EXHIBIT 10.1

 

LICENSE AGREEMENT

 

THIS AGREEMENT shall be effective on the last date of execution hereof and is by
and between Sontra Medical Corporation, a Minnesota corporation having a
principal place of business at 10 Forge Parkway, Franklin, MA 02038 (herein
referred to as “LICENSOR”); and Bayer Healthcare LLC, a Delaware Limited
Liability Company, acting through its Diagnostics Division and having a
principal place of business at 511 Benedict Avenue, Tarrytown, New York 10591,
USA (herein referred to as “BAYER”).

 

WHEREAS, LICENSOR owns certain patent rights and possesses certain know-how
relating to the transdermal collection of analytes by ultrasonic techniques;

 

WHEREAS, BAYER desires to be granted a worldwide right and license under such
patent rights and know-how to develop and commercialize products and processes;
and

 

WHEREAS, LICENSOR is willing to grant such a right and license under the terms
hereof;

 

NOW, THEREFORE, in consideration of the mutual promises herein, the parties
agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1    “Test” shall mean a commercially viable system for the determination of
glucose concentration in body fluid which glucose is obtained using ultrasonic
techniques.

 

1.2    “Patent Rights” shall mean any and all patent applications and granted
patents anywhere in the world which now or hereafter are owned or controlled by
LICENSOR, which are listed in Exhibit A together with any and all continuations,
continuations-in-part, additions,

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and divisions thereof, and any and all patents issuing from the aforesaid patent
applications, and any reissues, reexaminations, renewals, extensions, and
substitutions of such patents.

 

1.3     “Know-How” shall mean any and all technical, marketing or other
commercial information or materials owned by controlled by LICENSOR as of the
effective date hereof or thereafter, whether or not patentable, relating to a
Test which is not generally known to the public and which is necessary or useful
for BAYER and its sublicensees to develop, manufacture, use and/or sell any
Licensed Product or Process hereunder.

 

1.4    “Licensed Product or Process” shall mean any and all products or
processes for performing a Test which embodies Know-How or whose manufacture,
use, import, or sale, except for the licenses granted hereunder, would
constitute an infringement of a Valid Claim in Patent Rights.

 

1.5    “Net Sales” shall mean invoiced price for sales of Licensed Products or
Processes less (a) actual credited allowances to customers for spoiled, damaged,
outdated or returned Licensed Products or Processes, (b) retroactive price
reductions, and (c) trade, cash or quantity discounts (d) commissions paid to
distributors or agents, (e) any taxes or other governmental charges levied or
measured or both by sales and indicated in the billing price whether or not
absorbed by the customer, and (f) five-percent (5%) to cover transportation,
insurance and handling costs. Net Sales shall include all sales of a Licensed
Product or Processes by BAYER or a sublicensee of BAYER in the ordinary course
of business but shall exclude sales for experimental, test market, or
promotional purposes. A sale shall be deemed to have been made when such
transaction is invoiced to a third party customer. Sales of Licensed Product or
Process between or among divisions and/or affiliated companies of BAYER shall
not be included in Net Sales; however, sales of such Licensed Product by such
division or affiliated company to a third party shall be included in Net Sales.

 

1.6    “First Commercial Sale” shall mean the first sale of the first Licensed
Product sold by BAYER or a sublicensee of BAYER anywhere in the world in the
ordinary course of

 

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business to a third party, excluding any sale for experimental, test marketing,
or promotional purposes.

 

1.7    “Valid Claim” shall mean a claim of any active, unexpired patent which
has not been withdrawn, canceled, or disclaimed, or held invalid or
unenforceable by a court or other tribunal of competent jurisdiction in a
decision from which an appeal has not or cannot be made.

 

1.8    “Affiliate” shall mean any corporation or other business entity
controlled by, controlling, or under common control with the affected party,
wherein control means direct or indirect ownership of at least forty-percent
(40%) of the voting stock, or at least forty-percent (40%) interest in the
income, of such corporation or other business entity, or in either case the
maximum amount allowed by local law.

 

1.9    “Field of Use” shall mean the area of determination of glucose
concentration in body fluid which glucose is obtained using ultrasonic
techniques.

 

ARTICLE 2

WORLD WIDE LICENSE TO BAYER

 

2.1    Grant—LICENSOR hereby grants to BAYER an exclusive worldwide right and
license under the Patent Rights and Know-How in the Field of Use, with the right
to grant sublicenses, to make, have made, use, import, and sell any Licensed
Products and/or Processes during the term hereof.

 

2.2    Related Know-How—Upon execution of this Agreement by BAYER, LICENSOR
hereby grants BAYER an exclusive license to use, and LICENSOR shall provide
BAYER with all information and materials related to Patent Rights and/or
Know-How as may be known or controlled by LICENSOR and as may be reasonably
necessary or desirable for BAYER to exploit the licenses granted under Paragraph
2.1.

 

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ARTICLE 3

BAYER LICENSE RIGHTS AND CONSIDERATION FOR WORLD WIDE LICENSE

 

3.1    Payment of License Fee—In consideration for the license granted
hereunder, BAYER shall pay LICENSOR a non-refundable licensing fee of One
Million Five Hundred Thousand U.S. Dollars ($1,500,000) no later than January
15, 2004 provided that LICENSOR satisfies each of the following conditions prior
to such date: (a) LICENSOR is granted an exception by the Nasdaq Listing
Qualifications Panel from the Nasdaq SmallCap Market’s minimum $2.5 million
stockholders’ equity continued listing requirement as a result of a Nasdaq
delisting panel hearing scheduled for the end of July, 2003 in connection with a
delisting notice Sontra received on June 18 2003; (b) LICENSOR demonstrates by
signed, irrevocable agreement(s) with a third party or parties that it has
received an additional minimum of $1,500,000 in financing from the third party
or parties and a bank statement dated on or about November 30, 2003 showing at
least $1,500,000 has been deposited in LICENSOR’S bank account, and (c) LICENSOR
has stockholders’ equity on September 30, 2003 of at least $2.5 million, as
evidenced by an officer’s certificate of LICENSOR to such effect delivered to
BAYER on or after January 1, 2004.

 

i)    BAYER shall enter into one or more agreements (“the Joint Development
Agreement(s)”) with LICENSOR to jointly continue development of the Licensed
Product or Process through completion of Phase 3 (BAYER and Licensor will
complete a work plan during Phase 3 that will validate the final design and
manufacturing procedures as well as conducting the pivotal clinical trials
required for regulatory approval) of the BAYER PACE process, and make a
$3,000,000 milestone payment at the end of Phase 1 (as defined by the BAYER PACE
process) to LICENSOR in addition to the non-refundable $1,500,000 license fee.
Once BAYER has completed development of the Licensed Product or Process through
Phase 3, BAYER will retain a world-wide exclusive license to the Patent Rights
and Know-How in the Field of Use and a right of first refusal to those exclusive
rights in other applications within the realm of diagnostics; i.e., any and all
diagnostic uses outside the Field of Use, and LICENSOR cannot convert BAYER’s
right to a co-exclusive right if BAYER subsequently decides to terminate this

 

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Agreement. In Phase 2 of the Joint Development, Bayer and LICENSOR will agree
upon exclusive royalty and manufacturing supply terms and future milestone
payments to the LICENSOR related to FDA approval and sales.

 

ii)    If BAYER decides to terminate the joint development anticipated in
paragraph i) above, at any time after paying the $1,500,000 license fee, BAYER’s
license right will cease to be an exclusive right and Bayer will be granted a
world-wide co-exclusive (BAYER and one other party which may be LICENSOR or its
licensee), non-cancelable license to the Patent Rights and Know-How for which
BAYER will pay LICENSOR or its successor in interest a royalty (commencing with
the First Commercial Sale) of 1% of Net Sales by BAYER (or any sublicensee) of
any Licensed Product or Process which utilize the Patent Rights and Know-How
until the expiration of the last to expire of the patents encompassed in the
Patent Rights. BAYER shall have the right to grant sublicenses under the
co-exclusive license.

 

iii)    If LICENSOR at any time during the term of this Agreement discontinues
its operations for any reason, including bankruptcy (as that term is used in
Art. 8.6) or chooses to discontinue its development work on Licensed Product or
Process BAYER will receive, and is hereby granted, a fully paid up, exclusive
license under the Patent Rights and Know-How in the Field of Use.

 

iv)    If BAYER decides to terminate the joint development anticipated in
paragraph (i) above, and so requests, LICENSOR or its successor in interest
(such as an entity which acquires LICENSOR) will negotiate a commercially
reasonable manufacturing agreement with BAYER under which it will agree to
supply BAYER with the SonoPrep ultrasonic skin preparation component of
LICENSOR’s continuous glucose monitoring system.

 

3.2    Effect of Invalidation of Patent Rights—If one or more claims in a patent
in the Patent Rights which covers any Licensed Product or Process is held
invalid by a court or patent

 

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tribunal leaving no other Valid Claim in Patent Rights covering such Licensed
Product in a particular country, than all royalty due under Subparagraph 3.1(ii)
for sales in such country based on such invalid claim or claims shall cease
immediately; provided, however, that if such Licensed Product or Process
embodies licensed Know-How, royalty shall be paid at the rate of 0.5% of Net
Sales for a period equal to the unexpired life of the Patent Rights in question
had their claims not been invalidated.

 

3.3    Deduction of Royalty Due Third Parties—If the manufacture, use or sale of
a Licensed Product or use of a Licensed Process infringes a patent held by a
third party to whichBayer has to make royalty payments, BAYER and its
sublicensees shall have the right to reduce the royalties paid to LICENSOR by
the amount they pay with a maximum reduction of fifty-percent (50%) of any
royalty due LICENSOR on account of sales of such Licensed Product or Process,
for any royalty paid by BAYER or its sublicensees, respectively, to such third
party in order to continue the manufacture, use and sale of such Licensed
Product or Process.

 

3.4    Most Favored Licensee—LICENSOR shall, within thirty (30) days of granting
a license to a third party co-exclusive Licensee to make, have made, use or sell
any Licensed Product or use any Licensed Process under Art. 3.1(ii) hereof
provide BAYER with a complete and unedited copy of the license agreement with
such third party. If BAYER determines that the terms and conditions of such
other license are more favorable than those of this Agreement, the more
favorable terms and conditions of such other license shall, upon notification by
BAYER to LICENSOR and effective as of the date of such other license agreement,
be substituted for the corresponding terms and conditions of this Agreement.

 

3.5    Enforcement by BAYER—If BAYER is an exclusive Licensee under the
provisions of Article 3.1, it shall have the right to conduct litigation to
enforce its licensed Patent Rights and to consult with LICENSOR in the
prosecution of any Patent applications within the Patent Rights. Bayer is
entitled to receive and retain and is hereby assigned and granted by LICENSOR
the right to receive and retain the proceeds or other benefits of any such
action. In the event that there is a co-exclusive licensee other than SONTRA,
LICENSOR agrees that the right

 

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to conduct litigation and consultation in prosecution will be controlled by
BAYER. LICENSOR will assure that the co-exclusive LICENSEE agrees to this
provision as part of its License Agreement.

 

ARTICLE 4

RECORDS AND PAYMENTS

 

4.1    Records—BAYER and its sublicensees shall keep complete and accurate
records containing all information required for the computation and verification
of the royalties to be paid hereunder. Such records for a particular calendar
year shall be maintained for a minimum of three (3) years after the close of
such calendar year.

 

4.2    Audit of Records—BAYER and its sublicensees shall, upon request of
LICENSOR, permit an independent certified public accountant (“CPA”) selected and
retained by LICENSOR and reasonably acceptable to BAYER, to have access, during
ordinary business hours but not more than once each calendar year and with
thirty (30) days prior written notice, to such records as may be necessary to
determine either the accuracy of any report or the sufficiency of any payment
made under this Agreement for the three (3) year period immediately preceding
the date of inspection. Such CPA shall be obligated to keep all information
obtained from BAYER in such audit strictly confidential and to report to
LICENSOR, with a contemporaneous copy to BAYER, only that information necessary
to verify the calculation of amounts due hereunder. Any under-payment or
over-payment of royalties by BAYER, as properly determined by the CPA, shall be
promptly paid by BAYER to LICENSOR or reimbursed by LICENSOR to BAYER,
respectively; provided however, that in the event any such payment or
reimbursement is not promptly made for any reason, the party entitled to receive
the payment shall have the immediate right to recoup such amount from any
present or future payment owed under this Agreement.

 

4.3    Quarterly Reports and Payments—On or before sixty (60) days after March
31, June 30, September 30 and December 31 of each year throughout the term of
this Agreement and

 

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commencing after the date of First Commercial Sale, BAYER and its sublicensees
shall deliver to LICENSOR a quarterly written statement of account of Net Sales
of Licensed Product and a calculation of the royalty due LICENSOR. Payment of
such royalty due shall accompany such report.

 

4.4    Currency—All royalties due hereunder shall be payable in United States
Dollars. All royalty due for sales in countries foreign to the United States
shall be converted (for the purposes of calculation only) into equivalent United
States Dollars in accordance with the methods used for internal financial
reporting purposes within BAYER.

 

4.5    Local Restrictions—Payment of royalties on sales of Licensed Product or
Process shall be subject to any restrictions imposed by the local government. If
foreign exchange is not freely available, LICENSOR shall have the option to
accept payment in the currency of the country from which royalty is due. In the
event that local law restricts such royalty payment, the royalty due shall be
paid to the extent permitted by local law.

 

4.6    Withholding Taxes—Any income or other taxes which BAYER is required by
law or regulation to pay or withhold on behalf of LICENSOR with respect to
royalties and any other monies payable to LICENSOR under this Agreement shall be
deducted from the amount of such payments, royalties and other monies due to
LICENSOR and paid to the relevant competent taxing authority. BAYER shall
furnish LICENSOR with proof of such payments. BAYER shall promptly provide
LICENSOR with a certificate or other documentary evidence to enable LICENSOR to
support a claim for a refund or a foreign tax credit with respect to any such
tax so withheld or deducted by BAYER. BAYER and LICENSOR will reasonably
cooperate in completing and filing documents required under the provisions of
any applicable tax treaty or under any other applicable law, in order to enable
BAYER to make such payments to LICENSOR without any deduction or withholding, if
possible.

 

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ARTICLE 5

WARRANTY OF TITLE AND FREEDOM-TO-USE

 

5.1    Clear Title—LICENSOR represents and warrants that it holds the necessary
right, title and interest in the Patent Rights and Know-How to perform its
obligations under this Agreement, and that it has the unrestricted right and
power to enter into this Agreement and to grant the licenses provided hereunder
to BAYER without conflict or creating breach or default of any law, order of a
court or governmental agency, contract, or other obligation with any third
party.

 

5.2    Validity and Noninfringement—LICENSOR represents and warrants, to the
best of its knowledge and belief, that all claims in Patent Rights are valid and
enforceable. LICENSOR shall promptly notify BAYER if it should come into
possession of any information during the term hereof which could adversely
impact the validity or enforceability of any claim in Patent Rights.

 

5.3    Freedom-to-Use—LICENSOR represents and warrants, to the best of its
knowledge and belief, that no third party patent or other intellectual property
exist which are superior or dominant to the rights licensed to BAYER hereunder
or that would otherwise impair or prevent BAYER from fully exercising such
rights. LICENSOR shall promptly notify BAYER if it should come into possession
of any information during the term hereof which could adversely impact the
freedom of BAYER to manufacture, have manufactured, use or sell Licensed
Products or Processes. In the event that BAYER is charged with infringement of
intellectual property rights owned by any third party due to its exercise of its
rights under this License LICENSOR agrees to indemnify and hold harmless BAYER
from any resulting litigation. If LICENSOR fails to indemnify BAYER from any
resulting litigation and/or fails to reimburse BAYER for the cost of such
litigation, or any part thereof, as and when requested by BAYER, BAYER may
deduct and/or offset such right to indemnification from any future royalty
payments due to LICENSOR.

 

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ARTICLE 6

CONFIDENTIALITY

 

6.1    General Obligation and Writing Requirement—All information and materials
exchanged between the parties under this Agreement shall be deemed Confidential
Matter and subject to the obligations set forth in this Article 6, provided
that, in order for information and materials exchanged between the parties to be
considered Confidential Matter and subject to the obligations of this Article 6,
such must be presented in writing and designated “Confidential”, or words to the
same effect, or if first presented orally or visually, confirmed in writing
designated “Confidential”, or words to the same effect, and delivered to the
receiving party within thirty (30) days of its first oral or visual disclosure.

 

6.2    Nondisclosure and Nonuse—Confidential Matter shall not be disclosed to
any third party, or used for the benefit of any third party, except as expressly
provided herein.

 

6.3    Agreement Terms—The terms of this Agreement, including all exhibits,
shall be considered Confidential Matter.

 

6.4    Exclusions—The obligations of confidentiality and nonuse of this Article
shall not apply to information:

 

(a)    which was or is known by the receiving party prior to receipt from the
disclosing party as evidenced by documents in the possession of the receiving
party at the time of disclosure,

 

(b)    which, after receipt from the disclosing party, is disclosed to the
receiving party by a third party having the legal right to do so,

 

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(c)    which is available to the public at the time of receipt from the
disclosing party,

 

(d)    which becomes available to the public after receipt from the disclosing
party through no fault of the receiving party,

 

(e)    which is developed by the receiving party independently of information
received from the disclosing party,

 

(f)    which is required, in the opinion of legal counsel of BAYER, to be
disclosed for securing approval of governmental health regulatory agencies,
including but not limited to the U.S. Food and Drug Administration, to market
Licensed Products,

 

(g)    which is required, in the opinion of legal counsel of BAYER to be
disclosed for the filing of patent applications,

 

(h)    which is reasonably necessary to be disclosed by the receiving party to
its individual agents or third parties who require knowledge hereof in order to
perform their normal duties or services, such as legal counsel, certified public
accountants, and the like, provided that such agents and third parties are
advised of and acknowledge the confidential nature of such disclosure, or

 

(i)    which is required to be disclosed by order or other requirement of a
court, administrative agency, or other governmental body provided that the
receiving party has provided reasonable advance notice to allow the disclosing
party the opportunity to seek a protective order or otherwise contest, prevent
or limit such disclosure, or

 

(j)    which is reasonably necessary to be disclosed by the receiving party in
order to permit a bona fide third party to evaluate the advisability of an
investment in the receiving party and/or a transaction with the receiving party
including but not limited to a

 

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sublicense of the rights licensed hereunder, provided that the party to which
the information will be disclosed has signed a confidentiality agreement with
substantially similar terms to those included herein.

 

6.5    Press Releases and Regulatory Filings—The parties may issue a joint press
release announcing the execution of this Agreement, such press release to be in
a form mutually agreeable to the parties. Notwithstanding any other provisions
of this Agreement, LICENSOR may describe the terms of this Agreement in
documents to be provided to investors and potential investors, provided that
such parties agree to maintain the confidentiality of such documents. In
addition LICENSOR may file this Agreement with the Securities and Exchange
Commission and the Nasdaq Stock Market, Inc. and/or the Nasdaq Small Cap Market.

 

6.6    Standard of Care—Each party shall use the same level of care in complying
with its obligations hereof respecting Confidential Matter as it does with
respect to its own information of similar nature, but in any event not less than
reasonable care.

 

6.7    Previous Agreements Superseded—All obligations of confidentiality and
nonuse created under the Confidentiality Agreement between the parties dated
October 8, 2001 shall be superseded by replaced by the obligations defined in
this Article 6.

 

6.8    Survival—All obligations of confidentiality and nonuse created under the
provisions of this Article 6 shall be and remain in effect during the term of
this Agreement and for five (5) years thereafter.

 

ARTICLE 7

INTELLECTUAL PROPERTY RIGHTS

 

7.1    Ownership—LICENSOR shall own the entire right, title, and interest in and
to all Patent Rights and Know-How.

 

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7.2    Infringement

 

(a)    Each party hereto and any non-LICENSOR co-exclusive licensee shall
promptly report in writing to LICENSOR or BAYER or LICENSOR and BAYER as the
case may be during the term of this Agreement any: (i) known infringement or
suspected infringement of any of the Patent Rights; or (ii) unauthorized use or
misappropriation of the Know-How by a third party of which it becomes aware, and
shall provide each other entity with all available evidence supporting said
infringement, suspected infringement or unauthorized use or misappropriation.

(b)    In the event that BAYER does not have the right to enforce the Patent
Rights and Know-How as determined by Article 3.5 herein, within thirty (30) days
after LICENSOR becomes, or is made, aware of any of the foregoing, it shall
decide whether or not to initiate an infringement or other appropriate suit and
shall advise BAYER of its decision in writing. The inability of LICENSOR to
decide on a course of action within such thirty (30) day period shall for
purposes of this Agreement be deemed a decision not to initiate an infringement
or other appropriate suit. LICENSOR shall include a provision to this effect in
any co-exclusive license it grants to a third party. Within sixty (60) days
after LICENSOR becomes, or is made, aware of any infringement, suspected
infringement or unauthorized use or misappropriation by a third party, as
provided in Paragraph (a) above, and provided that LICENSOR shall have advised
BAYER of its decision to file suit within the thirty (30) day period provided in
Paragraph (a) above, LICENSOR shall have the right to initiate an infringement
or other appropriate suit anywhere in the world against such third party.
LICENSOR shall provide BAYER with an opportunity to make suggestions and
comments regarding such suit and shall promptly notify BAYER of the commencement
of such suit. LICENSOR shall keep BAYER promptly informed of, and shall from
time to time consult with BAYER regarding the status of any such suit and shall
provide BAYER with copies of all documents filed in, and all written
communications relating to, such suit.

 

 

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(c)    Provided that the terms of paragraph (b) above apply, LICENSOR shall
select counsel for any suit referred to in Paragraph (b) above who shall be
reasonably acceptable to BAYER. LICENSOR shall, except as provided below, pay
all expense of the suit, including, without limitation, attorney’s fees and
court costs. BAYER, in its sole discretion, may elect within sixty (60) days
after the receipt by BAYER from LICENSOR of notice of the commencement of such
litigation, to contribute to the costs incurred by LICENSOR in connection with
such litigation in an amount not to exceed 50 percent (50%) of such costs. Any
damages, settlement fees or other consideration for past infringement received
as a result of such litigation shall be shared by LICENSOR and BAYER pro rata
based on their respective sharing of the costs of such litigation. If necessary
BAYER shall join as a party to the suit but shall be under no obligation to
participate except to the extent that such participation is required as the
result of being a named party to the suit. BAYER shall have the right to
participate and be represented in any suit by its own counsel at its own
expense. LICENSOR shall not settle any suit involving Patent Rights or Know-How
license to BAYER without obtaining the prior written consent of BAYER, which
consent shall not be unreasonably withheld.

 

(d)    In the event that LICENSOR does not inform BAYER of its intent to
initiate an infringement or other appropriate suit within the thirty (30) day
period, or does not initiate such an infringement or other appropriate action
within the sixty (60) day period provided in Paragraph (b) above, or in the
event that BAYER has the right to enforce the Patent Rights and Know-How as
determined by Article 3.5 herein, BAYER shall have the right, at its expense, to
initiate an infringement or other appropriate suit. In exercising its right
pursuant to this Paragraph (d), BAYER shall have the sole and exclusive right to
select counsel and shall pay all expenses of the suit including without
limitation attorneys’ fees and court costs. If necessary, LICENSOR shall join as
a party to the suit and shall participate only to the extent that such
participation is required as a result of its being a named party to the suit or
being the holder of any patent at issue or being the owner of any Know-How at
issue. At BAYER’S request, LICENSOR shall offer reasonable assistance to BAYER
in connection therewith at no charge to BAYER

 

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except for reimbursement of reasonable out-of-pocket expenses incurred in
rendering such assistance. Without limitation the generality of the preceding
sentence, LICENSOR shall cooperate fully in order to enable BAYER to institute
any action hereunder. LICENSOR shall have the right to be represented in any
such suit by its own counsel at its own expense.

 

(e)    In the event of any incongruity between this Article 7 and Article 3.5
hereof, Article 3.5 will have precedence.

 

ARTICLE 8

TERM AND TERMINATION

 

8.1    Term—This Agreement shall be in effect until such time as BAYER is no
longer obligated to make any further royalty payment to LICENSOR pursuant to
Article 3 hereof, or until the expiration of the last to expire patent within
the Patent Rights, whichever occurs first.

 

8.2    Material Breach—Either party may terminate this Agreement at anytime if
the other party fails to perform any material covenant, condition, or limitation
herein, provided such other party shall not have remedied its failure within
sixty (60) days after receipt of written notice of such failure.

 

8.3    Unilateral Termination by Bayer—BAYER shall have the right to terminate
this Agreement in its entirety, or to remove patents and patent applications
from Patent Rights on a country-by-country basis, at any time(s) for any reason
upon ninety (90) days written notice to LICENSOR, provided that any such
termination shall not relieve BAYER or its sublicensees of the obligation to pay
royalties or make any other payments accruing to LICENSOR prior to the effective
termination date, and further that the provisions of Article 6 concerning
confidentiality shall not be affected and shall continue in full force and
effect as provided therein. Further, BAYER and its sublicensees shall have the
right, after a termination under this Paragraph 8.3 to sell any inventories of
Licensed Product or materials in process existing on the effective date of
termination and shall pay royalty thereon in accordance with the provisions of
Paragraph 3.2.

 

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8.4    Unforeseen Circumstances: Neither party shall be liable for damages for,
nor shall this Agreement be terminable or cancelable by reason of, any delay or
default in any such party’s performance hereunder if such default or delay is
caused by events beyond such party’s reasonable control including, but not
limited to, acts of God, regulation or law or other action of any government or
agency thereof, war or insurrection, civil commotion, destruction of production
facilities or materials by earthquake, fire, flood or storm, labor disturbances,
epidemic, or failure of suppliers, public utilities or common carriers. Each
party agrees to endeavor to resume its performance hereunder if such performance
is delayed or interrupted by reason of such forces majeure as listed above.

 

8.5    Bankruptcy—Each party may terminate this Agreement if the other Party (i)
makes an assignment for the benefit of creditors; (ii) applies for, seeks,
consents to, acquiesces in, or have appointed for it a receiver, custodian,
trustee, examiner, liquidator or similar official for it or substantially all of
its property; (iii) files a petition or otherwise seeks relief in any proceeding
seeking an order for relief under the Bankruptcy Code or any other proceeding
seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, or composition of its debts under any law relating to
bankruptcy, insolvency, or reorganization of all or substantially all of its
assets; or (iv) has instituted against it an insolvency proceeding under the
Bankruptcy Code or any bankruptcy, reorganization of all or substantially all of
its assets, arrangement, insolvency or similar proceeding under the laws of any
jurisdiction, if not dismissed or stayed within ninety (90) days after such
commencement.

 

8.6    Rights upon Rejection—The rights and license granted to BAYER under this
Agreement are intended to and shall be licenses of rights to “intellectual
property” within the meaning of Section 365(n) of the United States Bankruptcy
Code 11 USC §101 et. seq as amended (the “Bankruptcy Code”). As a licensee of
intellectual property rights, BAYER shall retain and shall fully exercise all of
its rights and elections under the Bankruptcy Code. Without limiting the
generality of the foregoing, if LICENSOR has not delivered and turned over to
BAYER all of the Patent Rights and Know-How, it shall do so immediately after
commencement

 

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of any case under the Bankruptcy Code and written request by BAYER, unless
LICENSOR elects to assume and continue its obligations under this Agreement. In
the event LICENSOR rejects this Agreement, BAYER shall be entitled to make the
election set forth in Section 365(n)(1)(A) or (B) of the Bankruptcy Code in
accordance therewith. In the event BAYER elects to retain its rights, as
described in Section 365(n)(1)(B), BAYER shall continue to make all royalty
payments, if any, due under this Agreement for the duration of its term and any
extension thereof, but all such royalty payments shall remain subject to BAYER’s
right to recoup any damages arising from or relating to LICENSOR’s failure to
perform its obligations under this Agreement (but excluding any right to offset
damages arising solely from the rejection of this Agreement) without prejudice
to any and all other rights or remedies that may be available to BAYER, whether
arising under Section 365(n) of the Bankruptcy Code, this Agreement, at equity
or in law.

 

8.7    Survival of Obligations—Notwithstanding any termination or rejection of
this Agreement, the rights and obligations of the parties with respect to the
protection and nondisclosure of Confidential Information (Article 6), as well as
any other provisions which by their nature are intended to survive any such
termination or rejection, shall survive and continue to be enforceable. Upon any
termination by BAYER pursuant to Paragraph 8.2, the licenses granted pursuant to
Articles 2 and 3 shall survive and shall be deemed to be fully paid. Upon any
termination of this Agreement pursuant to Paragraph 8.2, each party shall
promptly return to each other party all Confidential Information, and all copies
thereof, of such other party.

 

ARTICLE 9

NOTICES

 

9.1    Any notice required or permitted by this Agreement shall be in writing. A
notice shall be considered served when deposited in the national postal system
in a sealed envelope with sufficient postage affixed and addressed to the party
to whom such notice is directed at its post office address given below:

 

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     If to LICENSOR:   

Sontra Medical Corporation

10 Forge Parkway

Franklin, MA 02038

Attention: Chief Executive or Chief Financial Officer

          If to BAYER:   

Bayer Healthcare LLC

Business Group Diagnostics

511 Benedict Avenue

Tarrytown, New York 10591 USA

Attention: Law & Patents

    

 

 

 

ARTICLE 10

OTHER PROVISIONS

 

10.1    Governing Law—This Agreement shall be construed and the rights of the
parties hereunder shall be determined in the State of New York, USA in
accordance with the laws thereof, without reference to New York choice of law
principles.

 

10.2    Effect of Headings—All article and paragraph captions or titles are
inserted herein for ready reference only and are without contractual
significance or effect.

 

10.3    Assignment—Except where the assignee is an Affiliate, a successor in
business, or a purchaser of substantially all of the assets of a party relating
to the subject matter of this Agreement, a party hereto shall have no right or
power to assign any right or delegate any duty under this Agreement or any
portion or term hereof without the express written consent of the other party.
Notwithstanding the foregoing, LICENSOR shall have no right to assign this
Agreement, whether directly, by operation of law, or in connection with a merger
or sale of assets or business to either Johnson and Johnson, Roche Holdings AG,
Abbott Laboratories or to any other entity in the in vitro diagnostic business
or if such assignment would materially compromise or interfere with rights
granted to BAYER under this Agreement, without the prior written consent of
BAYER.

 

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10.4    Unitary Contract – This agreement and the options, licenses and other
rights granted hereunder together with the agreements contemplated by Articles
3.1 (i) through (iv) hereof are an integrated unitary contract and are part of a
single transaction among the parties. The parties further acknowledge and
stipulate that in the event a party becomes a debtor in a proceeding under any
chapter of the Bankruptcy Code, such party (or any successor in interest,
including any trustee as such term is used within Section 365 of the Bankruptcy
Code) may only assume or reject this Agreement in it’s entirety, and may not
assume or reject less than all of the options, licenses or other rights and
agreements granted hereunder or intended to be a part of this transaction.

 

10.5    Integration—This writing together with the agreements contemplated by
Section 3.1 (i) through (iv) constitutes the entire agreement between the
parties relating to the subject matter hereof. There are no understandings,
representations, or warranties of any kind except as expressly set forth herein
or therein.

 

10.6    Waiver—This Agreement may not be waived, altered, extended, or modified
except by written agreement of the parties.

 

10.7    Independent Contractors—The performance of each party hereunder is
undertaken as an independent contractor and not as an agent or partner of the
other party. Neither party shall enter into or incur, or hold itself out to
third parties as having authority to enter into or incur on behalf of the other
party, any contractual obligation, expense, or liability whatsoever.

 

10.8    Severability—If any provision of this Agreement is held unenforceable or
in conflict with the law of any jurisdiction, it is the intention of the parties
that the validity and enforceability of the remaining provisions hereof shall
not be affected by such holding.

 

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10.9    Multiple Executions—This Agreement may be executed in one or more
copies, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument, however, this Agreement
shall have no force or effect until executed by both parties.

 

IN WITNESS WHEREOF, the parties have duly signed and have made delivery to the
other.

 

BAYER HEALTHCARE LLC    SONTRA MEDICAL CORPORATION. By:      

/s/ Joe Martin        

--------------------------------------------------------------------------------

   By:      

/s/ Thomas Davison        

--------------------------------------------------------------------------------

Name:      

Joe Martin        

--------------------------------------------------------------------------------

   Name:      

Thomas Davison        

--------------------------------------------------------------------------------

Title:      

SVP, General Manager

--------------------------------------------------------------------------------

   Title:      

Chief Executive Officer        

--------------------------------------------------------------------------------

Date:      

July 28, 2003        

--------------------------------------------------------------------------------

   Date:      

July 28, 2003        

--------------------------------------------------------------------------------

 

 

 

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EXHIBIT A

LICENSOR PATENT RIGHTS

 

1.

 

US 6,234,990 B2

US 6,234,990 B1

WO 9800194 A2

EP 0925088 A2

2.  

WO 0170330 A2

EP 1225831 A2

3.  

U.S. 6,190,315 B1

WO 99348578 A1

EP 1045714 A1

4.  

WO 0035357 A1

EP 1139886 A1

5.  

WO 0035351 A

 

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