmaceutical uses.
 
Territory: Worldwide.
 
Term: The term of this Agreement shall commence on the Effective Date and
continue until the later of: a) the last day that at least one Valid Claim
exists; or b) the tenth anniversary of the day of the First Commercial Sale
whichever is longer.
 
RECITALS
 
A.           
WU possesses certain Patent Rights (as defined below), Technical Information (as
defined below), and Tangible Research Property (as defined below).
 
B.           
Licensee has developed a plan to manufacture, promote, import, sell and/or
market products based on the Patent Rights, the Technical Information, and/or
the Tangible Research Property which plan is attached hereto as Exhibit A (the
“Development Plan”).
 
C.           
Licensee WU possesses the desire, knowledge, expertise, experience and resources
to carry out the Development Plan, to meet the milestones set forth in Exhibit F
hereto and to otherwise diligently manufacture, market and to otherwise
diligently commercialize products based on the Patent Rights, Tangible Research
Property and/or the Technical Information.
 
D.           
Licensee desires to obtain from WU certain licenses to the Tangible Research
Property, Technical Information and Patent Rights and WU desires to grant such
licenses to Licensee.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the premises, covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
 
1.            
Definitions.
 
As used in this Agreement, the following terms have the meaning ascribed to them
below:
 
1.1           “Agreement” is defined in the Preamble above.
 
1.2           “Affiliate” means an entity that now or hereafter, directly or
indirectly, controls or is controlled by or is under common control with a party
to this Agreement whether by beneficial ownership, contract, or otherwise.
 
 
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1.3           “Calendar Half” means each six-month period of a calendar year, or
portion thereof, beginning on January 1 or July 1.
 
1.4           “Claims” is defined in Section 11.1 below.
 
1.5           “Confidential Information” is defined in Section 7.1 below.
 
1.6           “Development Plan” is defined in Recital B above.
 
1.7           “Effective Date” is defined in the Preamble above.
 
1.8           “Election Notice” is defined in Section 9.3 below.
 
1.9           “Field” is defined in the Preamble above.
 
1.10           “First Commercial Sale” means the earlier to occur of (a) the
earliest date on which Licensee transfers a Licensed Product for compensation
(including equivalent cash value for trades or other non-cash payments), or (b)
the earliest date on which Licensee offers a Licensed Service for compensation
(including equivalent cash value for trades or other non-cash payments).
 
1.11           “License Issue Fee” is defined in the Preamble above.
 
1.12           “Licensed Product” means (a) any product made, made for, used,
sold or imported by Licensee and/or Sublicensee that (i) in the absence of this
Agreement would infringe at least one Valid Claim, or (ii) uses a process
covered by a Valid Claim, and/or (b) any product made, and/or method or process
used, in whole or in part, using or otherwise derived from Technical Information
and/or Tangible Research Property., with the provisio that no product shall be
construed a "Licensed Product" pursuant to (a)(i) or (a)(ii) of this section
which would not infringe any claim of a Patent Rights patent application pending
in the United States as of October 15, 2012, or any claim of an issued,
unexpired, valid and enforceable Patent Rights patent, in either the country of
the product's manufacture or sale or (3)does not contain nicotinamide adenine
dinucleotide (NAD) or its precursor NADH, an intermediate of a de novo pathway
for synthesizing NAD, an intermediate of a NAD salvage pathway, an intermediate
of a nicotinamide riboside kinase pathway, or a combination thereof, such
ingredients including but not limited to nicotinamide mononucleotide, nicotinic
acid mononucleotide, and nicotinamide riboside." 
 
1.13           “Licensed Service” means (a) any service performed by Licensee
and/or Sublicensee that (i) in the absence of this Agreement would infringe at
least one Valid Claim, or (ii) uses a process covered by a Valid Claim, and/or
(b) service performed by Licensee that uses or is otherwise derived from
Technical Information and/or Tangible Research Property.
 
1.14           “Licensee” is defined in the Preamble above.
 
1.15           “Minimum Royalty” is defined in the Preamble above.
 
1.16           “Net Sales” means mean Net Sales for Licensed Products and Net
Sales for Licensed Services.
 
1.17           “Net Sales for Licensed Products and Net Sales for Licensed
Services” means the gross value, compensation, and payments, whether in cash or
in kind, received by Licensee or its Sublicensees for Sales of Licensed Products
or Licensed Services, respectively, less all Permissible Deductions.
 
1.18           “Patent Rights” means, subject to Section 9.3 below, the patents
and patent applications, and all foreign counterparts, continuations, divisions,
extensions, reexaminations and reissues thereof, which trace their earliest
priority filing date by unbroken lineage to any of such patent or patent
applications, as set forth in Exhibit E, herein below.
 
 
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1.19            “Permissible Deductions” means, and shall be limited to, any (a)
trade, quantity and cash discounts on Licensed Products actually provided to
third parties in connection with arms length transactions, (b) credits,
allowances or refunds, not to exceed the original invoice amount, for actual
claims, damaged goods, rejections or returns of Licensed Products, and (c)
excise, sale, use, value added or other taxes, other than income taxes, paid by
Licensee due to the Sale of Licensed Products.
 
1.20           “Sale” means any transaction in which a Licensed Product or
Licensed Service is exchanged or transferred for any value, payment or
compensation of any type or kind. Notwithstanding the forgoing, Sales of any
kind shall not include and shall expressly exclude transfers by Licensee: (a) to
a Sublicensee of Affiliate for distribution or their own internal testing of
samples of any Licensed Product or Licensed Service, provided that such testing
is not conducted for or on behalf of any end user and further provided that
Licensee receives no payment for such Licensed Product or Licensed Service in
excess of the fully burdened (i.e. direct and indirect) costs of producing and
transporting such materials; and (b) for its and its Affiliates own
non-commercial laboratory research and development purposes, manufacturing,
marketing/promotional purposes, beta testing and/or clinical testing, provided
that the foregoing is not performed for or on behalf of any end user and further
provided that Licensee receives no payment for such Licensed Product or Licensed
Service in excess of the fully burdened (i.e. direct and indirect) costs of
producing and transporting such materials and/or providing such Licensed Product
or License Service.
 
1.21          “Royalty Rate” is defined in the Preamble above and shall include
both the “Patent Royalty Rate” and the “Non-Patent Royalty Rate.” “Patent
Royalty Rate” means the Royalty Rate that shall apply to licensed activities
within Territory countries in which there is at least one Valid Claim.
“Non-Patent Royalty Rate” means the Royalty Rate that shall apply to licensed
activities, including use of Tangible Research Property and/or Technical
Information, in Territory countries in which there is no Valid Claim.
 
1.22           “Tangible Research Property” means, subject to Section 9.3 below,
any and all research tools and other personal property that WU may provide to
Licensee as specifically set forth in Exhibit B hereto.
 
1.23           “Technical Information” means, subject to Section 9.3 below,
research and development information, unpatented inventions, know-how, data,
methods, and technical data and information, in each instance that are necessary
to practice the Patent Rights and/or to commercialize one or more Licensed
Products, as specifically set forth in Exhibit C hereto.
 
1.24           “Termination Fee” is defined in Section 13.2 below.
 
1.25           “Territory” is defined in the Preamble above, except that it
shall exclude those countries to which export of technology or goods is
prohibited by applicable U.S. export control laws or regulations.
 
1.26           “WU” is defined in the Preamble above.
 
1.27           “WU Indemnitee” is defined in Section 11.1.
 
1.28           “Valid Claim” means a claim (a) of a pending Patent Rights patent
application, or (b) of an issued and unexpired Patent Rights patent that has not
been (i) held invalid or unenforceable by a court or other governmental agency
of competent jurisdiction in a decision or order that is not subject to appeal,
(ii) canceled, (iii) abandoned in accordance with, or as permitted by the terms
of this Agreement or by mutual written agreement of WU and Licensee.
 
1.29           “Sublicensing Revenue” means all value, payment or compensation
of any type or kind, other than earned royalties on Net Sales, received by
Licensee from or through its Sublicensees for the licensing, cross-licensing or
other authorized use of any license or right granted herein by WU. Sublicensing
Revenue shall include, without limitation, all fees, milestone payments, cash
equivalents, equities, securities, equipment, property, rights or anything else
of value received by Licensee as sublicensing consideration from or for the
benefit of any Sublicensee.
 
 
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2.            
License Grants and Restrictions.
 
2.1        Patent Rights. Subject to the terms and conditions of this Agreement,
WU hereby grants to Licensee, and Licensee hereby accepts, a non-transferable,
exclusive (subject to Section 2.4 below) and royalty-bearing license under the
Patent Rights and for the Term of this Agreement, to (a) make, have made, sell,
offer for sale, use, and import Licensed Products, and (b) perform Licensed
Services, in each instance solely in the Territory and in the Field. For the
avoidance of doubt, Licensee acknowledges and agrees that no license is granted
or implied under the Patent Rights outside the Field or the Territory.
 
2.2        Technical Information. Subject to the terms and conditions of this
Agreement, WU hereby grants to Licensee, and Licensee hereby accepts, a
non-transferable, nonexclusive and royalty-bearing license for the Term of this
Agreement to use the Technical Information solely for the purpose of exploiting
the license granted to Licensee in Section 2.1 above. For the avoidance of
doubt, Licensee acknowledges and agrees that no license is granted or implied
under the Technical Information outside the Field or the Territory.
 
2.3      Tangible Research Property. Subject to the terms and conditions of this
Agreement, WU hereby grants to Licensee, and Licensee hereby accepts, a
nontransferable, nonexclusive and royalty-bearing license, for the Term of this
Agreement, to use the Tangible Research Property solely for the purpose of
exploiting the licenses granted to Licensee in Sections 2.1 and 2.2 above. For
the avoidance of doubt, Licensee acknowledges and agrees that no license is
granted or implied to use the Tangible Research Property for any other purpose.
 
2.4        Limitations on Patent Rights License. WU retains its right to use the
Patent Rights to make, have made, use, and import Licensed Products and to
perform Licensed Services in the Territory and in the Field for research and
educational purposes including collaboration with other nonprofit entities,
which shall expressly exclude any commercial purposes.
 
2.5        Clarifications. For the avoidance of doubt, the license "to have
made" granted in Section 2.1 above means that the Licensee may contract with one
or more third parties to make Licensed Products for Licensee for Sale or offer
for Sale by Licensee within the scope of its sales operations. In any such
event, Licensee shall require all such third parties to be bound to a written
confidentiality agreement that contains non-use and nondisclosure obligations
that are at least as restrictive as those that are contained in Article 7 below
before any Confidential Information is disclosed to such third parties.
 
2.6        Government Rights. In accordance with Public Laws 96-517, 97-256 and
98-620, codified at 35 U.S.C. §§ 200-212, the United States government retains
certain rights to inventions arising from federally supported research or
development. Under these laws and implementing regulations, the government may
impose requirements on such inventions. Licensed Products embodying inventions
subject to these laws and regulations sold in the United States must be
substantially manufactured in the United States. The license rights granted in
this Agreement are expressly made subject to these laws and regulations as
amended from time to time. Licensee shall be required to abide by all such laws
and regulations.
 
 
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2.7           Reservation of Rights and Restrictions. Nothing in this Agreement
provides Licensee with any ownership rights of any kind in the Patent Rights,
the Technical Information and/or any Tangible Research Property. All ownership
rights in the Patent Rights, the Technical Information and the Tangible Research
Property shall remain the sole and exclusive property of WU. The risk of loss of
all Tangible Research Property shall pass to Licensee upon delivery. For the
avoidance of doubt, Licensee’s rights in any Tangible Research Property extend
only to the specific Tangible Research Property delivered by WU to Licensee.
Accordingly, Licensee shall have no right to any tangible research property
retained by WU including, without limitation, any original tangible research
property that may be retained by WU and on which the Tangible Research Property
delivered to Licensee may be based. No license or right is granted by WU, by
implication or otherwise, to any patent other than the Patent Rights. Other than
the licenses expressly granted in Sections 2.1, 2.2 and 2.3 above, all rights in
and to the Patent Rights, the Tangible Research Property and any Technical
Information are hereby reserved by WU. Licensee agrees not to practice or use
the Patent Rights, the Tangible Research Property and/or the Technical
Information or do any act in respect thereof outside the scope of the licenses
expressly granted above including, without limitation, providing any Tangible
Research Property to any third party. Licensee further agrees that it will not
do any act or thing which would in any way contest WU’s ownership in, or
otherwise derogate from the ownership by WU, of any rights in the Patent Rights,
the Tangible Research Property and/or Technical Information. In furtherance of
the foregoing but without limiting the generality thereof, Licensee agrees not
to register or attempt to register in the Territory or elsewhere any rights in
the Patent Rights, the Tangible Research Property and/or Technical Information
or to assist any third party to do so.
 
2.8          Markings. Licensee shall ensure that appropriate markings, such as
“Patent Pending” or the Patent Rights patent numbers or application serial
numbers, appear, in accordance with each country’s patent laws, on all Licensed
Products (or their packaging, as appropriate) sold by or on behalf of Licensee.
 
2.9           Research Cross-License. Licensee hereby grants to WU and WU hereby
accepts, a non-transferable, non-exclusive, perpetual, irrevocable, fully paid
up, license, for research and education purposes only, under any and all
applicable patents, copyright registrations or other intellectual property
rights, to make and use any and all inventions, discoveries or improvements
conceived of or reduced to practice by Licensee during the Term of this
Agreement and relating to the Patent Rights, Tangible Research Property or
Technical Information. For the avoidance of doubt, the rights under this Section
2.9 do not include any right to make, use, sell or offer to sell any products or
services for any commercial purpose.
 
2.10          Sublicensing.
 
2.10.1                      General. Subject to the further provisions of this
Section 2.10, Licensee may grant sublicenses of the licenses granted to Licensee
in Sections 2.1, 2.2 and 2.3 above to third parties by entering into a written
agreement with any such third party (each such agreement shall be referred to
herein as a “Sublicense” and each such third party shall be referred to herein
as a “Sublicensee”). Only Licensee (and not any Sublicensee) may enter into a
Sublicense, and each Sublicense shall expressly prohibit the Sublicensee from
granting further sublicenses.
 
2.10.2                      Requirements of each Sublicense Agreement. Licensee
agrees that it will require all Sublicensees to comply with the terms and
conditions set forth in this Agreement and applicable to Licensee. In
furtherance of the foregoing but without limiting the generality thereof, each
Sublicense shall, for the express benefit of WU, bind the Sublicensee to terms
and conditions no less favorable to WU than those between WU and Licensee
contained in this Agreement. To the extent that any term, condition, or
limitation of any Sublicense is inconsistent with the terms, conditions and
limitations contained in this Agreement, such term, condition, and/or limitation
shall be null and void against WU. Without in any way narrowing or limiting the
scope of the foregoing provisions of this Section 2.10.2, all Sublicenses shall
contain the terms and conditions set forth in Exhibit D hereto. Within thirty
(30) days after the effective date of any Sublicense, Licensee shall provide WU
a complete copy of the Sublicense including, without limitation, any and all
exhibits and/or attachments thereto. If the Sublicense is written in a language
other than English, the copy of the Sublicense shall be accompanied by a
complete translation written in English. Upon delivery of such translation to
WU, Licensee shall be deemed to represent and warrant to WU that such
translation is a true and accurate translation of the Sublicense.
 
 
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2.10.3                      Primary Liability. Licensee will be primarily liable
to WU for all acts, errors or omissions of a Sublicensee. Any act, error or
omission of a Sublicensee that would be a breach of this Agreement if imputed to
Licensee will be deemed to be a breach of this Agreement by Licensee.
 
3.            
Development Plan.
 
3.1        Development Plan. Licensee represents and warrants that (a) the
Development Plan contains Licensee’s good faith, bona fide plans for
commercializing Licensed Products as rapidly and extensively as practicable, and
(b) Licensee has the knowledge, expertise, experience and resources to fully
carry out such plans.
 
3.2        Development Plan Milestones. Licensee agrees to use its best efforts
to meet any and all milestones set forth above and in the Development Plan on or
before the times set forth in the Development Plan including, without
limitation, the development milestones for each Licensed Product and any
Licensed Services.
 
3.3        Progress Reports. Licensee will deliver to WU written reports on
Licensee’s progress against the Development Plan no later than January 31 and
July 31 of the first two calendar years following the calendar year in which the
Effective Date falls, and no later than January 31 of each calendar year
thereafter. Each such report will set forth Licensee’s progress against the
Development Plan in reasonable detail including, without limitation, the
progress achieved and any problems encountered in the development, prototyping,
evaluation, testing, manufacture, Sale, and/or marketing of, as applicable, each
Licensed Product and any Licensed Services. Each such report will identify in
detail any financial investment, grant or other source of funding awarded or
provided to Licensee that is used in part or in while to develop, evaluate,
test, manufacture, sell and/or market a Licensed Product and/or Licensed
Service. Upon reasonable request by WU from time-to-time, Licensee will meet
with WU to consult with WU about Licensee’s then-current progress against the
Development Plan.
 
3.4        Changes to Development Plan. Licensee may not amend, change or
otherwise modify the Development Plan without the written consent of WU.
 
4.            
Diligence.
 
               4.1        Licensee agrees to, throughout the term of this
Agreement, use its best efforts to develop, manufacture, promote and sell
Licensed Products and to perform any Licensed Services, in each instance
throughout the Territory and in the Field in accordance with the milestones set
forth in Exhibit F.
 
               4.2        Should WU conclude in its reasonable judgment that
Licensee fails to meet the diligence requirements set out in Section 4.1 above,
WU may notify Licensee of its conclusions and the basis therefore. The parties
shall then undertake to resolve WU’s concerns through good faith negotiations
for a period of 90 days. Should such negotiations fail to result in Licensee
achieving a level of diligence consistent with its obligations under Section 4.1
above, in WU’s sole reasonable judgment, then WU may terminate the license in
each specific sub-field where there has been insufficient best efforts or at WU
option change the license in each specific sub-field where there has been
insufficient best effort to a non-exclusive license.
 
5.            
Fees, Payments and Royalties.
 
5.1        License Issue Fee. Within fifteen (15) days after the Effective Date,
Licensee agrees to pay the License Issue Fee to WU. Such License Issue Fee shall
be non-refundable and shall not be credited against any other payments that may
be due hereunder.
 
5.2        License Maintenance Fee. On or before every anniversary of the
Effective Date and until and including the anniversary following the First
Commercial Sale of a Licensed Product or Licensed Service occurs in a primary
country designated in the Development Plan, Licensee agrees to pay the License
Maintenance Fee to WU. All License Maintenance Fees shall be non-refundable and
shall not be credited against any other payments that may be due hereunder.
Following the first Sale of License Product, Licensee’s obligations for this
payment will cease and transfer to the Minimum Royalties per Section 5.4.
Payments due under this section will be made on a prorated annual basis.
 
 
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5.3           Royalties.
 
5.3.1           Licensed Products. For each Licensed Product made or sold by or
for Licensee and/or Sublicensee within the Territory, Licensee agrees to pay WU
an earned royalty equal to the Patent Royalty Rate of Net Sales if there is a
Valid Claim in at least one of the country of manufacture or country of Sale or
equal to the Non-Patent Royalty Rate of Net Sales if there is no Valid Claim in
both the countries of manufacture and Sale. Such earned royalties shall be paid
by Licensee within thirty (30) days after the end of each Calendar Half in which
the Sale of the Licensed Products to which such earned royalties occurs. If a
Licensed Product is sold in combination with another product (“Combination
Product”) on which licensee is obligated to pay royalties, the Patent Royalty
Rate used shall be the Patent Royalty Rate if the Licensed Product were sold
alone multiplied by the ratio A/(A+B), where A = the cost of the Licensed
Product if sold alone and B = cost of the Combination Product if sold alone,
such that this ratio not be lower than 0.5, where B is an active ingredient and
not an excipient, carrier, diluents or filler.
 
5.3.2           Licensed Services. Licensee agrees to pay WU an earned royalty
equal to the Patent Royalty Rate of the total gross revenues generated, directly
or indirectly, by Licensee and/or Sublicensee from the performance of the
Licensed Services if there is a Valid Claim in the country in which the Licensed
Services were performed or equal to the Non-Patent Royalty Rate of the total
gross revenues generated, directly or indirectly, by Licensee from the
performance of the Licensed Services if there is no Valid Claim in the country
in which the Licensed Services were performed. Such earned royalties shall be
paid by Licensee within thirty (30) days after the end of each Calendar Half in
which the performance of the Licensed Services occurs. if a Licensed Service is
sold in combination with another product (“Combination Service”) on which
licensee is obligated to pay royalties, the Patent Royalty Rate used shall be
the Patent Royalty Rate if the Licensed Service were sold alone multiplied by
the ratio A/(A+B), where A = the cost of the Licensed Service if sold alone and
B = cost of the Combination Product if sold alone, such that this ratio not be
lower than 0.5.
 
5.4         Minimum Royalties. Commencing with the Calendar Half in which the
First Commercial Sale occurs and continuing thereafter throughout the term of
this Agreement, Licensee agrees to pay WU a minimum royalty equal to the Minimum
Royalty for each Calendar Half as an advance against the royalties due under
Section 5.3.1 above. Such Minimum Royalties shall be due on January 31 and July
31 of each Calendar Half.
 
5.5          Milestone Payments. Licensee agrees to pay WU milestone payments in
the amounts set forth in the Preamble, herein above, within thirty (30) days
after the date that the applicable milestone is met
 
5.6         Clarifications. For the avoidance of doubt, no multiple royalty will
be required to be paid because a Licensed Product or its manufacture, use, Sale
or importation is covered by more than one Valid Claim or patent or patent
application within the Patent Rights. A Sale of a Licensed Product will be
deemed to have been made at the time Licensee or a Sublicensee (or anyone acting
on behalf of or for the benefit of Licensee or its Sublicensees) first invoices,
ships, or receives value for a Licensed Product. Similarly, the performance of a
Licensed Service shall be deemed to have been performed at the time Licensee or
a Sublicensee (or anyone acting on behalf of or for the benefit of Licensee or
its Sublicensees) first invoices or receives value for a Licensed Service. In
order to ensure that WU obtains the full amount of royalty payments contemplated
in this Agreement, if any Licensed Product is sold or transferred internally
within Licensee or any Sublicensee or other third party with whom Licensee has
any agreement or arrangement regarding consideration (including but not limited
to an option to purchase stock, stock ownership, division of profits, or special
rebates or allowances), the amount of the Sale shall be deemed to be the greater
of (a) the price at which the Licensed Product is resold to the end user or (b)
the fair market value of the Licensed Product. Similarly, if any Licensed
Service is performed internally within Licensee or any Sublicensee or other
third party with whom Licensee has any agreement or arrangement regarding
consideration (including but not limited to an option to purchase stock, stock
ownership, division of profits, or special rebates or allowances), the amount of
revenue received by Licensee for such performance shall be deemed to be the
greater of (a) the price at which the Licensed Service is resold to the end user
or (b) the fair market value of the Licensed Service.
 
 
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5.7           Sublicensing Revenue Obligations. Licensee shall pay to WU the
percentage of Sublicensing Revenue identified in the Preamble above within
thirty (30) days of the end of the Calendar Half in which Licensee receives the
Sublicensing Revenue.
 
6.            
Place and Method of Payment; Reports and Records; Audit; Interest.
 
6.1           Method of Payment. All dollar ($) amounts referred to in this
Agreement are expressed in United States dollars. All payments to WU shall be
made in United States dollars by check or electronic transfer payable to
"Washington University." Any Sales revenues for Licensed Products or revenue for
Licensed Services in currency other than United States dollars shall be
converted to United States dollars at the conversion rate for the foreign
currency as published in the Eastern edition of The Wall Street Journal as of
the last business day in the United States of the applicable Calendar Half.
 
6.2           Place of Payment. Checks shall reference WU Contract Number
004446-0011and shall be sent to:
 
Accounting Department
Office of Technology Management
Washington University in St. Louis
660 South Euclid Avenue, CB 8013
St. Louis, MO 63110
 
All payments shall include the WU Contract Number to ensure accurate crediting
to Licensee’s account. Electronic transfers shall be made to a bank account
designated in writing by WU.
 
6.3           Reports. Within forty-five (45) days after the end of each
Calendar Half in which a Licensed Product is Sold or made or in which a Licensed
Service is performed, Licensee shall deliver to WU, a written report setting
forth the calculation of all amounts due to Licensee under Sections 5.3 and 5.5
above for such Calendar Half. For Licensed Products, each such report shall
show, at a minimum, (a) the number of Licensed Products in inventory at the
beginning of such Calendar Half, (b) the number of Licensed Products Sold and
amount of Sales by country during such Calendar Half, (c) the number of Licensed
Products in inventory at the end of such Calendar Half, (d) the gross receipts
for Sales of Licensed Products during such Calendar Half including total amounts
invoiced and received, (e) any Permissible Deductions giving totals by each type
for such Calendar Half, (f) Net Sales of Licensed Products by country for such
Calendar Half, (g) royalties, fees and payments due to WU for such Calendar
Half, giving totals for each category, and (h) earned royalty amounts credited
against minimum royalty payments for such Calendar Half. For Licensed Services,
each such report shall show, at a minimum, (a) the number of Licensed Services
performed during such Calendar Half and a description of such Licensed Services,
(b) the total gross revenues by country for Licensed Services during such
Calendar Half including total amounts invoiced and received, and (c) royalties
due to WU for such Calendar Half, giving totals for each category.
 
6.4          Books and Records. Licensee shall maintain complete and accurate
books of account and records that would enable an independent auditor to verify
the amounts paid as royalties, fees and payments under this Agreement. The books
and records must be maintained for ten years following the Calendar Half after
submission of the reports required by this Agreement. Upon reasonable notice by
WU, Licensee must give WU (or auditors or inspectors appointed by and
representing WU) access to all books and records relating to Sales of Licensed
Products by Licensee and the performance of Licensed Services by Licensee to
conduct, at WU’s expense, an audit or review of those books and records. This
access must be available at least once every six (6) months, during regular
business hours, during the term of this Agreement and for the three calendar
years following the year in which termination or expiration of this Agreement
occurs. If any such audit or review determines that Licensee has underpaid
royalties by 5% or more for any Calendar Half, Licensee shall (a) reimburse WU
for the costs and expenses of the accountants and auditors in connection with
the review and audit, and (b) immediately pay WU the amount of such underpayment
along with interest on the past due amount as provided in Section 6.5 below.
 
 
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6.5           Interest and Collection. Any amounts not paid by Licensee to WU
when due shall accrue interest, from the date thirty (30) days after the balance
is due at an interest rate of 1.5% per month or portion of a month. In addition,
Licensee will reimburse WU for all reasonable costs and expenses incurred
(including reasonable attorneys’ fees) in collecting any overdue amounts.
 
6.6          Foreign Taxes. Payments shall be paid to WU free and clear of all
foreign taxes. If laws, rules or regulations require withholding of income taxes
of other rates imposed upon payments set forth in this Agreement, Licensee shall
make such withholding payments as required and without subtracting such
withholding payments from such payments to WU. Licensee shall submit appropriate
proof of payment of the withholding rates to WU within a reasonable period of
time. Licensee shall use efforts consistent with its usual business practices to
minimize the extent of any withholding taxes imposed under the provisions of the
current or any future double taxation treaties or agreement between foreign
countries, and the parties shall cooperate with each other with respect thereto,
with the appropriate party under the circumstances providing the documentation
required under such treaty or agreement to claim benefits thereunder.
 
7.            
Confidentiality.
 
7.1          Definition of Confidential Information. The parties acknowledge
that, prior to and during the Term of this Agreement, the parties may disclose
to one another scientific, technical, trade secret, business, or other
information which is treated by the disclosing Party as confidential or
proprietary, including but not limited to unpublished Patent Rights patent
applications, Technical Information, and Tangible Research Property.
(hereinafter referred to as “Confidential Information”). Both parties agree that
in order to ensure that each party understands which information is deemed to be
confidential, all Confidential Information will be in written form and clearly
marked as “Confidential,” and if the Confidential Information is initially
disclosed in oral or some other non-written form, it will be confirmed and
summarized in writing and clearly marked as “Confidential” within thirty (30)
days of disclosure. The receiving party shall hold such Confidential Information
in confidence and shall treat such information in the same manner as it treats
its own confidential information but not less than with a reasonable degree of
care. In recognition that WU is a non-commercial, academic institution, Licensee
agrees to limit to the extent possible the delivery of Licensee Confidential
Information to WU. WU retains the right to refuse to accept any such information
or data from Licensee which it does not consider to be essential to this
Agreement or which it believes to be improperly designated, for any reason, but
such refusal shall not eliminate the obligation of the individual making such a
determination from treating such information as confidential hereunder where
such information has been read by such individual. The Confidential Information
provided to the receiving party will remain the property of the disclosing
party, and will be disclosed only to those persons necessary for the performance
of this Agreement. No indirect or consequential damages or damages based on loss
of profits or market share are contemplated or recoverable for breach of
confidentiality.
 
7.2          Exclusions. Confidential Information does not include information
that (a) was known to the receiving party prior to receipt from the disclosing
party as evidenced by the receiving party’s records; (b) is or becomes part of
the public domain through no act by or on behalf of the receiving party; (c) is
lawfully received by the receiving party from a third party without any
restrictions, and/or (d) comprises identical subject matter to that which had
been originally and independently developed by the receiving party personnel
without knowledge or use of any Confidential Information as evidenced by the
receiving party’s records.
 
7.3           General Obligations. Subject to Section 2.5 above and to Sections
7.5 and 7.6 below, the receiving party agrees that during the term of this
Agreement and forever thereafter it will (a) refrain from disclosing any
Confidential Information to third parties, (b) disclose Confidential Information
to only those employees of the receiving party necessary for the receiving party
to use the Confidential Information in accordance with this Agreement and who
are subject to restrictions on use and disclosure at least as restrictive as
those set forth in this Agreement, (c) keep confidential the Confidential
Information, and (d) except for use in accordance with the licenses which are
expressly granted in this Agreement, refrain from using Confidential
Information.
 
 
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7.4         No License. By disclosing the WU Confidential Information to
Licensee, WU does not grant any express or implied rights to Licensee under any
patents, copyrights, trademarks, or trade secrets. WU reserves, without
prejudice, the ability to protect its rights under any such patents, copyrights,
trademarks, or trade secrets.
 
7.5        Judicial Procedures. The receiving party may, to the extent
necessary, disclose the disclosing party’s Confidential Information in
accordance with a judicial or other governmental order, provided that the
receiving party either (a) gives the disclosing party reasonable notice prior to
such disclosure to allow the disclosing party a reasonable opportunity to seek a
protective order or equivalent, or (b) obtains written assurance from the
applicable judicial or governmental entity that it will afford the Confidential
Information the highest level of protection afforded under applicable law or
regulation.
 
7.6        Governmental Approvals. Licensee may, to the extent necessary, use
and disclose the Confidential Information to secure governmental approval to
clinically test or market a Licensed Product or Licensed Service, or, if
applicable, to secure patent protection for an invention within the Patent
Rights. Licensee will, in any such event, take all reasonably available steps to
maintain the confidentiality of the disclosed Confidential Information and to
guard against any further disclosure.
 
8.            
Representations and Warranties.
 
8.1        Authority. Each of WU and Licensee represents and warrants to the
other of them that (a) this Agreement has been duly executed and delivered and
constitutes a valid and binding agreement enforceable against such party in
accordance with its terms, (b) no authorization or approval from any third party
is required in connection with such party’s execution, delivery, or performance
of this Agreement, and (c) the execution, delivery, and performance of this
Agreement does not violate the laws of any jurisdiction or the terms or
conditions of any other agreement to which it is a party or by which it is
otherwise bound.
 
8.2        Compliance with Laws. Licensee represents and warrants that it will
(a) use the Patent Rights, Tangible Research Property and Technical Information
only to exploit the license rights granted in Sections 2.1, 2.2 and 2.3 in
accordance with the provisions of this Agreement and with such laws, rules,
regulations, government permissions and standards as may be applicable thereto
in the Territory and in the Field, and (b) otherwise comply with all laws,
rules, regulations, government permissions and standards as may be applicable to
Licensee in the Territory with respect to the performance by Licensee of its
obligations hereunder.
 
8.3       Reports and Statements. Licensee warrants that all reports and/or
statements provided by Licensee hereunder are true and correct and are certified
true and correct by Licensee upon delivery to WU.
 
8.4       Additional Warranties of Licensee. Licensee represents and warrants
that (a) it has obtained the insurance coverage required by Article 11 below,
and (b) there is no pending litigation and no threatened claims against it that
could impair its ability or capacity to perform and fulfill its duties and
obligations under this Agreement.
 
8.5       Additional Warranties of WU. WU represents and warrants that (a) it
has in place an intellectual property policy that provides for its ownership
(subject to any rights retained by the U.S. government by operation of law) of
the Patent Rights, Technical Information and Tangible Research Property; (b) as
of the Effective Date, it has received no notice of any third party claims
against WU challenging WU’s ownership or control of the Patent Rights, Technical
Information and Tangible Research Property; and (c) it has obtained assignments
from all WU inventors named in patent applications within the Patent Rights
assigning to WU all their right, title and interest in and to the Patent Rights.
 
 
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9.            
Application, Prosecution and Maintenance of Patent Rights.
 
9.1           Patent Applications. WU has the sole right to control the
preparation, filing, prosecution, issue and maintenance of Patent Rights patents
and applications. Subject to compliance by Licensee of the terms and conditions
of this Agreement (including, without limitation, Section 9.2 below),WU will (a)
prosecute and maintain the applications and patents within the Patent Rights,
and (b) prepare, file and prosecute additional applications within the Patent
Rights as Licensee may reasonably request, in WU's name at Licensee’s sole cost
and expense. WU will select qualified outside patent counsel and corresponding
foreign associates reasonably acceptable to Licensee to prepare, file, prosecute
and maintain U.S. patents/applications and foreign counterparts within the
Patent Rights. WU will consult with Licensee regarding the prosecution of Patent
Rights patent applications including, without limitation, providing Licensee a
reasonable opportunity to review and comment on proposed submissions to any
patent office before the submission is filed. WU will keep Licensee reasonably
informed of the status of Patent Rights patents and applications by timely
giving Licensee copies of significant communications relating to such Patent
Rights that are received from any patent office or outside patent counsel of
record or foreign associate.
 
9.2           Costs and Expenses. Subject to Section 9.3 below, Licensee agrees
to reimburse WU for all reasonable costs and expenses incurred by WU in
connection with the preparation, filing, prosecution, issue and/or maintenance
of patents and applications within the Patent Rights both prior to the Effective
Date on patent actions authorized by Licensee and anytime thereafter during the
term of this Agreement provided WU provides Licensee notice of such fees before
the date on which the applicable cost or expense is to be incurred by WU.
Licensee agrees to pay WU the amount of any such reimbursement within thirty
(30) days after receipt by Licensee of documentation for any such costs and
expenses, which WU may provide to Licensee from time-to-time.
 
9.3           Failure to Reimburse. Licensee may elect not to reimburse WU for
amounts due under Section 9.2 in respect to one or more Patent Rights patent
and/or applications only by giving WU notice of such election at least thirty
(30) days before the date on which the applicable cost or expense is to be
incurred by WU (each an “Election Notice”). For purposes of this Section 9.3, a
cost or expense shall be deemed to be incurred by WU on the earlier of (a) the
date WU actually pays the cost or expense, or (b) the date WU becomes obligated
to pay the cost or expense (which, for example, shall be the date WU engages a
third party to perform any service which gives rise to any such cost or
expense). Any such Election Notice shall specify the Patent Rights patents
and/or applications to which such Election Notice relates (“Elected Patent
Rights”). In the event any Election Notice is given by Licensee, (a) the term
“Patent Rights” shall be modified to exclude, as applicable, such Elected Patent
Rights, (b) the term “Technical Information” shall be modified to exclude any
research and development information, unpatented inventions, know-how, data,
methods, and technical data and information no longer necessary for the
exploitation of the license granted to the remaining Patent Rights, and (c) the
term “Tangible Research Property” shall be modified to exclude any and all
research tools and other personal property that WU may have provided to Licensee
that is no longer necessary for the exploitation of the license granted to the
remaining Patent Rights, in each instance as of the date the Election Notice is
given. Accordingly, and for the avoidance of doubt, as of the date the Election
Notice is given, the license to the Elected Patent Rights, the applicable
Technical Information and the applicable Tangible Research Property granted to
Licensee under Sections 2.1, 2.2 and 2.3 above shall terminate, and WU shall be
free, without any further obligation to Licensee whatsoever, to abandon the
applications or patents subject to the Election Notice, or to continue
prosecution or maintenance, for WU’s sole use and benefit, including a license
to unrelated third parties, at WU’s option. Licensee agrees to deliver to WU,
along with any Election Notice, all Technical Information and Tangible Research
Property to which such Election Notice relates. For the avoidance of doubt, WU
will not refund any amounts paid under Section 9.2 to WU prior to WU’s receipt
of an Election Notice.
 
 
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9.4           Community of Interest. The Parties desire to avail themselves to
the maximum extent possible of all applicable legal privileges. The Parties
intend that information regarding the preparation, filing, prosecution and
maintenance of the applications and patents within the Patent Rights (“Shared
Information”) that would otherwise be subject to one or more legal privileges or
protections is and shall be subject to those same privileges and protections
despite the fact that it has been developed by or exchanged between or among
them and/or their joint or independent counsel. The Parties further intend that
Shared Information is and shall be subject to the joint defense doctrine and
common interest/community of interest doctrine as recognized in such cases as
Hunydee v. United States, 355 F.2d 183 (9th Cir. 1965), Continental Oil Company
v. United States, 330 F.2d 347 (9th Cir. 1964), In re University of California,
101 F.3d 1386 (Fed. Cir. 1996), and In re Spalding Sports Worldwide, Inc., 203
F.3d 800 (Fed. Cir. 2000), including the cases cited therein. The Parties
acknowledge that the legal privileges and protections pertaining to Shared
Information are held jointly by all Parties, and that no individual Party is
authorized to waive any such privilege or protection. Further, this Agreement
shall not affect the ethical, fiduciary or other obligations inherent in those
attorney-client relationships other than to extend the cloak of confidentiality
and privilege to the Shared Information as provided herein. Each Party agrees
that Shared Information obtained from another Party or developed jointly shall
be used only for the preparation and prosecution of the Licensed Patents and for
no other purpose. Each Party agrees to keep Shared Information confidential,
disclose Shared Information within each Party only to those individuals who have
a business need to know the information and not to disclose Shared Information
to any person or firm not a Party to this License Agreement.
 
10.            
Infringement, Enforcement, and Defense.
 
10.1          Notice of Infringement. Throughout the term of this Agreement,
each of WU and Licensee agree to give the other prompt notice of (a) any known
or suspected infringement of the Patent Rights or unauthorized use or disclosure
of the Technical Information and/or Tangible Research Property in the Territory,
and (b) any claim that a Licensed Product or Licensed Service infringes the
intellectual property rights of a third party.
 
10.2              Patent Rights.
 
10.2.1                     Enforcement. Licensee, at its sole expense, will
attempt to stop promptly any infringement of the Patent Rights in the Territory.
Upon receipt of WU’s written consent, such consent not to be unreasonably
withheld, Licensee may initiate and prosecute actions in its own name or, if
required by law, in WU’s name against third parties for infringement of the
Patent Rights in the Territory through outside counsel of Licensee’s choice who
are reasonably acceptable to WU. Licensee shall consult with WU prior to and in
conjunction with all significant issues, shall keep WU informed of all
proceedings, and shall provide copies to WU of all pleadings, legal analyses,
and other papers related to such actions. WU will provide reasonable assistance
to Licensee in prosecuting any such actions. If Licensee fails or declines to
take any action under this Section 10.2.1 within a reasonable time after
learning of the infringement of the Patent Rights, WU shall have the right (but
not the obligation) to take appropriate actions including, without limitation,
filing a lawsuit. Licensee will provide reasonable assistance to WU in
prosecuting, resolving and/or settling any such actions In the event a third
party alleged to have infringed the Patent Rights brings a declaratory judgment
action against Licensee, Licensee may at its sole discretion decline to litigate
the declaratory judgment action or initiate action for the alleged infringement
in question.  Should Licensee decline to litigate a declaratory judgment action,
WU shall have the right (but not the obligation) to defend Licensee and the
Patent Rights at WU's sole expense and direction.  Licensee will provide
reasonable assistance to WU in prosecuting, defending, resolving and/or settling
such action. Nothing under this Section 10.2.1 shall be construed to require
Licensee to initiate or prosecute an action for patent infringement against
third parties.
 
10.2.2                      Restrictions on Settlement. Notwithstanding anything
in this Agreement to the contrary, Licensee may not, without the advanced
written consent of WU, settle, compromise, or otherwise enter into any form of
settlement (or other similar agreement) regarding any claim of action brought
under Section 10.2.1 above that either (a) admits liability on the part of WU,
(b) otherwise negatively affects the rights of WU or imposes any liability,
restrictions or obligation upon WU, (c) requires any financial payment by WU,
(d) concedes or otherwise portions the Territory and/or (e) grants rights or
concessions to a third party to the Patent Rights, any Licensed Products, any
Licensed Services.
 
 
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10.2.3                      Proceeds. If Licensee obtains any value, payment or
compensation of any type or kind as a result of any claim brought pursuant to
Section 10.2.1 above, such proceeds shall be distributed in accordance with the
further provisions of this Section 10.2.3. Licensee shall pay to WU a percentage
of any and all proceeds equal to the Patent Royalty Rate.
 
10.3           Technical Information. WU shall have the exclusive right (but not
the obligation) to institute legal action against any third party arising out of
such third party’s actual or threatened infringement or misappropriation of the
Technical Information, and WU shall retain any and all proceeds from any such
actions. Licensee shall have no right to make any demands or claims, bring suit,
effect any settlements or take any other action with respect to any such
infringement or misappropriation without the prior written consent of WU.
 
11.            
Indemnification.
 
11.1           Notwithstanding anything else in this Agreement, Licensee agrees
to indemnify, reimburse and hold harmless WU, WU personnel, the principal
investigator, WU’s Affiliates, and each of their respective present trustees,
faculty, staff, employees, students, directors, officers, agents, successors and
assigns (altogether the “WU Indemnitees”) from, for and against any and all
judgments, settlements, losses, expenses, damages and/or liabilities (the
“Losses”) and any and all court costs, attorneys’ fees, and expert witness fees
and expenses (“Fees”) that a WU Indemnitee may incur from any and all
allegations, claims, suits, actions or proceedings (the “Claims”) arising out
of, relating to, or incidental to Licensee’s breach of this Agreement or its
use, commercialization, or other exploitation of WU deliverables, whether by or
through Licensee, and including all Claims for infringement, injury to business,
personal injury and product liability, but excluding Losses, not Fees, to the
extent they are adjudicated by a Court of competent jurisdiction to be caused by
the gross negligence or willful misconduct of a WU Indemnitee.
 
11.2           WU agrees to indemnify, reimburse and hold harmless Licensee,
Licensee personnel, Licensee’s Affiliates, and its present staff, employees,
directors, officers, agents, successors and assigns (together the “Licensee
Indemnitees”) from, for and against any and all Losses and Fees that a Licensee
Indemnitee may incur from any and all Claims by WU Indemnitees arising out of,
relating to, or incidental to WU’s activities pursuant to this Agreement,
including, without limitation, WU’s use, storage or handling of company property
at WU.
 
11.3           Obligations set forth in this section shall survive termination
of this Agreement, shall continue even after assignment of rights and
responsibilities, and shall not be limited by any provision of this Agreement
outside this section. A party seeking indemnification under this Agreement
shall: (a) give the indemnifying party prompt written notice of the Claim; (b)
cooperate with the indemnifying party, at the indemnifying party’s expense, in
connection with the defense and settlement of the Claim; and (c) not settle or
compromise the Claim without the written consent of the indemnifying party,
which shall not be unreasonably withheld. An indemnifying party may satisfy its
duty to indemnify for Fees by accepting an irrevocable duty to defend the Claim
on behalf of the Indemnitees without a reservation of rights, at which time the
indemnifying party shall be entitled to conduct and direct the defense of
Indemnitees against such Claim using attorneys of its own selection; for all
other Claims, the Indemnitee shall be entitled to conduct and direct its own
defense and that of other Indemnitees using attorneys of its own selection with
Fees subject to the indemnifying party’s ongoing obligation to indemnify for
Fees. 
 
12.            
Insurance.
 
 
Throughout the Term of this Agreement and for a period of five (5) years
thereafter, Licensee shall obtain and maintain comprehensive general liability
and product liability insurance, naming WU as an additional insured, with
carrier(s) having at least A.M. Best ratings/class sizes of A/VII and in the
following minimum annual limits: From the Effective Date until the date at least
one day prior to the First Commercial Sale or clinical study: $2,000,000 per
occurrence and $5,000,000 in the aggregate; and from the date at least one day
prior to the First Commercial Sale or clinical study: $5,000,000 per occurrence
and $10,000,000 in the aggregate.
 
Licensee will provide WU with a certificate of insurance within thirty days of
execution of this Agreement and annually thereafter. The certificates must
provide that Licensee’s insurer will notify WU in writing at least thirty (30)
days prior to cancellation or material change in coverage. The specified minimum
insurance coverage and limits do not constitute a limitation on Licensee’s
liability or obligation to indemnify or defend under this Agreement.
 
 
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13.            
Term and Termination.
 
13.1        Term. The Term of this Agreement is defined in the Preamble and is
subject to earlier termination as provided herein.
 
13.2        Termination By Licensee. Licensee may terminate this Agreement
without cause by (a) giving notice thereof to WU, and (b) paying WU, along with
such notice, all amounts due and owing to WU under this Agreement as of the date
of termination and a termination fee (“Termination Fee”). Any such termination
shall be effective on the date such notice is given along with the Termination
Fee. The Termination Fee shall be an amount equal to all amounts that would have
come due under this Agreement (absent termination) under Sections 5.2, 5.4 and
5.5 above in the one hundred twenty (120) day period after the effective date of
termination.
 
13.3        Termination by WU. WU may terminate this Agreement by giving notice
thereof to Licensee upon the occurrence of any one or more of the following
events (in which event this Agreement shall terminate on the date such notice is
given): (a) Licensee fails to meet any of the milestones set forth in the
Development Plan and/or in Exhibit F on or before the times set forth in the
Development Plan (regardless of whether Licensee has used its best efforts to do
so) and fails to remedy such failure within sixty (60) days after WU gives
Licensee notice of such failure, (b) Licensee breaches any other written
agreement between Licensee and WU (and/or defaults in any obligation to WU
outside the scope of this Agreement) and Licensee fails to remedy such breach
(or default) within sixty (60) days after WU gives Licensee notice of, as
applicable, such breach or default, (c)  Licensee exercises, or attempts or
offers to exercise, any rights with respect to the Patent Rights and/or the
Technical Information outside the scope of the licenses granted to Licensee in
Article 2 above, (d) Licensee breaches any provision of Article 6 above, and/or
(e) Licensee (i) becomes insolvent, bankrupt, or is otherwise unable to pay its
debt(s) to WU by the due date(s), or (ii) Licensee suffers the appointment of a
receiver, receiver and manager, or administrative receiver of the whole or any
part of its assets or undertaking, (iii) a resolution is passed, for its winding
up (other than for the purpose of amalgamation or reconstruction),.
 
13.4        Breach and Failure to Cure. WU may terminate this Agreement by
giving notice thereof to Licensee in the event Licensee commits a breach of any
provision of this Agreement (other than a breach of the type contemplated by
Section 13.3 above) and fails to cure such breach within sixty (60) days after
the day that WU gives Licensee notice of such breach. Such termination shall be
effective on the date such notice of termination is given. Licensee may
terminate this Agreement by giving notice thereof to WU in the event WU commits
a breach of any provision of this Agreement and fails to cure such breach within
thirty (30) days after the day that Licensee gives notice to WU of such breach,
and such termination shall be effective on the date such notice of termination
is given.
 
13.5        Duties Upon Expiration or Earlier Termination. For the avoidance of
doubt, on the date of expiration or earlier termination of this Agreement, all
license rights granted to Licensee under Article 2 above shall terminate.
Licensee agrees to, promptly upon the expiration or earlier termination of this
Agreement, deliver to WU all originals, copies, reproductions and summaries of
all Tangible Research Property, Technical Information and Confidential
Information, in each instance in the format in which it exists at the time of
expiration or earlier termination of this Agreement, or in another mutually
agreed format. Within ten (10) days after the expiration or earlier termination
of this Agreement for any reason whatsoever, Licensee agrees to deliver a
written report to WU of all Licensed Products in inventory. If this Agreement
terminates before the expiration of the last-to-expire Patent Rights, then, upon
the termination of this Agreement, Licensee agrees (a) to immediately
discontinue the exportation of Licensed Products that were made in the
Territory, (b) to immediately discontinue the manufacture, Sale and distribution
of the Licensed Products in the Territory and the performance of Licensed
Services in the Territory, (c) to immediately destroy all Licensed Products in
inventory, and (d) not to manufacture, sell and/or distribute Licensed Products
in the Territory until the expiration of applicable last-to-expire Patent
Rights. If this Agreement expires, Licensee agrees to, within ten (10) days
after the expiration of this Agreement, pay WU a royalty for the Licensed
Products in inventory equal to the Royalty Rate of the then current market value
of the Licensed Products in inventory.
 
 
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13.6             Effect of Expiration or Earlier Termination. For the avoidance
of doubt, the expiration or earlier termination of this Agreement shall not
relieve Licensee of its obligation to account for and make payment to WU of any
amount due hereunder including, without limitation, any royalties accrued during
the Term of this Agreement and amounts under Section 9.2 and 13.2 above.
 
14.            
Disclaimer and Limitation of Liability. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, EVERYTHING PROVIDED BY WU UNDER THIS AGREEMENT IS UNDERSTOOD TO BE
EXPERIMENTAL IN NATURE, MAY HAVE HAZARDOUS PROPERTIES, AND IS PROVIDED WITHOUT
ANY WARRANTY OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR
NON-INFRINGEMENT OF ANY THIRD-PARTY PATENT, TRADEMARK, COPYRIGHT OR ANY OTHER
THIRD-PARTY RIGHT. WU MAKES NO WARRANTIES REGARDING THE QUALITY, ACCURACY,
COMMERCIAL VIABILITY OR ANY OTHER ASPECT OF ITS PERFORMANCE PURSUANT TO THIS
AGREEMENT OR REGARDING THE PERFORMANCE, VALIDITY, SAFETY, EFFICACY OR COMMERCIAL
VIABILITY OF ANYTHING PROVIDED BY WU UNDER THIS AGREEMENT. IN NO EVENT SHALL WU
OR LICENSEE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, WHETHER IN BREACH OF
CONTRACT, TORT OR OTHERWISE, EVEN IF THE PARTY IS ADVISED OF THE POSSIBLITY OF
SUCH DAMAGES. EXCEPT FOR THEIR RESPECTIVE INDEMNITY OBLIGATIONS, EACH OF WU’S
AND LICENSEE’S AGGREGATE LIABILITY TO THE OTHER UNDER THIS AGREEMENT SHALL NOT
EXCEED THE PAYMENTS MADE OR PAYMENTS DUE UNDER THIS AGREEMENT, RESPECTIVELY.
 
15.            
General Provisions.
 
15.1         Import/Export Controls. In performing their respective obligations
under the Agreement, the Parties will comply with United States export control
and asset control laws, regulations, and orders, as they may be amended from
time to time, applicable to the export or re-export of goods or services,
including software, processes, or technical data. Such regulations include
without limitation the Export Administration Regulations (“EAR”), International
Traffic in Arms Regulations (“ITAR”), and regulations and orders administered by
the Treasury Department’s Office of Foreign Assets Control (collectively,
“Export Control Laws”). WU is not transferring any information or material
outside of the United States under this Agreement and is providing no
representation regarding the export control status or classification of any
information or materials provided hereunder.
 
15.2         Entire Agreement; Amendment. This Agreement embodies the entire
understanding of the parties and supersedes all other past and present
communications and agreements relating to the subject matter. No amendment or
modification of this Agreement shall be valid unless made in writing and signed
by authorized representatives of both parties.
 
15.3         Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State Missouri,
without regard to its rules or procedures involving conflicts of laws. All
actions relating to this Agreement shall be brought exclusively in the United
States District Court for the Eastern District of Missouri or the Circuit Court
of St. Louis County, Missouri, if no federal subject matter jurisdiction exists.
The Parties irrevocably waive all present and future objections to personal
jurisdiction, forum or venue in such courts.
 
15.4        Survival. Each provision of this Agreement that would by its nature
or terms survive, shall survive any termination or expiration of this Agreement,
regardless of the cause. Such provisions include, without limitation, Sections
7, 8, 10, 11, 12, and 14.
 
 
-16-

 
 
15.5          Notices. Notices pursuant to this Agreement shall be to the
following contacts and are effective when sent if sent by a commercial carrier’s
overnight delivery service or when received if sent otherwise:
 
    Office of Technology Management
    Attention: Director
    Washington University in St. Louis
    660 South Euclid Avenue, CB 8013
    St. Louis, MO 63110
 
15.6        Assignment. This Agreement is binding upon and inures to the benefit
of the Parties and their successors, but this Agreement may not be assigned by
either party without the prior written consent of the other party.
 

15.7         Construction. The recitals and preamble to this Agreement, if any,
are hereby incorporated as an integral part of this Agreement as if restated
herein in full. Headings are included for convenience and reference only and are
not incorporated as an integral part of this Agreement. This Agreement may be
executed in any number of counterparts each of which shall be deemed an original
and as executed shall constitute one agreement, binding on both parties, even
though both parties do not sign the same counterpart.
 
15.8         Relationship of the Parties. Each Party is an independent
contractor and not a partner or agent of the other Party. This Agreement will
not be interpreted or construed as creating or evidencing any partnership or
agency between the Parties or as imposing any partnership or agency obligation
or liability upon either Party. Further, neither Party is authorized to, and
will not, enter into or incur any agreement, contract, commitment, obligation or
liability in the name of or otherwise on behalf of the other Party.
 
15.9        Severability. If any provision in this Agreement is held invalid,
illegal, or unenforceable in any respect, such holding shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
it had never contained the invalid, illegal, or unenforceable provisions.
 
15.10       Remedies. The failure of either Party to insist upon or enforce
strict performance by the other Party of any provision of this Agreement, or to
exercise any right or remedy under this Agreement will not be interpreted or
construed as a waiver or relinquishment of that Party's right to assert or rely
upon any such provision, right or remedy in that or any other instance; rather,
the same will be and remain in full force and effect. All rights and remedies
under this Agreement are cumulative of every other such right or remedy and may
be exercised concurrently or separately from time-to-time.
 
15.11        Use of Names. Neither Party may use the trademarks or name of the
other Party or its employees for any commercial, advertisement, or promotional
purposes without the prior written consent of the other with WU acting through
an authorized corporate officer. If either party is required by law,
governmental regulation, or its own authorship or conflict of interest policies
to disclose its relationship with the other Party, including, but not limited
to, in SEC filings, scientific publications or grant submissions, it shall
provide the other Party with a copy of the disclosure.
 
15.12        Force Majeure. Neither WU nor Licensee will be liable for failure
of or delay in performing obligations set forth in this Agreement, and neither
will be deemed in breach of its obligations, other than for Payments, if such
failure or delay is due to natural disasters or other causes reasonably beyond
the control of a Party and reasonable notice of the delay is provided to the
other Party.
 
15.13       WU Personnel. Licensee agrees that for all WU faculty or staff
members who serve Licensee in the capacity of consultant, officer, employee,
board member, advisor, or otherwise through a personal relationship with
Licensee (a “Consultant”) (i) such Consultant shall serve the Licensee in his or
her individual capacity, as an independent contractor, and not as an agent,
employee or representative of WU; (ii) WU exercises no authority or control over
such Consultant while acting in such capacity; (iii) WU receives no benefit from
such activity; (iv) neither Licensee nor the Consultant may use WU resources in
the course of such service; (v) WU makes no representations or warranties
regarding such service and otherwise assumes no liability or obligation in
connection with any such work or service undertaken by such Consultant; and (vi)
any breach, error, or omission by a Consultant acting in the capacity set forth
in this paragraph shall not be imputed or otherwise attributed to WU, and shall
not constitute a breach of this Agreement by WU.
 
 
-17-

 
 
15.14             Further Acts. Each party shall, at the reasonable request of
the other, execute and deliver to the other such instruments and/or documents
and shall take such actions as may be required to more effectively carry out the
terms of this Agreement.
 
15.15            Impact on Tax-Exempt Status.  WU advises (a) that it is exempt
from federal income tax under Section 501(c) (3) of the Internal Revenue Code,
(b) that maintenance of such exempt status is of critical importance to WU and
to its members, and (c) that WU has entered into this Agreement with the
expectation that there will be no adverse impact on its tax exempt status. As
such, and if it becomes necessary, the parties agree to amend, modify or reform
this Agreement as necessary (i) in order to ensure that there is no material
adverse impact on WU's tax exempt status, and (ii) in a manner that preserves
the economic terms of the Agreement as such are set forth in this Agreement.
 
The signatures of the undersigned indicate that they have read, understand and
agree with the terms of this Agreement and have the authority to execute this
Agreement on behalf of their represented Party and to bind their Party to all
the terms of this Agreement.
 
WASHINGTON UNIVERSITY
 
 
By: /s/ Bradley J. Castanho, Ph.D.
 
Title:      

Assistant Vice Chancellor for Research
 
Office of Technology Management
 
Washington University in St. Louis
 

 
LICENSEE
 
 
By:  /s/ Tom Varvaro

Title: CFO
 
 
 
-18-

 

 
Exhibit A
Initial Development Plan
 
 
(a) a definition and/or specification of each Licensed Product/Service planned
for development,
 
Field 1
Dietary supplement, sports nutrition, foods with health claims,
skincare/cosmetics
Field 2
food or drink products requiring FDA approval
Field 3
Consumer foods, such as dairy products, formulas, cereal
Field 4
Research (ref standard at $3000/gram)
Field 5
Pharmaceuticals

 
(b) the tasks to be performed by Licensee, its contractors to develop each
Licensed Product to the point of commercialization, including estimated time
schedules for specific tasks such as prototype development, beta testing,
trials, product development, and market surveys and testing;
Product Development
ChromaDex embarked on an ambitious NR product development program to yield a
commercially viable product. After careful review of the patent literature
surrounding the synthesis of NR and 9 months of continuous experimentation,
ChromaDex scientists have arrived at an improved synthetic chemistry approach
that yields a high purity NR product with very good recoveries. While the
methodolgy is sound and reproducible, the resultant material is not a
commercially viable product. ChromaDex has contracted with two commercial
partners to refine the methodology, generate a commericially viable product and
scale up the resultant process to commercial production levels. Our expected
availability of product is anticipated to be mid Q3 of 2013.
Product Profile, Commercial Viability and Impact on Plan
The business plan will be contigent upon having cost effective commercially
viable product, therefore the timeline for commercial and clinical events will
be represented at L + or -. L will represent the date ChromaDex has the
availability of commercially viable product. Commercial viability is dependent
on profile and cost.
Clinical Plan
Nicotinamide Riboside
PK
L + 3mos
Initial data to support dosing and safety
Nicotinamide Riboside
comparison to niacin in optimization of NAD pathway and its effects
L + 3mos
For cholesterol mainly, but other minor niacin comparisons (anti-oxidant,
anti-inflammatory)
Nicotinamide Riboside
Weight loss, metabolism, and associated molecular markers
L + 6mos
This is based on NR conversion to NAD, and NAD's role in activating histone
deacetylases (HDACs) which are used to control metabolism
Nicotinamide Riboside
Endurance and sports nutrition
L + 9 mos
Based on NR's position in the NAD recycling pathway following use in ATP
production
Nicotinamide Riboside
Joint health
L + 15 mos
Based on a comparison to niacin's ability to increase range of motion, decrease
pain, and act as an anti-inflammatory
Nicotinamide Riboside
Chemotherapy-induced neuropathy
L + 21mos
This ican be an OTC and ulitimatley a pharma inquiry

 
 
-19-

 
 
(c) the tasks to be performed to achieve regulatory approval or other
certification of each Licensed Product/Service, including estimated time
schedules for each;
Regulatory Plan
Self affirmed GRAS L+18 mos
 
(d) the identification of the primary country(ies) in which the Licensed
Product(s)Service(s) will be sold and a good faith estimate of time of First
Commercial Sale in the primary country(ies); and
 
Country Roll out
 
 
USA
Q3
2013
Canada
Q2
2015
Australia
Q2
2016
EU
Q4
2016
Asia
Q4
2017
 
(e) good faith estimates of Sales and income by Calendar Half for the next five
calendar years including the first calendar year or partial calendar year
following the Effective Date.]
 
 
 

 
Company Sales (USD)
  Q3 2013 
  Q4 2013 
  1H 2014 
  2H 2014 
  1H 2015 
Field 1
Dietary supplement, sports nutrition, foods with health claims
 $125,000 
 $187,500 
 $437,500 
 $500,000 
 $625,000 
Field 2
food or drink products requiring FDA approval
 $0 
 $0 
 $0 
 $0 
 $0 
Field 3
Consumer foods, such as dairy products, formulas, cereal
 $0 
 $0 
 $0 
 $8,000 
 $20,000 
Field 4
Research
 $750 
 $750 
 $1,500 
 $1,500 
 $2,250 
Total
 $125,750 
 $188,250 
 $439,000 
 $509,500 
 $647,250 
 
    
    
    
    
    
Company Sales (USD)
  2H 2015 
  1H 2016 
  2H 2016 
  1H 2017 
  2H 2017 
Field 1
Dietary supplement, sports nutrition, foods with health claims
 $812,500 
 $1,000,000 
 $1,125,000 
 $1,250,000 
 $1,312,500 
Field 2
food or drink products requiring FDA approval
 $0 
 $10,000 
 $20,000 
 $30,000 
 $40,000 
Field Field 3
Consumer foods, such as dairy products, formulas, cereal
 $50,000 
 $60,000 
 $100,000 
 $150,000 
 $150,000 
Field 4
Research
 $2,250 
 $3,000 
 $3,000 
 $4,500 
 $4,500 
Total
 $864,750 
 $1,073,000 
 $1,248,000 
 $1,434,500 
 $1,507,000 

 
 
 
-20-

 

 
Exhibit B
Tangible Research Properties
 
NAD biosynthetic pathway carboxy His-tag murine cDNAs that encode:
 
Nmnat1
Nmnat2
Nmnat3
Nrk1
Nrk2
Nampt
 
 
 
-21-

 

 
Exhibit C
Technical Information
 
Specific protocols from the laboratory of Jeffrey Milbrandt outlining
experimental details of the prevention of axonal degradation by increased
activity of NAD salvage pathway via NMNAT and Sir2
 
 
 
 
-22-

 

 
Exhibit D
Sublicense Agreement Provisions
 
 
Sublicensee agrees to indemnify and hold harmless WU Indemnitees to the same
extent and under terms no less favorable to WU Indemnitees as Licensee’s
obligations under Article 11 of this Agreement.
 
Sublicensee agrees to maintain insurance for WU’s benefit to the same extent and
under terms no less favorable to WU as Licensee’s obligations under Article 12
of this Agreement.
 
Sublicensee agrees to maintain books and records and allow audits for WU’s
benefit to the same extent and under terms no less favorable to WU as Licensee’s
obligations under this Agreement.
 
If Licensee enters bankruptcy or receivership, voluntarily or involuntarily,
sublicensing revenue then or thereafter due to Licensee will, upon notice from
WU to any Sublicensee, become directly due and owing to WU for the account of
Licensee. WU will remit to Licensee any amounts received that exceed the sum
actually owed by Licensee to WU.
 
Washington University is a third party beneficiary of this Sublicense Agreement.
Accordingly, Washington University may enforce this Agreement against
Sublicensee to the same extent as the Sublicensor.
 
 
-23-

 
 
 
Exhibit E
Patent Rights
 
Application Type
Country
Application Number
Patent Number
Status
 
 
 
 
 
PCT
PCT
PCT/US2005/019524
 
Converted
Provisional
United States
60/577,233
 
Converted
Provisional
United States
60/641,330
 
Converted
Non-provisional application
United States
11/144,358
7,776,326
Granted
FOR - Foreign
EPO
5790283.5
 
Pending
FOR - Foreign
China
China 200580018114.8
ZL200580018114.8
Granted
Provisional
United States
60/886,854
 
Converted
PCT
PCT
PCT/US08/01085
 
Converted
FOR - Foreign
Canada
2676609
 
Pending
FOR - Foreign
Mexico
MX/A/2009/008022
 
Pending
Non-provisional application
United States
12/524,718
 
Pending
Divisional
United States
12/790,722
 
Pending

 
 
-24-

 
 
Exhibit F
Diligence Milestones
 
Market
Milestone
Timing
Field 1 (dietary supplement, sports nutrition, functional foods, skin
care/cosmetic)
Commercial-scale production
12 months
Cumulative sales >3kg
18 months
$200K cumulative sales
24 months
$1M cumulative sales
36 months
Field 2 (food/beverage with FDA approval)
Cumulative sales >3kg
36 months
Cumulative sales >20kg
48 months
Field 3 (consumer foods)
Cumulative sales >3kg
24months
$100K cumulative sales
36 months
$500K cumulative sales
48months
Field 4 (research)
$5K cumulative sales
24 months
$10K cumulative sales
36 months
Field 5 (pharmaceutical)
TBD
TBD
 
 

 
 
 
 
 
-25-