Exhibit 10.32

 

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

 

 

EXCLUSIVE LICENSE AGREEMENT

 

BETWEEN

 

THE JOHNS HOPKINS UNIVERSITY

 

&

 

CAPRICOR, INC.

 

________________________

 

 

 

JHU Ref: DM – 4562

 

 

 

 

LICENSE AGREEMENT

 

THIS EXCLUSIVE LICENSE AGREEMENT (this “Agreement”) is entered into by and
between THE JOHNS HOPKINS UNIVERSITY, a Maryland corporation having an address
at 3400 N. Charles Street, Baltimore, MD 21218-2695 (“JHU”) and CAPRICOR, INC.,
a Delaware corporation having an address at 2415 Old Bosley Road, Lutherville,
MD 21093 (“Company”), with respect to the following:

 

 

RECITALS

 

WHEREAS, valuable inventions as identified by name and JHU reference numbers on
Exhibit A attached hereto and incorporated herein by this reference were
developed during the course of research conducted by those individuals who are
identified on Exhibit A hereto as inventors by having their respective names
underlined thereon (all hereinafter, "Inventors"); and

 

WHEREAS, JHU has acquired through assignment all right, title, and interest,
with the exception of certain retained rights by the United States government,
in said valuable inventions; and

 

WHEREAS, as a center for research and education, JHU is interested in licensing
PATENT RIGHTS (hereinafter defined) in a manner that will benefit the public by
facilitating the distribution of useful products and the utilization of new
methods, but is without capacity to commercially develop, manufacture, and
distribute any such products or methods; and

 

WHEREAS, Company desires to obtain exclusive rights under the PATENT RIGHTS in
order to commercially develop, manufacture, use, and distribute such products
and processes throughout the world;

 

NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

All references to particular Exhibits, Articles, or Paragraphs shall mean the
Exhibits to, and Paragraphs and Articles of, this Agreement, unless otherwise
specified. For the purposes of this Agreement and the Exhibits hereto, the
following words and phrases shall have the following meanings:

 

1.1 “AFFILIATED COMPANY” as used herein in either singular or plural shall mean
any corporation, company, partnership, joint venture or other entity, which
controls, is controlled by or is under common control with Company. For purposes
of this Paragraph 1.1, “control” shall mean the direct or indirect ownership of
at least fifty percent (50%) of the voting stock or other ownership interest of
such entity.

 

Page 1

 

 

1.2 “EFFECTIVE DATE” of this License Agreement shall mean the date the last
party hereto has executed this Agreement.

 

1.3 “EXCLUSIVE LICENSE” shall mean a grant by JHU to Company of its entire right
and interest in the PATENT RIGHTS throughout the world, subject (if and to the
extent any NIH funds were used for the licensed invention) to rights retained by
the United States government in accordance with the Bayh-Dole Act of 1980
(established by P.L. 96-517 and amended by P.L. 98-620, codified at 35 USC § 200
et. seq. and implemented according to 37 CFR Part 401), and subject to the
retained right of JHU to make, have made, provide, and use for its and The Johns
Hopkins Health Systems' nonprofit academic research purposes, LICENSED
PRODUCT(S) and LICENSED SERVICE(S), including the ability to distribute any
biological material covered by the PATENT RIGHTS to non-commercial entities for
nonprofit academic research use as is customary in the scientific community;
provided, however, that any transfer of such biological material may only be
made with advance notice to the Company and pursuant to the Materials Transfer
Agreement attached hereto as Exhibit B.

 

1.4 “FINANCING MILESTONE” shall mean Company’s raise of $1,000,000 (One Million
Dollars) or more in equity and/or convertible debt.

 

1.5 “FIRST COMMERCIAL SALE” shall mean the first sale of a LICENSED PRODUCT or a
LICENSED SERVICE by Company, an AFFILIATED COMPANY or a SUBLICENSEE for
consideration in an arm’s-length transaction following recipient from the
appropriate government agency of marketing approval for such LICENSED PRODUCT or
such LICENSED SERVICE.

 

1.6 “KNOW-HOW” shall mean (a) biological materials in JHU’s possession that were
developed by Inventors of PATENT RIGHTS and which are disclosed in PATENT
RIGHTS, and any portions, progeny, or unmodified derivatives thereof and (b) any
other tangible know-how in JHU’s possession that may be necessary or useful for
the effective exercise of the PATENT RIGHTS in the LICENSED FIELD.

 

1.7 “LICENSED FIELD” shall mean any and all commercial and research fields.

 

1.8 “LICENSED PRODUCT(S)” as used herein in either singular or plural shall mean
any material, composition, drug, or other product, the manufacture, use, or sale
of which by Company, an AFFILIATED COMPANY, or a SUBLICENSEE would constitute,
but for the license granted to Company pursuant to this Agreement, an
infringement of a claim of PATENT RIGHTS (infringement shall include, but is not
limited to, direct, contributory, or inducement to infringe).

 

1.9 “LICENSED SERVICE(S)” as used herein in either singular or plural shall mean
the performance on behalf of a third party by Company, an AFFILIATED COMPANY or
a SUBLICENSEE of any method, including any drug discovery or screening, or the
manufacture

of any product or the use of any product or composition which would constitute,
but for the license granted to Company pursuant to this Agreement, an
infringement of a claim of PATENT RIGHTS (infringement shall include, but not be
limited to, direct, contributory, or inducement to infringe).

 

Page 2

 

 

1.10 “NET SALES” shall mean gross sales revenues and fees billed by Company,
AFFILIATED COMPANIES, and SUBLICENSEE(S) from the sale of LICENSED PRODUCT(S)
less (a) trade discounts allowed; (b) amounts repaid or credited by reason of
refunds, returns, and recalls; (c) outbound transportation and delivery charges
(including insurance premiums related thereto), if separately included in the
invoiced amount; (d) government-mandated retroactive price reductions; (e)
amounts allowed for bad debt; and (f) sales taxes, tariff duties, and other
government charges (other than income taxes) related to the manufacture, use,
transportation, or sale of LICENSED PRODUCT(S).

 

In the event that Company, AFFILIATED COMPANIES, and SUBLICENSEE(S) sell
LICENSED PRODUCT(S) in combination with other active ingredients or substances
or as part of a kit containing other component(s) (including, but not limited
to, devices for delivery), and such other ingredients, substances or components,
if manufactured, used or sold by an unlicensed party would not constitute an
infringement of PATENT RIGHTS (collectively “Other Components”), then Net Sales
for purposes of royalty payments shall be calculated using one of the following
methods: (x) if all LICENSED PRODUCT(S) and Other Components contained in the
combination are available separately, then NET SALES shall be calculated by
multiplying the NET SALES of the combination by the fraction A/A+B, where A is
the invoice price of all LICENSED PRODUCT(S) in the combination and B is the
invoice price of all Other Components in the combination; (y) if the combination
includes Other Components which are not sold separately (but all LICENSED
PRODUCT(S) contained in the combination are available separately), then NET
SALES shall be calculated by multiplying the NET SALES of the combination by the
fraction A/C, where A is defined above and C is the invoice price of the
combination; and (z) if the LICENSED PRODUCT(S) and the Other Components in the
combination are not sold or available separately, then NET SALES for purposes of
determining royalties on the combination shall be calculated by multiplying NET
SALES of the combination by the fraction D/D+E, where D is the fully burdened
manufacturing cost of LICENSED PRODUCT(S) at the point of assembly into the
combination and E is the fully burdened manufacturing cost of the Other
Components included in the combination at such point.

 

In the event any LICENSED PRODUCT(S) shall be sold by Company to an AFFILIATED
COMPANY or among AFFILIATED COMPANIES for subsequent resale to an unaffiliated
third party, then the royalty due hereunder shall be based upon the greater of:
(a) NET SALES received by Company from the AFFILIATED COMPANY and (b) NET SALES
received by the AFFILIATED COMPANY from the purchaser of such LICENSED
PRODUCT(S).

 

In the event that consideration in lieu of money is received by Company,
AFFILIATED COMPANIES, or SUBLICENSEE(S) from the sale of LICENSED PRODUCT(S) in
an arms-length transaction, the fair market value of such consideration shall be
included in the determination of NET SALES for such sale. Such fair market value
shall be determined by the Company, AFFILIATED COMPANY or SUBLICENSEE, as
applicable, in good faith.

 

Page 3

 

 

1.11 “NET SERVICE REVENUES” shall mean gross service revenues and fees billed by
Company, AFFILIATED COMPANIES and SUBLICENSEE(S) for the performance of LICENSED
SERVICE(S) less (a) amounts allowed for bad debt and (b) sales and/or use taxes
and other government charges (other than income taxes) imposed upon and with
specific reference to the LICENSED SERVICE(S). In the event that Company,
AFFILIATED COMPANIES or SUBLICENSEE(S) sell a LICENSED SERVICE(S) in combination
with other services, then NET SERVICE REVENUES for purposes of royalty payments
shall be calculated by multiplying the NET SERVICE REVENUES of the combination
by the fraction A/A+B, where A is the invoice price of all LICENSED SERVICE(S)
and B is the invoice price of all other services in the combination.

 

1.12 “PATENT RIGHTS” shall mean the patents and patent applications set forth in
Exhibit A attached hereto, together with any patents that issue on any of the
patent applications set forth in Exhibit A, any reissues, reexaminations,
renewals, extensions, divisions, and continuations of the foregoing, any foreign
counterparts to any of the foregoing, and any other form of patent coverage
(including, subject to the limitation below, continuations-in-part) claiming
priority to any of the foregoing patents and patent applications.
Continuations-in-part are included to the extent that the subject matter of such
continuation-in-part application is described in and enabled by the disclosure
of the initial JHU patent application.

 

1.13 “SUBLICENSEE” as used herein in either singular or plural shall mean any
person or entity other than an AFFILIATED COMPANY to which Company has granted a
sublicense under this Agreement.

 

 

ARTICLE 2

LICENSE GRANT

 

2.1 Grant. Subject to the terms and conditions of this Agreement, JHU hereby
grants to Company an EXCLUSIVE LICENSE to make, have made, use, import, offer
for sale, and sell the LICENSED PRODUCT(S) and to provide the LICENSED
SERVICE(S) in the United States and worldwide under the PATENT RIGHTS in the
LICENSED FIELD. In order to facilitate Company’s development of LICENSED
PRODUCTS and LICENSED SERVICES, JHU additionally grants Company a non-exclusive
license to KNOW-HOW in the LICENSED FIELD. In furtherance of such license, JHU
shall (a) reduce to writing and provide to Company, upon Company’s reasonable
and occasional request, utilization procedures, best practices, protocols, and
the like and (b) promptly provide Company, upon Company’s reasonable request,
reasonable quantities of biological materials covered by the PATENT RIGHTS.

 

2.2 Sublicense. Company may sublicense others under this Agreement with prior
notice to JHU, and shall provide a copy of each such sublicense agreement to JHU
promptly after it is executed. For the avoidance of doubt, Company need not seek
JHU’s consent prior to executing a sublicense agreement. Each sublicense shall
be consistent with the terms of this Agreement.

 

Page 4

 

 

2.3 Government Rights. Company acknowledges that the United States government
has retained certain rights under the PATENT RIGHTS and that Company may be
subject to certain laws and regulations applicable to the grant/contract award
under which the associated inventions were made. Company shall comply with such
laws and regulations to the extent applicable.

 

2.4 “Financing Milestone” Condition Precedent. The effectiveness of the grant
under Article 2 of this Agreement is conditioned upon Company achieving the
FINANCING MILESTONE on or before that day that is nine (9) months after the
EFFECTIVE DATE (or upon any later date as Company and JHU may hereafter agree in
writing). Upon Company’s achievement of the FINANCING MILESTONE, Company shall
so inform JHU in writing and this Agreement shall be deemed to be effective as
of the EFFECTIVE DATE. Prior to the achievement of the FINANCING MILESTONE,
Articles 4, 8, 9, and 10 shall apply. In the event that the FINANCING MILESTONE
is not achieved prior to the deadline stated in this Paragraph 2.4, this
Agreement shall thereupon and thereafter be null and void except for any
pre-termination obligations of Company under Paragraphs 3.8 and 4.1.

 

 

ARTICLE 3

FEES, ROYALTIES, & PAYMENTS

 

3.1 License Fee. Company shall pay to JHU, within thirty (30) days of the later
of (a) the EFFECTIVE DATE of this Agreement and (b) Company achieving the
FINANCING MILESTONE, the initial license fee set forth in Exhibit C. JHU will
not submit an invoice for the license fee, which is nonrefundable and shall not
be credited against royalties or other fees.

 

3.2 Annual Maintenance Fee. Company shall pay to JHU a nonrefundable,
non-creditable annual maintenance fee as set forth in Exhibit C. This annual
maintenance fee shall be due within thirty (30) days of each anniversary of the
EFFECTIVE DATE beginning with the first anniversary.

 

3.3 Minimum Annual Royalties. Company shall pay to JHU minimum annual royalties
in the amounts set forth in Exhibit C. These minimum annual royalties shall be
due within thirty (30) days of each anniversary of the EFFECTIVE DATE beginning
with the first anniversary. Any such minimum annual royalties shall be credited
against running royalties due pursuant to Paragraph 3.4(a) during such
anniversary year (i.e., running from anniversary date to anniversary date) and
(b) against subsequent years; provided, however, in respect to applying such
payments as credits against subsequent years, that such credit not reduce the
amount otherwise payable to JHU in any royalty payment period by more than
[…***…] and with any amount unable to be credited by operation of the preceding
clause being carried forward into each subsequent royalty payment period until
the full credit has been realized.

 

3.4 Royalties. Company shall pay to JHU, on a country-by-country basis, a
running royalty on NET SALES and NET SERVICE REVENUES at the rates set forth in
Exhibit C. All non-US income taxes related to LICENSED PRODUCT(S) or LICENSED
SERVICE(S) sold under this Agreement shall be paid by Company and shall not be
deducted from royalty or other payments due to JHU. Only one royalty shall be
due and payable for the manufacture, use, or sale of a LICENSED PRODUCT or
LICENSED SERVICE, irrespective of the number of claims within the PATENT RIGHTS
that would be infringed by the manufacture, use, or sale of such LICENSED
PRODUCT or LICENSED SERVICE.

 

 

*Confidential Treatment Requested

 

Page 5

 

 

3.5 Exclusions from Revenue. Neither of the following shall be included in NET
SALES or NET SERVICE REVENUES: (a) the transfer of a LICENSED PRODUCT to an
AFFILIATED COMPANY for sale by such AFFILIATED COMPANY in a transaction that
will be royalty-bearing, and (b) the transfer of a LICENSED PRODUCT to, or
provision of a LICENSED SERVICE for, a third party without consideration in
connection with the development or testing of a LICENSED PRODUCT or LICENSED
SERVICE. In addition, NET SALES and NET SERVICE REVENUES shall be reduced by
[…***…] in connection with the sale of a LICENSED PRODUCT or provision of a
LICENSED SERVICE to or on behalf of the United States government in respect of
any rights that may be retained by the United States government under the PATENT
RIGHTS in the LICENSED FIELD.

 

3.6 Sublicense Consideration. Company shall pay to JHU the percentage of
Sublicense Consideration as set forth in Exhibit C. For purposes of this
Paragraph 3.6, the term “Sublicense Consideration” shall mean consideration of
any kind received by the Company or AFFILIATED COMPANIES from SUBLICENSEE(S) in
consideration for the grant of a sublicense under the PATENT RIGHTS, including
up-front licensing fees, milestone payments, and any premium paid by the
SUBLICENSEE(S) over Fair Market Value for stock of the Company or an AFFILIATED
COMPANY in consideration for such sublicense, but excluding license maintenance
fees, running royalties, funding for product development, research work,
clinical studies and regulatory approvals performed by or for the Company or
AFFILIATED COMPANIES or third parties pursuant to a specific agreement including
a performance plan and commensurate budget, and equity investments at no more
than Fair Market Value. The term "Fair Market Value" shall mean, for a
publicly-traded security, the average closing price of that security (as
reported by the securities exchange or market on which it is listed) during
twenty (20) trading day period ending on the trading day prior to the
announcement of its purchase by the SUBLICENSEE(S) or, for a security that is
not publicly traded, the fair market value of such security as determined in
good faith by the Board of Directors of the Company or AFFILIATED COMPANY that
issued the shares.

 

3.7 Payment Reduction If Rights Non-Exclusive. If Company has a joint ownership
interest in a particular PATENT RIGHT in the LICENSED FIELD or if JHU is not the
assignee under the rights of all of the inventors of the invention(s) claimed in
a particular PATENT RIGHT, then (a) all payments due to JHU pursuant to
Paragraphs 3.2 through 3.6 hereof shall be reduced by […***…] and (b) Company
shall be entitled to credit […***…] of all payments previously paid to JHU
pursuant to Paragraphs 3.1 through 3.6 hereof (to the extent not already
adjusted by operation of clause (a) above) against future payment obligations to
JHU hereunder (as such obligations shall be adjusted by operation of clause (a)
above).

 

3.8 Patent Cost Reimbursement. In addition to the provisions of Paragraph 4.1
below, notwithstanding the condition precedent set forth in Paragraph 2.4,
Company will reimburse JHU for all reasonable, documented, out-of-pocket costs
incurred up to and including the EFFECTIVE DATE of this Agreement in connection
with the preparation, filing, prosecution, and maintenance of the PATENT RIGHTS
in the LICENSED FIELD. Such reimbursement shall be made in three (3) equal
annual installments, with the first such payment due within thirty (30) days of
the EFFECTIVE DATE of this Agreement.

 

 

*Confidential Treatment Requested

 

 

Page 6

 

 

3.9. Milestone Payments. Company shall pay JHU within one hundred twenty (120)
days after the achievement of each of the milestones such payments as are set
forth in Exhibit C.

 

3.10 Form of Payment. All payments under this Agreement shall be made in U.S.
Dollars by the Company. Checks are to be made payable to “The Johns Hopkins
University". Wire transfers may be made through:

 

Bank:

 

[…***…]

 

Wire info:

 

[…***…]

 

 

If needed for international wires:

 

[…***…]

 

 

 

Company shall be responsible for any and all costs associated with wire
transfers.

 

3.11 Late Payments. In the event that any payment due hereunder is not made when
due, the payment shall accrue interest beginning on the tenth day following the
due date thereof, at two (2) percentage points above the prime interest rate
quoted by The Wall Street Journal (Eastern Edition) on the date said payment is
due, the interest being compounded annually; provided however, that in no event
shall said interest rate exceed the maximum applicable legal interest rate.

 

 

*Confidential Treatment Requested

 

Page 7

 

 

ARTICLE 4

PATENT PROSECUTION, MAINTENANCE, & INFRINGEMENT

 

4.1 Prosecution & Maintenance. JHU shall prepare, file, prosecute, and maintain
all patents and patent applications under the PATENT RIGHTS upon authorization
of Company and Company shall be exclusively licensed thereunder. Title to all
such patents and patent applications shall reside in JHU. JHU shall have full
and complete control over all patent matters in connection therewith under the
PATENT RIGHTS; provided, however, that JHU shall instruct patent counsel to
cross-copy Company with copies of all documents (or drafts thereof) pertaining
to the preparation, filing, prosecution, or maintenance of the PATENT RIGHTS so
as to enable Company to have a meaningful opportunity to review and comment
thereon. JHU will consider and incorporate reasonable comments received from
Company. Company shall reimburse JHU, within forty-five (45) days of the receipt
of an invoice from JHU, for all reasonable, documented, out-of-pocket costs
incurred by JHU after the EFFECTIVE DATE in connection with the preparation,
filing, prosecution, and maintenance of the PATENT RIGHTS in the LICENSED FIELD.
Company will provide payment authorization to JHU at least one (1) month before
an action is due, provided that Company has received timely notice of such
action from JHU. Failure to provide authorization can be considered by JHU as a
Company decision not to authorize an action. In any country where Company elects
not to have a patent application filed or to pay expenses associated with
preparing, filing, prosecuting, or maintaining a patent application or patent,
JHU may prepare, file, prosecute, and/or maintain the patent application or
patent at its own expense and for its own exclusive benefit and Company
thereafter shall not be licensed under such patent or patent application in such
country.

 

4.2 Notification. Each party will notify the other promptly in writing of any
known or suspected third party infringement of any PATENT RIGHTS or if any
action for a declaration of non-infringement or invalidity of PATENT RIGHTS is
made by a third party, or if any allegation of infringement of third party
patents is made against either party, an AFFILIATED COMPANY, or a SUBLICENSEE as
a result of the manufacture, use or sale of a LICENSED PRODUCT or provision of a
LICENSED SERVICE.

 

4.3 Infringement.

 

(a) Company shall have the first right to respond to any challenge or
infringement of the PATENT RIGHTS at its own expense and shall at all times keep
JHU informed as to the status thereof. Company may, in its sole judgment and at
its own expense, institute suit against any such infringer or alleged infringer
and control, settle, and defend such suit in a manner consistent with the terms
and provisions hereof and recover, for its account, any damages, awards, or
settlements resulting therefrom, subject to Paragraph 4.4. This right to sue for
infringement shall not be used in an arbitrary or capricious manner. JHU agrees
to be included as a party plaintiff in any such action and shall otherwise
reasonably cooperate in any such action at Company's expense.

 

(b) If, within ninety (90) days of providing to or receiving from Company notice
of third party infringement of the PATENT RIGHTS pursuant to the preceding
paragraph, Company does not exercise its first right to initiate legal action or
initiate discussions to avert

legal action (by license or otherwise), then JHU may, in its sole judgment and
at its own expense, take steps to enforce any patent and control, settle, and
defend such suit in a manner consistent with the terms and provisions hereof,
and recover, for its own account, any damages, awards, or settlements resulting
therefrom; provided, however, that JHU shall give good faith consideration to
the position of Company in declining to bring any action in the first instance.

 

Page 8

 

 

4.4 Recovery. Any recovery of monetary damages by Company under Paragraph 4.3(a)
shall be allocated to the parties in the following manner: (a) first, Company
shall be reimbursed for all costs and expenses incurred by it in connection with
such action; (b) any remaining compensatory damages shall be divided […***…].

 

4.5 Right to Sublicense Infringers. Company shall have the sole right, subject
to the terms and conditions hereof, to sublicense any alleged infringer for
future use of the PATENT RIGHTS in the LICENSED FIELD.

 

 

ARTICLE 5

OBLIGATIONS OF THE PARTIES

 

5.1 Reports. Company shall provide to JHU within thirty (30) days of the end of
each calendar quarter after the FIRST COMMERCIAL SALE, a written report to JHU
of the amount of LICENSED PRODUCT(S) sold, and LICENSED SERVICE(S) sold, the
total NET SALES and NET SERVICE REVENUES of such LICENSED PRODUCT(S) and
LICENSED SERVICE(S), and the running royalties due to JHU as a result of NET
SALES and NET SERVICE REVENUES by Company, AFFILIATED COMPANIES and
SUBLICENSEE(S) thereof. Payment of any such royalties due shall accompany such
report. The report of sales and royalties due shall be substantially in the
format of the sales and royalty report form given in Exhibit D. Prior to the
FIRST COMMERCIAL SALE, Company shall submit to JHU, on an annual basis, a full
written report describing Company's, AFFILIATED COMPANIES’ or any SUBLICENSEE'S
technical efforts towards meeting its obligations under the terms of this
Agreement.

 

5.2 Records. Company shall make and retain, for a period of three (3) years
following the period of each report required by Paragraph 5.1, true and accurate
records, files and books of account containing all the data reasonably required
for the full computation and verification of sales and other information
required in Paragraph 5.1. Such books and records shall be in accordance with
generally accepted accounting principles consistently applied. Company shall
permit the inspection and copying of such records, files and books of account by
JHU or its agents during regular business hours upon ten (10) business days'
written notice to Company. Such inspection shall not be made more than once each
calendar year. All costs of such inspection and copying shall be paid by JHU,
provided that if any such inspection shall reveal that an error has been made in
the amount equal to ten percent (10%) or more of such payment, such costs shall
be borne by Company. Company shall include in any agreement with its AFFILIATED
COMPANIES or its SUBLICENSEE(S) which permits such party to make, use or sell
the LICENSED PRODUCT(S) or provide LICENSED SERVICE(S), a provision requiring
such party to retain records of sales of LICENSED PRODUCT(S) and records of
LICENSED SERVICE(S) and other information as required in Paragraph 5.1 and
permit JHU to inspect such records as required by this Paragraph.

 

 

 

*Confidential Treatment Requested

Page 9

 

 

5.3 Diligence. Company shall exercise commercially reasonable and diligent
efforts to develop and to introduce the LICENSED PRODUCT(S) and LICENSED
SERVICE(S) into the commercial market as soon as practicable, consistent with
sound and reasonable business practice and judgement; thereafter, until the
expiration of the Agreement, Company shall endeavor to keep LICENSED PRODUCT(S)
and LICENSED SERVICE(S) reasonably available to the public. Company shall also
exercise commercially reasonable efforts to ensure that the PATENT RIGHTS can be
commercialized as broadly and as speedily in the LICENSED FIELD as good
scientific and business judgement would deem possible.

 

5.4 Patent Acknowledgement. Company agrees that all packaging containing
individual LICENSED PRODUCT(S) sold by Company, AFFILIATED COMPANIES and
SUBLICENSEE(S) will be marked with the number of the applicable patent(s)
licensed hereunder in accordance with each country's patent laws, or Company
shall be responsible for any damages lost as a result of the failure to so mark.

 

 

ARTICLE 6

REPRESENTATIONS

 

6.1 Representations by JHU. JHU warrants that, to the best of its knowledge
following due inquiry, it has all right, title, and interest in and to the
PATENT RIGHTS with the exception of certain retained rights of the United States
government. JHU warrants that it has not licensed or assigned any right or
interest in or to the PATENT RIGHTS to a third party in the LICENSED FIELD, that
it has the right to grant the rights and licenses granted hereunder and such
rights have been validly granted, and that such grant does not require the
consent of a third party. JHU does not warrant the validity of any patents or
that practice under such patents or use of KNOW-HOW shall be free of
infringement. EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 6.1, COMPANYAGREES
THAT THE PATENT RIGHTS AND KNOW-HOW ARE PROVIDED "AS IS", AND THAT JHU MAKES NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF LICENSED
PRODUCT(S) AND LICENSED SERVICE(S) INCLUDING THEIR SAFETY, EFFECTIVENESS, OR
COMMERCIAL VIABILITY. JHU DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCT AND
SERVICE LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL
WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY
PARTICULAR PURPOSE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, JHU
ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON THE PART OF JHU AND
INVENTORS, FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT,

INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS' AND EXPERTS' FEES, AND
COURT COSTS (EVEN IF JHU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
FEES OR COSTS), ARISING OUT OF OR IN CONNECTION WITH THE MANUFACTURE, USE, OR
SALE OF THE PRODUCT AND SERVICE LICENSED UNDER THIS AGREEMENT. COMPANY,
AFFILIATED COMPANIES AND SUBLICENSEE(S) ASSUME ALL RESPONSIBILITY AND LIABILITY
FOR LOSS OR DAMAGE CAUSED BY A PRODUCT AND SERVICE MANUFACTURED, USED, OR SOLD
BY COMPANY, ITS SUBLICENSEE(S) AND AFFILIATED COMPANIES WHICH IS A LICENSED
PRODUCT(S) OR LICENSED SERVICE(S) AS DEFINED IN THIS AGREEMENT.

 

Page 10

 

 

ARTICLE 7

INDEMNIFICATION

 

7.1 Indemnification. JHU and the Inventors will have no legal liability exposure
to third parties if JHU does not license the LICENSED PRODUCT(S) and LICENSED
SERVICE(S), and any royalties JHU and the Inventors may receive is not adequate
compensation for such legal liability exposure. Therefore, JHU requires Company
to protect JHU and Inventors from such exposure to the same manner and extent to
which insurance, if available, would protect JHU and Inventors. Furthermore, JHU
and the Inventors will not, under the provisions of this Agreement or otherwise,
have control over the manner in which Company or its AFFILIATED COMPANIES or its
SUBLICENSEE(S) or those operating for its account or third parties who purchase
LICENSED PRODUCT(S) or LICENSED SERVICE(S) from any of the foregoing entities,
develop, manufacture, market or practice the inventions of LICENSED PRODUCT(S)
and LICENSED SERVICE(S). Therefore, Company, AFFILIATED COMPANY and SUBLICENSEE
shall indemnify, defend with counsel reasonably acceptable to JHU, and hold JHU,
The Johns Hopkins Health Systems, their present and former trustees, officers,
Inventors of PATENT RIGHTS, agents, faculty, employees and students harmless as
against any judgments, fees, expenses, or other costs arising from or incidental
to any product liability or other lawsuit, claim, demand or other action brought
as a consequence of the practice of said inventions by any of the foregoing
entities, whether or not JHU or said Inventors, either jointly or severally, is
named as a party defendant in any such lawsuit, except those which arise from
any use of the PATENT RIGHTS or KNOW-HOW resulting from the use by JHU of the
rights JHU has retained under this Agreement. JHU shall notify Company promptly
of any claims and Company shall have the right to control the defense,
settlement or compromise of any such claim, and Company shall have no obligation
to an indemnified party hereunder for a claim that is settled or compromised
without Company’s prior written consent and whether or not JHU or the Inventors
are alleged to be negligent or otherwise responsible for any injuries to persons
or property. Practice of the inventions covered by LICENSED PRODUCT(S) and
LICENSED SERVICE(S), by an AFFILIATED COMPANY or an agent or a SUBLICENSEE(S) or
a third party on behalf of or for the account of Company or by a third party who
purchases LICENSED PRODUCT(S) and LICENSED SERVICE(S) from Company, shall be
considered Company's practice of said inventions for purposes of this Paragraph.
The obligation of Company to defend and indemnify as set out in this Paragraph
shall survive the termination of this Agreement, shall continue even after
assignment of rights and responsibilities to an affiliate or sublicensee, and
shall not be limited by any other limitation of liability elsewhere in this
Agreement.

 

ARTICLE 8

CONFIDENTIALITY

 

8.1 Confidentiality. If necessary, the parties will exchange information that
they consider to be confidential. The recipient of such information agrees to
accept the disclosure of said information which is marked as confidential at the
time it is sent to the recipient, and to employ all reasonable efforts to
maintain the information secret and confidential, such efforts to be no less
than the degree of care employed by the recipient to preserve and safeguard its
own confidential information. The information shall not be disclosed or revealed
to anyone except employees of the recipient who have a need to know the
information and who have entered into a secrecy agreement with the recipient
under which such employees are required to maintain confidential the proprietary
information of the recipient and such employees shall be advised by the
recipient of the confidential nature of the information and that the information
shall be treated accordingly. Notwithstanding the foregoing, Company shall have
the right to disclose confidential information of JHU to a third party that
undertakes obligations of confidentiality and non-use with respect to such
information at least as restrictive as Company’s obligations hereunder.

 

Page 11

 

 

The obligations of this Paragraph shall also apply to AFFILIATED COMPANIES
and/or SUBLICENSEE(S) provided such information by Company. JHU's, Company's,
AFFILIATED COMPANIES, and SUBLICENSEE's obligations under this Paragraph shall
extend until three (3) years after the termination of this Agreement.

 

8.2 Exceptions. The recipient's obligations under Paragraph 8.1 shall not extend
to any part of the information:

 

a.that can be demonstrated to have been in the public domain or publicly known
and readily available to the trade or the public prior to the date of the
disclosure; or

 

b.that can be demonstrated from written records to have been in the recipient's
possession or readily available to the recipient from another source not under
obligation of secrecy to the disclosing party prior to the disclosure; or

 

c.that becomes part of the public domain or publicly known by publication or
otherwise by some means other than an unauthorized act by the recipient; or

 

d.that is demonstrated from written records to have been developed by or for the
receiving party without reference to confidential information disclosed by the
disclosing party; or

 

e.that is required to be disclosed by law, government regulation or court order.

 

8.3 Right to Publish. JHU may publish manuscripts, abstracts or the like
describing the PATENT RIGHTS, the inventions contained therein and KNOW-HOW,
provided such publication is first submitted to Company for review, comment, and
consideration of appropriate action. JHU shall submit such manuscripts,
abstracts or the like to Company for review at least thirty (30) days prior to
the date of submission for publication or submission of the abstract or oral
disclosure. Company shall notify JHU within thirty (30) days of receipt of such
submission whether it appears that any patent applications may need to be filed
in connection with obtaining or maintaining the PATENT RIGHTS. Written
publication or other disclosure by JHU shall be deferred to permit the filing of
any necessary patent applications, provided said deferral shall in no event
exceed ninety (90) days from the date of receipt by Company of said disclosure.
Further, confidential information of Company as defined in Paragraph 8.1 shall
not be included in any manuscript, abstract or the like without first obtaining
written approval from Company, which consent may be withheld in Company’s sole
discretion.

 

Page 12

 

 

ARTICLE 9

TERM & TERMINATION

 

9.1 Term. The term of this Agreement shall commence on the EFFECTIVE DATE and
shall continue, in each country, until the date of expiration of the last to
expire patent included within PATENT RIGHTS in that country or if no patents
issue then for a term of […***…] from the EFFECTIVE DATE of this Agreement.

 

9.2 Termination By Either Party.

 

(a) This Agreement may be terminated by either party, in the event that the
other party (a) files a petition under the Bankruptcy Act, makes an assignment
for the benefit of creditors, voluntarily has a receiver appointed for it or a
substantial part of its assets, or otherwise takes advantage of any statute or
law designed for relief of debtors or (b) fails to perform or otherwise breaches
any of its obligations hereunder, if, following the giving of notice by the
terminating party of its intent to terminate and stating the grounds therefor,
the party receiving such notice shall not have cured the failure or breach
within thirty (30) days. In no event, however, shall such notice or intention to
terminate be deemed to waive any rights to damages or any other remedy which the
party giving notice of breach may have as a consequence of such failure or
breach.

 

(b) All rights and licenses granted under or pursuant to this Agreement are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, as amended (the “Code”), licenses of rights to "intellectual
property" as defined under Section 101 of the Code. The parties agree that
Company is a licensee of such rights under this Agreement and shall retain and
may fully exercise all rights under the Code. The parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against JHU or
its assignee under the Code, Company shall be entitled to (x) take control of
the patent prosecution of the Patent Rights and (y) receive a complete duplicate
of (or complete access to, as appropriate) any such intellectual property and
all embodiments of such intellectual property. Such intellectual property and
embodiments, if not already in Company's possession, shall be, within ten (10)
days of the commencement of such proceeding, delivered to it upon JHU's receipt
of a request therefore, unless JHU (or a trustee on behalf of JHU) elects to
continue to perform all of its obligations under this Agreement. Nothing herein
shall constitute Company's acquiescence or agreement that all or any portion of
this Agreement is subject to rejection.

 

9.3 Termination by Company. Company may terminate this Agreement and the
licenses granted herein, for any reason, upon giving JHU sixty (60) days written
notice.

 

 

*Confidential Treatment Requested

Page 13

 

 

9.4 Obligations and Duties upon Termination. If this Agreement is terminated
pursuant to Paragraphs 9.2(a) or 9.3, both parties shall be released from all
obligations and duties imposed or assumed hereunder to the extent so terminated,
except as expressly provided to the contrary in this Agreement. Upon
termination, both parties shall cease any further use of the confidential
information disclosed to the receiving party by the other party. Termination of
this Agreement, for whatever reason, shall not affect the obligation of either
party to make any payments for which it is liable prior to or upon such
termination. Termination shall not affect JHU's right to recover unpaid
royalties or fees or reimbursement for patent expenses incurred pursuant to
Paragraph 4.1 prior to termination. Upon termination, Company shall submit a
final royalty report to JHU and any royalty payments and unreimbursed patent
expenses due JHU shall become immediately payable, and all tangible
manifestations of KNOW-HOW shall be returned to the appropriate Inventors or
destroyed. Furthermore, upon termination of this Agreement, all rights in and to
the PATENT RIGHTS and KNOW-HOW shall revert immediately to JHU at no cost to
JHU. Upon termination of this Agreement, any SUBLICENSEE(S) shall become a
direct licensee of JHU, provided that JHU’s obligations to SUBLICENSEE(S) are no
greater than JHU’s obligations to Company under this Agreement. Company shall
provide written notice of such to each SUBLICENSEE(S) with a copy of such notice
provided to JHU.

 

ARTICLE 10

MISCELLANEOUS

 

10.1 Use of Name. Company shall not use the name of The Johns Hopkins University
or The Johns Hopkins Health System or any of its constituent parts, such as the
Johns Hopkins Hospital or any contraction thereof or the name of Inventors of
PATENT RIGHTS in any advertising, promotional or sales literature or fundraising
documents without prior written consent from an authorized representative of
JHU, except that Company may advise any other party that it is licensed by JHU
under this Agreement. Company shall allow at least five (5) business days notice
of any proposed public disclosure for JHU's review and comment or to provide
written consent. Notwithstanding the foregoing, Company shall have the right to
use the name of JHU without JHU’s prior written consent where such use is
required by law, rule or regulation (e.g., federal and state securities laws).
In addition, once JHU has consented to a particular disclosure, Company shall
not be required to seek JHU’s consent to make the same disclosure in a
subsequent document.

 

10.2 No Partnership. Nothing in this Agreement shall be construed to create any
agency, employment, partnership, joint venture or similar relationship between
the parties other than that of a licensor/licensee. Neither party shall have any
right or authority whatsoever to incur any liability or obligation (express or
implied) or otherwise act in any manner in the name or on the behalf of the
other, or to make any promise, warranty or representation binding on the other.

 

10.3 Notice of Claim. Each party shall give the other party or its
representative immediate notice of any suit or action filed, or prompt notice of
any claim made, against them arising out of the performance of this Agreement.

 

Page 14

 

 

10.4 Product Liability. Prior to initial human testing or first commercial sale
of any LICENSED PRODUCT(S) or LICENSED SERVICE(S) as the case may be in any
particular country, Company shall establish and maintain, in each country in
which Company, an AFFILIATED COMPANY or SUBLICENSEE(S) shall test or sell
LICENSED PRODUCT(S) and LICENSED SERVICE(S), product liability or other
appropriate insurance coverage in the minimum amount of […***…] per claim (with
an industry reasonable “annual aggregate” dollar limit to be agreed upon by JHU
and Company) and will annually present evidence to JHU that such coverage is
being maintained. Upon JHU's request, Company will furnish JHU with a
Certificate of Insurance of each product liability insurance policy obtained.
JHU shall be listed as an additional insured in Company's said insurance
policies. If such Product Liability insurance is underwritten on a ‘claims made’
basis, Company agrees that any change in underwriters during the term of this
Agreement will require the purchase of ‘prior acts’ coverage to ensure that
coverage will be continuous throughout the term of this Agreement. If JHU and
Company are unable to reach agreement as to the industry reasonable “annual
aggregate” dollar limit, either JHU or Company may request arbitration. Upon
such request, within fifteen (15) days thereafter, the parties shall agree upon
a single arbitrator to review the matter, but if they cannot so agree, they
shall each name an arbitrator, and the two arbitrators shall select a third
arbitrator. One of the arbitrators shall be a member of the Association of
University Technology Managers. The parties shall submit the issue to the
arbitrators on written brief only, there shall be no formal hearing. Briefs
shall be filed within thirty (30) days of selection of the arbitrator, or the
panel, and shall include the party’s suggestion of the aggregate amount, and the
basis therefore.

 

10.5 Governing Law. This Agreement shall be construed, and legal relations
between the parties hereto shall be determined, in accordance with the laws of
the State of Maryland applicable to contracts solely executed and wholly to be
performed within the State of Maryland without giving effect to the principles
of conflicts of laws. Any disputes between the parties to the Agreement shall be
brought in the state or federal courts of Maryland.

 

10.6 Notice. All notices or communication required or permitted to be given by
either party hereunder shall be deemed sufficiently given if mailed by
registered mail or certified mail or sent by overnight courier, such as Federal
Express, to the other party at its respective address set forth below or to such
other address as one party shall give notice of to the other from time to time
hereunder. Mailed notices shall be deemed to be received on the third business
day following the date of mailing. Notices sent by overnight courier shall be
deemed received the following business day.

 

If to Company: Capricor, Inc.     2415 Old Bosley Road     Lutherville, MD 21093
    Attn: President               with a copy to: Shapiro Sher Guinot & Sandler
    36 S. Charles Street, Suite 2000          

 

 

 

*Confidential Treatment Requested

Page 15

 

 

  Baltimore, MD 21201   Attn: […***…]         If to JHU: Johns Hopkins
Technology Transfer   100 North Charles Street, 5th Floor   Baltimore, MD 21201
  Attn: […***…], Executive Director

 

10.7 Compliance with All Laws. In all activities undertaken pursuant to this
Agreement, JHU and Company each covenant and agree that it will comply in all
material respects with applicable Federal, state and local laws and statutes as
may be in effect at the time of performance and all valid rules, regulations and
orders thereof regulating such activities.

 

10.8 Successors and Assigns. Neither this Agreement nor any of the rights or
obligations created herein, except for the right to receive any remuneration
hereunder, may be assigned by either party, in whole or in part, without the
prior written consent of the other party, except that either party shall be free
to assign this Agreement in connection with a merger, consolidation, or sale of
all or substantially all of its assets without the consent of the other. Any
consents requested hereunder shall not be unreasonably withheld or delayed. This
Agreement shall bind and inure to the benefit of the successors and permitted
assigns of the parties hereto.

 

10.9 No Waivers; Severability. No waiver of any breach of this Agreement shall
constitute a waiver of any other breach of the same or other provision of this
Agreement, and no waiver shall be effective unless made in writing. Any
provision hereof prohibited by or unenforceable under any applicable law of any
jurisdiction shall as to such jurisdiction be deemed ineffective and deleted
herefrom without affecting any other provision of this Agreement. It is the
desire of the parties hereto that this Agreement be enforced to the maximum
extent permitted by law, and should any provision contained herein be held by
any governmental agency or court of competent jurisdiction to be void, illegal
and unenforceable, the parties shall negotiate in good faith for a substitute
term or provision which carries out the original intent of the parties.

 

10.10 Entire Agreement; Amendment. Company and JHU acknowledge that they have
read this entire Agreement and that this Agreement, including the attached
Exhibits, constitutes the entire understanding and contract between the parties
hereto and supersedes any and all prior or contemporaneous oral or written
communications with respect to the subject matter hereof, all of which
communications are merged herein. It is expressly understood and agreed that (i)
there being no expectations to the contrary between the parties hereto, no usage
of trade, verbal agreement or another regular practice or method dealing within
any industry or between the parties hereto shall be used to modify, interpret,
supplement, or alter in any manner the express terms of this Agreement; and (ii)
this Agreement shall not be modified, amended or in any way altered except by an
instrument in writing signed by both of the parties hereto.

 

 

 

*Confidential Treatment Requested

Page 16

 

 

10.11 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party hereto,
shall impair any such right, power or remedy to such party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

 

10.12 Force Majeure. If either party fails to fulfill its obligations hereunder
(other than an obligation for the payment of money), when such failure is due to
an act of God, or other circumstances beyond its reasonable control, including
but not limited to fire, flood, civil commotion, riot, war (declared and
undeclared), revolution, or embargoes, then said failure shall be excused for
the duration of such event and for such a time thereafter as is reasonable to
enable the parties to resume performance under this Agreement.

 

10.13 Further Assurances. Each party shall, at any time and from time to time,
upon the reasonable request of the other party, execute and deliver to the other
such instruments and documents and shall take such actions as may be required to
more effectively carry out the terms, purposes and intent of this Agreement.

 

10.14 Survival. Articles 6, 7 and 8 and Paragraphs 3.10, 4.1, 9.4, 10.1, 10.3,
10.5, 10.6, 10.13 and 10.14 (and related definitions) shall survive the
expiration or any termination of this Agreement.

 

10.15 No Third Party Beneficiaries. Nothing in this Agreement shall be construed
as giving any person, firm, corporation or other entity, other than the parties
hereto and their successors and permitted assigns, any right, remedy or claim
under or in respect of this Agreement or any provision hereof.

 

10.16 Headings. Article and paragraph headings are for convenient reference and
not a part of this Agreement. All Exhibits are incorporated herein by this
reference.

 

10.17 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which when taken together shall be
deemed but one instrument.

 

 

[Signatures on Following Page.]

 

Page 17

 

 

IN WITNESS WHEREOF, this Exclusive License Agreement shall take effect as of the
EFFECTIVE DATE, when it has been executed below by the duly authorized
representatives of the parties.

 

THE JOHNS HOPKINS UNIVERSITY   CAPRICOR, INC.                               By:
/s/ Jill A. Tarzian Sorensen   By: /s/ Eduardo Marbán   Jill A. Tarzian
Sorensen, J.D.     Eduardo Marbán, M.D.    Executive Director, JHTT    
President           June 21, 2006   June 22, 2006                              
        [SEAL]                             William E. Carlson         William E.
Carlson, Esq.         Secretary

 

EXHIBIT A. PATENT RIGHTS.

EXHIBIT B. MATERIAL TRANSFER AGREEMENT.

EXHIBIT C. LICENSE FEE & ROYALITIES.

EXHIBIT D. SALES & ROYALTY REPORT FORM.

 

Page 18

 

 

EXHIBIT A

 

PATENT RIGHTS

 

 

[…***…]

 

 

 

*Confidential Treatment Requested

Page 19

 

 

EXHIBIT B

 

MATERIAL TRANSFER AGREEMENT

 

Johns Hopkins University School of Medicine

MATERIAL TRANSFER AGREEMENT

FOR NON-PROFIT RECIPIENTS

 

1. Parties to this Agreement

 

Providing Scientist:

 

 

 

Providing Organization:

 

Johns Hopkins University

 

 

Address:

Johns Hopkins Technology Transfer

100 North Charles Street, 5th Floor

Baltimore, MD 21201

 

 

 

“PROVIDER” shall mean the Providing Organization through its employee, the
Providing Scientist.     Recipient Scientist:  

 

Recipient Organization:

 

 

Address:

      “RECIPIENT” shall mean the Recipient Organization through its employee,
the Recipient Scientist.

 

2. Material(s)

 

Material(s) provided:  

 

“MATERIAL(S)” means the provided materials described above and any Progeny and
Unmodified Derivatives thereof. Progeny is an unmodified descendant from the
provided material, such as virus from virus, cell from cell, or organism from
organism. Unmodified Derivatives are substances created by the RECIPIENT which
constitute an unmodified functional subunit or product expressed by the provided
material, such as subclones of unmodified cell lines, purified or fractionated
subsets of the provided material, proteins expressed by DNA/RNA supplied by the
PROVIDER, or monoclonal antibodies secreted by a hybridoma cell line.
MATERIAL(S) shall not include: (a) Modifications, or (b) other substances
created by the recipient through the use of the MATERIAL(S) which are not
Modifications, Progeny, or Unmodified Derivatives. Modifications are materials
made by the RECIPIENT which contain/incorporate the MATERIAL(S).

 

Page 20

 

 

The MATERIAL(S), including, but not limited to, MATERIAL(S) contained or
incorporated in Modifications, are the sole property of the PROVIDER and are
made available as a service to the research community. RECIPIENT acknowledges
that certain intellectual property rights claiming the MATERIAL(S) have been
granted to Capricor, Inc. (“Capricor”), and that except as expressly provided in
this Agreement, no rights are provided to RECIPIENT under any patents, patent
applications, trade secrets or other proprietary rights of PROVIDER or Capricor.

 

3. Research

 

The RECIPIENT agrees that THE MATERIAL(S) SHALL NOT BE USED IN HUMAN SUBJECTS,
IN CLINICAL RESEARCH, OR FOR DIAGNOSTIC PURPOSES INVOLVING HUMAN SUBJECTS. The
PROVIDER agrees that the MATERIAL(S) were not obtained from human subjects.

 

The RECIPIENT agrees to use the MATERIAL(S) in compliance with all applicable
statutes and regulations, including the Public Health Service and National
Institutes of Health regulations and guidelines such as, for example, those
relating to research involving the use of animals and/or recombinant DNA.

 

The RECIPIENT agrees that the MATERIAL(S) will be used solely for internal
research purposes in the laboratory of the Recipient Scientist and under his/her
direct supervision.

 

The RECIPIENT agrees that the MATERIAL(S) will not be used for any Commercial
Purpose. Commercial Purpose shall mean the sale, lease, license, or other
transfer of the MATERIAL(S) or Modifications to a for-profit organization.
Commercial Purposes shall also include uses of the MATERIAL(S) or Modifications
by any organization, including RECIPIENT, to perform contract research or other
research sponsored by a for-profit entity, to screen compound libraries, to
produce or manufacture products for general sale, or to conduct research
activities that result in any sale, lease, license, or transfer of the
MATERIAL(S) or Modifications to a for-profit organization.

 

The RECIPIENT agrees that the MATERIAL(S) and Modifications (except as set forth
below) will not be transferred to any third party without the PROVIDER’s written
consent. Nothing in this Agreement shall preclude the PROVIDER from transferring
the MATERIAL(S) to other interested third parties for commercial or research
purposes. The RECIPIENT shall have the right, without restriction, to distribute
to third parties substances created by the RECIPIENT through the use of the
MATERIAL(S) provided those substances are not Progeny or Unmodified Derivatives.
The RECIPIENT may transfer Modifications to not-for-profit research institutions
under a material transfer agreement containing terms substantially similar to
those contained in this Agreement.

 

If RECIPIENT’s research with MATERIAL or Modifications results in a patentable
invention (“Invention”), RECIPIENT agrees promptly to disclose the Invention to
PROVIDER and Capricor on a confidential basis. Inventorship will be determined
in accordance with United States patent law (whether or not patentable) and
ownership shall follow inventorship. In the case of a joint invention between
PROVIDER and RECIPIENT or among PROVIDER, RECIPIENT and Capricor (“Joint
Invention”), the applicable parties agree to negotiate in good faith an
exclusive license agreement for such Joint Invention with Capricor. If RECIPIENT
decides not to pursue the further development of an Invention or Joint Invention
hereunder, then PROVIDER or Capricor may elect to pursue the patenting or
commercial development of said Invention or Joint Invention at its/their sole
discretion. PROVIDER, RECIPIENT and Capricor shall each have the right to use
such Inventions and Joint Inventions for internal research purposes without
payment of any license fees or royalties. In addition, Capricor shall have an
exclusive, first option to obtain an exclusive, worldwide, royalty-bearing
commercial license for each Invention or Joint Invention conceived solely by
RECIPIENT or jointly by PROVIDER and RECIPIENT, with such option to be valid for
a period of six (6) months from the date on which Capricor received written
notice of the disclosure of such Invention or joint Invention.

 

Page 21

 

 

4. Publications

 

This Agreement shall not be interpreted to prevent or delay the publication of
research findings resulting from the use of the MATERIAL(S). The Recipient
Scientist agrees to provide appropriate acknowledgement of the source of the
MATERIAL(S) in all publications resulting from the use of the MATERIAL(S).
Recipient Scientist further agrees to furnish PROVIDER and Capricor with a copy
of the manuscript or abstract disclosing such findings prior to submission
thereof and not less than thirty (30) days prior to their publication or
disclosure. PROVIDER and Capricor shall promptly provide RECIPIENT with any
comments relating to said publication or presentation and RECIPIENT may proceed
with said publication or presentation after taking due consideration of such
comments. If no response is received from PROVIDER or Capricor within thirty
(30) days of the date of the proposed publication or disclosure was received by
PROVIDER and Capricor, respectively, it will be conclusively presumed that the
publication or disclosure may proceed without delay. If PROVIDER or Capricor
determines that the proposed publication or disclosure contains patentable
subject matter that requires protection, then PROVIDER or Capricor may request
the delay of the presentation or disclosure for a period of time not to exceed
ninety (90) days for the purpose of allowing the pursuit of such patent
protection. Patent applications shall be prepared, filed, prosecuted and
maintained by the owner(s) of the subject intellectual property unless and until
an alternative arrangement is mutually agreed upon by all of the owners of such
intellectual property and Capricor.

 

5. Miscellaneous

The MATERIAL(S) are understood to be experimental in nature and may have
hazardous properties. The PROVIDER MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED. THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
THAT THE USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK,
OR OTHER PROPRIETARY RIGHTS.

 

Except to the extent prohibited by law, the RECIPIENT assumes all liability for
damages which may arise from its use, storage or disposal of the MATERIAL(S).
Neither PROVIDER (including, but not limited to, its directors, trustees,
officers, employees, students, and agents, as applicable) nor Capricor will be
liable to the RECIPIENT for any loss, claim or demand made by the RECIPIENT, or
made against the RECIPIENT by any other party, due to or arising from the use of
the MATERIAL by the RECIPIENT, except to the extent permitted by law when caused
by the gross negligence or willful misconduct of the PROVIDER or Capricor.

 

Neither party shall use the name of the other or any contraction or derivative
thereof or the name(s) of the other party's faculty members, employees, or
students, as applicable, in any advertising, promotional, sales literature, or
fundraising documents without prior written consent from the other party.

 

Page 22

 

 

In the event that the MATERIAL(S) are not received by the RECIPIENT, this
Agreement shall terminate ninety (90) days after the Effective Date and neither
party shall have any further obligations or responsibilities under this
Agreement. Otherwise, this Agreement will terminate one (1) year from the
Effective Date. Notwithstanding the foregoing, those provisions which by their
nature should survive such termination, shall survive such termination, provided
however, that no obligations under this Agreement shall survive beyond five (5)
years following the Effective Date. Promptly upon the one year termination date,
RECIPIENT, unless otherwise instructed by PROVIDER, agrees to destroy the
MATERIAL(S).

 

The parties to this Agreement, the RECIPIENT and the PROVIDER, hereby indicate
their agreement to the terms of this Agreement by affixing the signature below
of an appropriate representative or officer who is specifically authorized to
execute documents of this type. The “Effective Date” of this Agreement shall be
the date that the last party hereto signs this Agreement.

 

 

RECIPIENT ORGANIZATION

 

 

  PROVIDING ORGANIZATION By:     By:  

 

Name:

 

 

 

 

Name:

  Title:     Title:  

 

The Recipient Scientist and Providing Scientist, by affixing their signatures
below, acknowledge that they have read, understood, and agree to comply with the
terms of this Agreement.

 

 

Recipient Scientist

 

 

  Providing Scientist By:     By:  

 

Name:

 

 

 

 

Name:

 

 

Title:     Title:  

 

Date:

   

 

Date:

 

 

Page 23

 

 

EXHIBIT C

 

LICENSE FEE & ROYALTIES

 

[…***…]

 

Development Milestone Payment

Successful completion of a full Phase I clinical study […***…]

 

 

$100,000

[…***…]

 

[…***…]

 

 

 

 

*Confidential Treatment Requested

Page 24

 

 

[…***…]

 

 

[…***…]

 

[…***…] Full FDA market approval. $1,000,000 (which shall be paid in four (4)
equal, quarterly installments, the first being on such 120th day).

 

 

 

*Confidential Treatment Requested

 

Page 25

 

 

EXHIBIT D

 

QUARTERLY SALES & ROYALTY REPORT

 

FOR LICENSE AGREEMENT BETWEEN CAPRICOR, INC. AND

THE JOHNS HOPKINS UNIVERSITY DATED

JUNE ____, 2006

 

FOR PERIOD OF ______________ TO ______________

 

TOTAL ROYALTIES DUE FOR THIS PERIOD $___________

 

 

PRODUCT

ID

 

 

PRODUCT NAME

 

*JHU REFERENCE

 

1st COMMERCIAL SALE DATE

 

TOTAL NET

SALES/SERVICES

 

ROYALTY RATE

 

AMOUNT

DUE

                                                                               
   

 

* Please provide the JHU Reference Number or Patent Reference

 

This report format is to be used to report quarterly royalty statements to JHU.
It should be placed on Company letterhead and accompany any royalty payments due
for the reporting period. This report shall be submitted even if no sales are
reported.

 

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