Exhibit 10.6

 

 

 

 

 

 

 

 

 

 

 

 

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

 

AND

 

ARCH THERAPEUTICS, INC.

 

AMENDED AND RESTATED EXCLUSIVE PATENT LICENSE AGREEMENT

 

 

 

 

TABLE OF CONTENTS

 

R E C I T A L S 3 1.  DEFINITIONS. 5 2.  GRANT OF RIGHTS. 10 3.  COMPANY
DILIGENCE OBLIGATIONS. 12 4.  ROYALTIES AND PAYMENT TERMS. 14 5.  REPORTS AND
RECORDS. 19 6.  PATENT PROSECUTION. 21 7.  INFRINGEMENT. 22 8.  INDEMNIFICATION
AND INSURANCE 24 9.  NO REPRESENTATIONS OR WARRANTIES 26 10.  ASSIGNMENT. 26
12.  GENERAL COMPLIANCE WITH LAWS 28 13.  TERMINATION 29 14.  DISPUTE
RESOLUTION. 31 15.  MISCELLANEOUS. 32 APPENDIX A 36 APPENDIX B 38 EXHIBIT A 41
EXHIBIT B 41

 

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MASSACHUSETTS INSTITUTE OF TECHNOLOGY

AMENDED AND RESTATED EXCLUSIVE PATENT LICENSE AGREEMENT

 

 

This Agreement, effective as of the date set forth above the signatures of the
parties below (the "EFFECTIVE DATE"), is between the Massachusetts Institute of
Technology ("M.I.T."), a Massachusetts corporation, with a principal office at
77 Massachusetts Avenue, Cambridge, MA 02139-4307 and Arch Therapeutics, Inc.
(f/k/a Clear Nano Solutions, Inc.) ("COMPANY"), a Massachusetts corporation
having its principal office at 1 Chieftain Lane, Natick, MA 01760.

 

R E C I T A L S

 

WHEREAS, M.I.T. is the owner of certain PATENT RIGHTS A (as later defined
herein) relating to M.I.T. Case No. 6008, "Self-Assembly Of An Oligopeptide To
Form A Robust Macroscopic Membranous Structure," by Todd Holmes, Curtis
Lockshin, Alexander Rich and Shuguang Zhang, M.I.T. Case No. 6692,
"Oligopeptide-Based Biomaterials Which Support Cell Attachment And Cell Growth
And Neurite Outgrowth," by C. Michael Dipersio, Todd Holmes, Curtis Lockshin,
Alexander Rich and Shuguang Zhang, M.I.T. Case No. 8813, "Encapsulation Of
Chondrocytes In Self-Assembling Peptide Gel For Applications To Cartilage Tissue
Engineering," by Alan J. Grodzinsky, John Kisiday and Shuguang Zhang, M.I.T.
Case No. 9344, "Liver Cellular Reprogramming In Peptide Scaffold And Uses
Thereof," by Carlos E. Semino, Colette Shen, James L. Sherley and Shuguang
Zhang, M.I.T. Case No. 9786, "Self-assembling Peptide Scaffold Hydrogels Bridge
Lesions in Central Nervous System," by Rutledge Ellis-Behnke, Gerald E.
Schneider, Carlos E. Semino and Shuguang Zhang and M.I.T. Case No. 10154,
"Designed Peptide Scaffold with Biological Activities and Uses Thereof," by Elsa
Genove, Carlos E. Semino and Shuguang Zhang and has the right to grant licenses
under said PATENT RIGHTS A;

 

WHEREAS, M.I.T. has the right to grant a license to Arch Therapeutics, Inc. in
Field A under PATENT RIGHTS A in Appendix A;

 

WHEREAS, M.I.T. and Versitech Limited ("Versitech"), the technology transfer
company of The University of Hong Kong, are the owners of certain PATENT RIGHTS
B (as later defined herein) relating to M.I.T. Case No. 11366, "Instantaneous
Hemostasis," by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So, David K C. Tay and Shuguang Zhang; and M.I.T. Case No. 12061,
“Compositions and Methods for Promoting Hemostasis and other Physiological
Activities.” by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So and David K C. Tay;

 

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WHEREAS, M.I.T. has the right to grant licenses under said PATENT RIGHTS B
subject to the M.I.T. - Versitech Joint Invention Agreement effective September
7, 2005 hereby incorporated in its entirety as Appendix D;

 

WHEREAS, Rutledge Ellis-Behnke, an inventor of the PATENT RIGHTS and current
employee of M.I.T., has acquired equity in COMPANY, the Conflict Avoidance
Statement of Rutledge Ellis-Behnke is attached as Exhibit A hereto;

 

WHEREAS, Rutledge Ellis-Behnke, an inventor of the PATENT RIGHTS, has acquired
equity in COMPANY not resulting from this Agreement, the Inventor/Author
Acknowledgment of No Equity Distribution in M.I.T.'s institutional equity share
of Rutledge Ellis-Behnke is attached as Exhibit B hereto;

 

WHEREAS, M.I.T.'s Vice President for Research has approved that Rutledge
Ellis-Behnke, an inventor of the PATENT RIGHTS, now holds equity in COMPANY and
that M.I.T. is accepting equity as partial consideration for the rights and
licenses granted under this Agreement;

 

WHEREAS, M.I.T. desires to have the PATENT RIGHTS developed and commercialized
to benefit the public and is willing to grant a license thereunder;

 

WHEREAS, COMPANY has represented to M.I.T., to induce M.I.T. to enter into this
Agreement, that COMPANY shall commit itself to a thorough, vigorous and diligent
program of exploiting the PATENT RIGHTS so that public utilization shall result
therefrom; and

 

WHEREAS, M.I.T. and COMPANY are party that certain Exclusive License Agreement
dated December 5, 2007 (the “Prior Agreement”), pursuant to which the COMPANY
obtained a license under the PATENT RIGHTS upon the terms and conditions set
forth therein;

 

WHEREAS, M.I.T. and COMPANY are party that certain First Amendment to the Prior
Agreement dated October 28, 2010 (the “First Amendment”), pursuant to which the
PATENT RIGHTS associated with M.I.T. Case No. 6008 were deleted from the PATENT
RIGHTS A;

 

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WHEREAS, M.I.T. subsequently granted to 3D Matrix Ltd. (“3DM”) an exclusive,
world-wide license to certain patent rights associated with M.I.T. Case No. 6008
in the field of medical and life sciences applications and cosmetics;

 

WHEREAS, M.I.T., the COMPANY and 3DM are party to that certain Non-Exclusive
Patent Sublicense Agreement dated October 28, 2010, as amended by that certain
First Letter Agreement dated [January 3, 2011], pursuant to which 3DM granted to
COMPANY a free, fully-paid up, royalty-free, non-exclusive, world-wide
sublicense under its in-licensed patent rights associated with M.I.T. Case No.
6008 in the STASIS FIELD OF USE;

 

WHEREAS, M.I.T. and the COMPANY now desire to amend and restate the Prior
Agreement, in order to revise, clarify and restate the respective benefits and
obligations of the parties as hereinafter set forth.

 

NOW, THEREFORE, M.I.T. and COMPANY, in consideration of the premises and for
other good and valuable consideration the sufficiency of which is hereby
acknowledged, hereby agree that the Prior Agreement shall be amended and
restated as follows: 

 

1. DEFINITIONS.

 

1.1 "AFFILIATE" shall mean any legal entity (such as a corporation, partnership,
joint venture or limited liability company) that is directly or indirectly
controlled by COMPANY. For the purposes of this definition, the term "control"
means (i) beneficial ownership of at least fifty percent (50%) of the voting
securities of a corporation or other business organization with voting
securities or (ii) a fifty percent (50%) or greater interest in the net assets
or profits of a partnership or other business organization without voting
securities.

 

"CELLULAR DELIVERY" shall mean applications for the delivery of cells.

 

"CONFIDENTIAL INFORMATION" shall mean any confidential or proprietary
information furnished by one party (the “Disclosing Party”) to the other party
(the “Receiving Party”) in connection with this Agreement, provided that such
information is specifically designated as confidential. Such CONFIDENTIAL
INFORMATION shall include, without limitation, any diligence reports furnished
to M.I.T. under Section 3.1, royalty reports furnished to M.I.T. under Section
5.2 and copies of sublicenses furnished to M.I.T. under Section 2.4.

 

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“COMMERCIAL SALE” shall mean the final transfer or sale by COMPANY, an AFFILIATE
or SUBLICENSEE, whether at retail, wholesale or otherwise, of any LICENSED
PRODUCT to a party that is not an AFFILIATE or SUBLICENSEE hereunder. The
following are not deemed to be COMMERCIAL SALE: a transfer to an AFFILIATE or
SUBLICENSEE for purposes of clinical trials, research and development or other
testing, or provision of samples of LICENSED PRODUCT for research, development,
manufacturing or marketing purposes but not for resale.

 

1.5 “EXCLUSIVE PERIOD" shall mean the TERM as defined in Section 1.18

 

1.6 "FIELD A" shall mean all Products, Methods of Manufacture and Methods of Use
Thereof for all STASIS, ADHESION AND BARRIER APPLICATIONS, but specifically
excluding CELLULAR DELIVERY.

 

1.7 "FIELD B" shall mean all fields.

 

1.8 "LICENSED PRODUCT" shall mean any product that, in whole or in part:

(a) absent the license granted hereunder, would infringe one or more claims of
the PATENT RIGHTS; or

(b) is manufactured by using a LICENSED PROCESS or that, when used, practices a
LICENSED PROCESS.

 

1.9 "LICENSED PROCESS" shall mean any process that, absent the license granted
hereunder, would infringe one or more claims of the PATENT RIGHTS or which uses
a LICENSED PRODUCT.

 

1.10 "NET SALES" shall mean the gross amount billed by COMPANY and its
AFFILIATES and SUBLICENSEES for LICENSED PRODUCTS and LICENSED PROCESSES
intended for COMMERCIAL SALE, less the following:

(a) customary trade, quantity, or cash discounts, chargebacks and rebates to the
extent actually allowed and taken;

(b) amounts repaid or credited by reason of rejection or return;

(c) to the extent separately stated on purchase orders, invoices, or other
documents of sale, any taxes or other governmental charges levied on the
production, sale, transportation, delivery, or use of a LICENSED PRODUCT or
LICENSED PROCESS which is paid by or on behalf of COMPANY; and

(d) outbound transportation costs prepaid or allowed and costs of insurance in
transit.

 

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If COMPANY or any of its AFFILIATES or SUBLICENSEES sell any LICENSED PRODUCT or
LICENSED PROCESS in a COMMERCIAL SALE as a component of a combination of
elements, then the ADJUSTED NET SALES shall be determined by multiplying NET
SALES of such combination by the fraction A over A + B, in which “A” is the
gross amount billed for the LICENSED PRODUCT and/or LICENSED PROCESS portion of
the combination when sold separately during the REPORTING PERIOD in the country
in which the sale was made, and “B” is the gross amount billed for the other
elements of the combination sold separately during said REPORTING PERIOD in said
country. In the event that no separate sale of either such LICENSED PRODUCT
and/or LICENSED PROCESS or other elements of the combination is made during said
REPORTING PERIOD in said country, the ADJUSTED NET SALES shall be determined by
multiplying the NET SALES of such combination by the fraction C over C + D, in
which “C” is the fully-absorbed cost of the LICENSED PRODUCT and/or LICENSED
PROCESS portion of the combination, and “D” is the sum of the fully-absorbed
costs of the other elements of the combination , such costs being arrived at
using the standard accounting procedures of COMPANY which will be in accord with
generally accepted accounting practices.

 

No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by COMPANY and on its
payroll, or for cost of collections. NET SALES shall occur on the date of
billing for a LICENSED PRODUCT or LICENSED PROCESS. If a LICENSED PRODUCT or a
LICENSED PROCESS is distributed for COMMERCIAL SALE at a discounted price that
is substantially lower than the customary price or market driven prices charged
by COMPANY or distributed for COMMERCIAL SALE for non-cash consideration
(whether or not at a discount), NET SALES shall be calculated based on the
non-discounted amount of the LICENSED PRODUCT or LICENSED PROCESS charged to an
independent third party during the same REPORTING PERIOD or, in the absence of
such sales, on the fair market value of the LICENSED PRODUCT or LICENSED
PROCESS. Sales or other transfers between or among COMPANY and any of its
AFFILIATES for the purpose of subsequent resale to third parties shall not be
included in the calculation of NET SALES.

 

Non-monetary consideration shall not be accepted by COMPANY, any AFFILIATE, or
any SUBLICENSEE for any LICENSED PRODUCTS or LICENSED PROCESSES intended for
COMMERCIAL SALE without the prior written consent of M.I.T.

 

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NET SALES will be calculated only once with respect to each LICENSED PRODUCT or
LICENSED PROCESS sold by COMPANY, any AFFILIATE and/or any SUBLICENSEE, even if
such LICENSED PRODUCT or LICENSED PROCESS is sold more than once in the course
of its transfer to the ultimate end-user. The foregoing notwithstanding, NET
SALES will not include transfers among the COMPANY, any AFFILIATE and/or any
SUBLICENSEE unless the recipient is the end-user.

 

1.11 “PATENT CHALLENGE” shall mean a challenge to the validity, patentability,
enforceability and/or non-infringement of any of the PATENT RIGHTS (as defined
below) or otherwise opposing any of the PATENT RIGHTS.

 

1.12 "PATENT RIGHTS " shall mean PATENT RIGHTS A and PATENT RIGHTS B.

 

1.13 "PATENT RIGHTS A" shall mean:

(a) the United States and international patents listed on Appendix A;

(b) the United States and international patent applications and/or provisional
applications listed on Appendix A and the resulting patents;

(c) any patent applications resulting from the provisional applications listed
on Appendix A, and any divisionals, continuations, continuation-in-part
applications, and continued prosecution applications (and their relevant
international equivalents) of the patent applications listed on Appendix A and
of such patent applications that result from the provisional applications listed
on Appendix A, to the extent the claims are directed to subject matter
specifically described in the patent applications listed on Appendix A, and the
resulting patents;

(d) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in (a), (b),
and (c) above; and

(e) international (non-United States) patent applications and provisional
applications filed after the EFFECTIVE DATE and the relevant international
equivalents to divisionals, continuations, continuation-in-part applications and
continued prosecution applications of the patent applications to the extent the
claims are directed to subject matter specifically described in the patents or
patent applications referred to in (a), (b), (c), and (d) above, and the
resulting patents.

 

1.14 "PATENT RIGHTS B" shall mean:

(a) the United States and international patents listed on Appendix B;

(b) the United States and international patent applications and/or provisional
applications listed on Appendix B and the resulting patents;

 

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(c) any patent applications resulting from the provisional applications listed
on Appendix B, and any divisionals, continuations, continuation-in-part
applications, and continued prosecution applications (and their relevant
international equivalents) of the patent applications listed on Appendix B and
of such patent applications that result from the provisional applications listed
on Appendix B, to the extent the claims are directed to subject matter
specifically described in the patent applications listed on Appendix B, and the
resulting patents;

(d) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in (a), (b),
and (c) above; and

(e) international (non-United States) patent applications and provisional
applications filed after the EFFECTIVE DATE and the relevant international
equivalents to divisionals, continuations, continuation-in-part applications and
continued prosecution applications of the patent applications to the extent the
claims are directed to subject matter specifically described in the patents or
patent applications referred to in (a), (b), (c), and (d) above, and the
resulting patents.

 

1.15 "PRODUCT DEVELOPMENT PAYMENTS" shall mean payments to COMPANY or an
AFFILIATE from a SUBLICENSEE for the purposes of funding bona fide research and
development of LICENSED PRODUCTS or LICENSED PROCESSES and that are expressly
intended only to fund or pay for:

(a) the purchase of equipment, supplies, products or services

(b) the assignment of or hiring of employees and/or consultants to achieve a
research or development goal for the commercialization of LICENSED PRODUCTS AND
LICENSED PROCESSES, as indicated by their inclusion as specific line items in a
written agreement between COMPANY or AFFILIATE and the SUBLICENSEE

(c) reasonable overhead charges related to the direct expense described in (a)
and (b) above

 

1.16 “RAISE CAPITAL” shall mean (i) receive funds or property from the issuance
of securities, (ii) acquire an interest in a joint venture to the extent of the
proportionate share of such acquired joint venture interest in the funds or
property, (iii) receive funds, services or property by way of a research or
development grant from governmental, non-governmental or private sources, either
as reimbursement of previously conducted research and development activities or
for future research and development activities or (iv) receive funds, services
or property (including, without limitation, as upfront, royalty, milestone,
license maintenance, option or exclusivity fees or other payments or income)
from consulting, feasibility studies, licenses, sublicenses (including from
SUBLICENSEES), or contracts with partners of COMPANY.

 

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1.17 "REPORTING PERIOD" shall begin on the first day of each calendar quarter
and end on the last day of such calendar quarter.

 

1.18 "STASIS, ADHESION AND BARRIER APPLICATIONS" shall mean applications for the
prevention or control of the movement or leakage of solid, fluid or gaseous
substances in or on the body (including, but not limited to, bleeding, blood and
blood components, cerebral spinal fluid, intestinal content or fluid, gas or
air, bacteria), for hemostasis, for the prevention or control of surgical or
other types of adhesions, or which function as a barrier (including, but not
limited to, reduction of contamination).

 

1.19 "SUBLICENSE INCOME" shall mean any payments that COMPANY or an AFFILIATE
receives from a SUBLICENSEE in consideration of the sublicense of the rights
granted COMPANY and AFFILIATES under Sections 2.1 and 2.2, including without
limitation license fees, milestone payments, and license maintenance fees, but
specifically excluding funds received from the issuance of securities in
COMPANY, funds received by way of a research or development grant from
governmental, non-governmental or private sources, PRODUCT DEVELOPMENT PAYMENTS,
reimbursement of manufacturing expenses and royalties on NET SALES.

 

1.20 "SUBLICENSEE" shall mean any non-AFFILIATE sublicensee of the rights
granted COMPANY under Sections 2.1 and 2.2, that has been retained for
COMMERCIAL SALE.

 

1.21 "TERM" shall mean the term of this Agreement, which shall commence on the
EFFECTIVE DATE and shall remain in effect until the expiration or abandonment of
all issued patents and filed patent applications within the PATENT RIGHTS,
unless earlier terminated in accordance with the provisions of this Agreement.

 

1.22 "TERRITORY" shall mean worldwide.

 

2. GRANT OF RIGHTS.

 

2.1 License Grants under PATENT RIGHTS A. Subject to the terms of this
Agreement, M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a
non-exclusive royalty-bearing license under the PATENT RIGHTS A to develop,
make, have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTS
in the FIELD A in the TERRITORY and to develop and perform LICENSED PROCESSES in
the FIELD A in the TERRITORY.

 

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2.2 License Grants under PATENT RIGHTS B. Subject to the terms of this
Agreement, M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a
royalty-bearing exclusive license under the PATENT RIGHTS B to develop, make,
have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTS in the
FIELD B in the TERRITORY and to develop and perform LICENSED PROCESSES in the
FIELD B in the TERRITORY.

 

2.3 Exclusivity under PATENT RIGHTS B. In order to establish an exclusive period
for COMPANY, M.I.T. agrees that it shall not grant and has not granted any other
license under the PATENT RIGHTS B to make, have made, use, sell, lease and
import LICENSED PRODUCTS in the FIELD B in the TERRITORY or to perform LICENSED
PROCESSES in the FIELD B in the TERRITORY until the expiration of the TERM.

 

2.4 Sublicenses COMPANY shall have the right to grant sublicenses of its rights
under Sections 2.1 and 2.2 Any exclusivity of such sublicenses shall be limited
to the PATENT RIGHTS B. The term of any sublicense may extend past the
expiration date of the EXCLUSIVE PERIOD, but any exclusivity of such sublicense
shall expire upon the expiration of the EXCLUSIVE PERIOD. COMPANY shall
incorporate terms and conditions into its sublicense agreements sufficient to
enable COMPANY to comply with this Agreement. COMPANY shall also include
provisions in all sublicenses to provide that in the event that SUBLICENSEE
brings a PATENT CHALLENGE against M.I.T. or assists another party in bringing a
PATENT CHALLENGE against M.I.T. (except as required under a court order or
subpoena) then COMPANY may terminate the sublicense. COMPANY shall promptly
furnish M.I.T. with a fully signed photocopy of any sublicense agreement. Upon
termination of this Agreement for any reason, any SUBLICENSEE not then in
default shall have the right to seek a license from M.I.T. M.I.T. agrees to
negotiate such licenses in good faith under reasonable terms and conditions.

 

2.5 Retained Rights.

 

(a) M.I.T. M.I.T. retains the right to practice under the PATENT RIGHTS for
research, teaching, and educational purposes.

 

(b) Federal Government. COMPANY acknowledges that the U.S. federal government
retains a royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any PATENT RIGHTS as set forth in 35
U.S.C. §§ 201-211, and the regulations promulgated thereunder, as amended, or
any successor statutes or regulations.

 

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2.6 No Additional Rights. Nothing in this Agreement shall be construed to confer
any rights upon COMPANY by implication, estoppel, or otherwise as to any
technology or patent rights of M.I.T. or any other entity other than the PATENT
RIGHTS, regardless of whether such technology or patent rights shall be dominant
or subordinate to any PATENT RIGHTS.

 

3. COMPANY DILIGENCE OBLIGATIONS.

 

3.1 Diligence Requirements. COMPANY shall use diligent efforts, or shall cause
its AFFILIATES and SUBLICENSEES to use diligent efforts, to develop LICENSED
PRODUCTS or LICENSED PROCESSES and to introduce LICENSED PRODUCTS or LICENSED
PROCESSES into the commercial market; thereafter, COMPANY or its AFFILIATES or
SUBLICENSEES shall make LICENSED PRODUCTS or LICENSED PROCESSES reasonably
available to the public. Specifically, COMPANY or AFFILIATE or SUBLICENSEE shall
fulfill the following obligations:

 

(a) M.I.T. acknowledges that COMPANY has previously furnished M.I.T. a written
research and development plan describing the major tasks to be achieved in order
to bring to market a LICENSED PRODUCT or a LICENSED PROCESS, specifying the
number of staff and other resources to be devoted to such commercialization
effort.

 

(b) Within ninety (90) days after the end of each calendar year, COMPANY shall
furnish M.I.T. with a written report on the progress of its efforts during the
immediately preceding calendar year to develop and commercialize LICENSED
PRODUCTS or LICENSED PROCESSES. The report shall also contain a discussion of
intended efforts and sales projections for the year in which the report is
submitted.

 

(c) COMPANY shall permit an in-plant inspection by M.I.T. at regular intervals
with at least six (6) months between each such inspection.

 

(d) M.I.T. acknowledges that COMPANY successfully RAISED CAPITAL in the amount
of at least One Million Dollars ($1,000,000) prior to January 1, 2009.

 

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(e) In the aggregate, COMPANY shall RAISE CAPITAL of at least Four Million
Dollars ($4,000,000) by July 1, 2013.

 

(f) M.I.T. acknowledges that COMPANY successfully funded the equivalent of no
less than Three Hundred Thousand Dollars ($300,000) (it being agreed that such
funding may take the form of cash or cash equivalents, and/or equity grants
and/or contributed/granted/donated services performed by third parties if such
services result data or other results which can be accessed by COMPANY) toward
the development or commercialization of LICENSED PRODUCTS and/or LICENSED
PROCESSES in 2007 (pro-rated for partial year). M.I.T. acknowledges that COMPANY
successfully funded the equivalent of no less than Six Hundred Thousand Dollars
($600,000) (it being agreed that such funding may take the form of cash or cash
equivalents, and/or equity grants and/or contributed/granted/donated services
performed by third parties if such services result data or other results which
can be accessed by COMPANY) toward the development or commercialization of
LICENSED PRODUCTS and/or LICENSED PROCESSES in 2008, 2009 and 2010.

 

(h) COMPANY shall fund the equivalent of no less than Six Hundred Thousand
Dollars ($600,000) (it being agreed that such funding may take the form of cash
or cash equivalents, and/or equity grants and/or contributed/granted/donated
services performed by third parties if such services result data or other
results which can be accessed by COMPANY) toward the development or
commercialization of LICENSED PRODUCTS and/or LICENSED PROCESSES in each
calendar year (pro-rated for partial years) beginning in 2011 and ending with
the first commercial sale of a LICENSED PRODUCT or a first commercial
performance of a LICENSED PROCESS.

 

(i) M.I.T. acknowledges that on or before July 1, 2009, COMPANY initiated an
animal trial to collect data on the safety and effectiveness of a LICENSED
PRODUCT.

 

(j) M.I.T. acknowledges that COMPANY has entered into a commercially reasonable
business arrangement with at least one manufacturing partner.

 

(k) COMPANY will initiate a pre-investigational or comparable consultation with
an appropriate center within a regulatory authority by 2014.

 

(l) COMPANY shall submit an investigational new drug application,
investigational device exemption or comparable application to an appropriate
center within a regulatory agency for sale of a LICENSED PRODUCT by January 1,
2018 or achieve NET SALES of a LICENSED PRODUCT and/or a first commercial
performance of a LICENSED PROCESS on or before January 1, 2019 in excess of
$500,000.

 

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In the event that COMPANY (or an AFFILIATE or SUBLICENSEE) has failed to fulfill
any of its obligations under this Section 3.1, then M.I.T. may treat such
failure as a material breach in accordance with Section 12.3(b).

 

4. ROYALTIES AND PAYMENT TERMS.

 

4.1 Consideration for Grant of Rights.

 

(a) License Issue Fee and Patent Cost Reimbursement. M.I.T. acknowledges that
COMPANY paid to M.I.T. on the effective date of the Prior Agreement a license
issue fee of Twenty-five Thousand dollars ($25,000), and, in accordance with
Section 6.3, reimbursed M.I.T. for its actual expenses incurred as of the
effective date of the Prior Agreement in connection with obtaining the PATENT
RIGHTS. These payments are nonrefundable and are pursuant to the schedule
outlined in Section 6.3(c).

 

(b) License Maintenance Fees. M.I.T. acknowledges that COMPANY previously paid
M.I.T a license maintenance fee in the amount of $10,000 for the calendar year
commencing on January 1, 2009 and in the amount of $10,000 for the calendar year
commencing on January 1, 2010. There shall be no license maintenance fee for the
calendar year commencing on January 1, 2011. COMPANY shall pay to M.I.T. the
following license maintenance fees within 30 (thirty) days of the dates set
forth below:

 

January 1, 2012 $25,000 and each January 1 of   every year thereafter $25,000

 

This annual license maintenance fee is nonrefundable; however, the license
maintenance fee shall be credited to running royalties subsequently due on NET
SALES earned during the same calendar year, if any. License maintenance fees
paid in excess of running royalties due in such calendar year shall not be
creditable to amounts due for future years.

 

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(c) Running Royalties. COMPANY shall pay to M.I.T. a running royalty of three
percent (3%) of NET SALES or ADJUSTED NET SALES, as appropriate, by COMPANY,
AFFILIATES and SUBLICENSEES. Running royalties shall be payable for each
REPORTING PERIOD and shall be due to M.I.T. within ninety (90) days of the end
of each REPORTING PERIOD.

 

(d)Sharing of SUBLICENSE INCOME. COMPANY shall pay M.I.T. a total of

fifteen percent (15%) of all SUBLICENSE INCOME received by COMPANY or
AFFILIATES, excluding running royalties on NET SALES of SUBLICENSEES (which are
payable pursuant to clause (c) above).

 

Such amount shall be payable for each REPORTING PERIOD and shall be due to
M.I.T. within ninety (90) days of the end of each REPORTING PERIOD.

 

(e) Milestone Payment. COMPANY shall pay to M.I.T. a one-time milestone payment
of Fifty Thousand Dollars ($50,000) upon the first COMMERCIAL SALE of a LICENSED
PRODUCT by COMPANY, its AFFILIATE or SUBLICENSEE. This payment is nonrefundable
and amounts due pursuant to this Section will be paid to M.I.T. over the
subsequent 12 months in approximately equal quarterly installments within thirty
(30) days of invoicing.

 

(f) Third Party Royalty Offset. If COMPANY or an AFFILIATE or SUBLICENSEE is
required to pay royalties to one or more third parties to obtain a patent
license in the absence of which it could not legally make, import, use, sell, or
offer for sale LICENSED PRODUCTS or LICENSED PROCESSES in any country, and
COMPANY provides M.I.T. with reasonably satisfactory evidence of such
third-party royalty payment requirements, including a signed copy of any such
license agreements, then COMPANY may offset a total of fifty percent (50%) of
such third-party payments against running royalties owed to M.I.T. as defined in
Section 4.1 (c) above, hereunder, provided that COMPANY requires such third
parties to offset its royalties as a result of royalties paid to M.I.T. by at
least the same amount and provided that in no one year shall the aggregate of
all such expenses be credited against more than fifty percent (50%) of royalty
payments that would otherwise be due to M.I.T.

 

(g) Consequences of a PATENT CHALLENGE. In the event that (i) COMPANY or any of
its AFFILIATES brings a PATENT CHALLENGE against M.I.T., or (ii) COMPANY or any
of its AFFILIATES assists another party in bringing a PATENT CHALLENGE against
M.I.T. (except as required under a court order or subpoena), and (iii) M.I.T.
does not choose to exercise its rights to terminate this Agreement pursuant to
Section 12.4, then in the event that such a PATENT CHALLENGE is successful,
COMPANY will have no right to recoup any royalties paid during the period of
challenge. In the event that a PATENT CHALLENGE is unsuccessful, COMPANY shall
reimburse M.I.T. for all reasonable legal fees and expenses incurred in its
defense against the PATENT CHALLENGE.

 

15

 

 

(h) No Multiple Royalties. If the manufacture, use, lease, or sale of any
LICENSED PRODUCT or the performance of any LICENSED PROCESS is covered by more
than one of the PATENT RIGHTS, multiple royalties shall not be due.

 

(i) Equity.

 

(i) Initial Grant. COMPANY shall issue a total of FORTY SIX THOUSAND SEVEN
HUNDRED (46,700) shares of Common Stock of COMPANY, no par value per share, (the
"Shares") in the name of M.I.T. and of such persons as M.I.T. shall direct
("M.I.T. Holder"), and each M.I.T. Holder shall receive such number of shares as
M.I.T. shall direct. Such issuance shall be recorded on the Stock Transfer
Ledger of COMPANY on the EFFECTIVE DATE and the Shares shall be delivered to
M.I.T. and M.I.T. Holders, if any, within thirty (30) days of the EFFECTIVE
DATE.

 

COMPANY represents to M.I.T. that, as of the Effective Date, the aggregate
number of Shares equals Four Percent (4%) of the COMPANY's issued and
outstanding Common Stock calculated on a "Fully Diluted Basis." For purposes of
this Section 4.1(i), "Fully Diluted Basis" shall mean that the total number of
issued and outstanding shares of the COMPANY's Common Stock shall be calculated
to include conversion of all issued and outstanding securities then convertible
into common stock, the exercise of all then outstanding options and warrants to
purchase shares of common stock, whether or not then exercisable, and shall
assume the issuance or grant of all securities reserved for issuance pursuant to
any COMPANY stock or stock option plan in effect on the date of the calculation.

 

(ii) Anti-Dilution Protection. COMPANY shall issue additional shares of Common
Stock to M.I.T. as it pertains to the equity grant in Section 4.1(i) of this
License Agreement signed by the Technology Licensing Office on behalf of M.I.T.
and each M.I.T. Holder pro rata, such that M.I.T. 's and each M.I.T. Holders'
aggregate ownership of the outstanding Common Stock shall not fall below Four
Percent (4%) on a Fully Diluted Basis, as calculated after giving effect to the
anti-dilutive issuance. Such issuances shall continue until a total of Four
Million Dollars ($4,000,000) in cash in exchange for COMPANY's capital stock
(the "Funding Threshold") shall be received by COMPANY. Thereafter, no
additional shares shall be due to M.I.T. or any M.I.T. Holder pursuant to this
section. For purposes of clarity, this anti-dilution provision does not provide
anti-dilution protection to the Deshpande Center for Technological Innovation at
M.I.T., which holds shares in the COMPANY under a separate Agreement.

 

16

 

 

(iii) Participation in Future Private Equity Offerings. After the date of the
Funding Threshold, M.I.T. (specifically not including M.I.T. Holders) shall have
the right to purchase additional shares of the COMPANY's Common Stock in any
private offering by the COMPANY of its equity securities in exchange for cash,
to maintain its pro rata ownership as calculated immediately prior to such
offering on a Fully Diluted Basis, pursuant to the terms and conditions at least
as favorable as those granted to the other offerees. All rights granted to
M.I.T. pursuant to this Section 4.1(i) (iii) shall terminate immediately after
the COMPANY RAISES CAPITAL in excess of $6.0 million.

 

(iv) Adjustments for Punitive Round Financings. After the date of the Funding
Threshold (the "Funding Threshold Date"), if COMPANY issues Common Stock, or any
equity security exercisable for or convertible into Common Stock, such that the
price per share of COMPANY's Common Stock is less than the M.I.T. Share Price
(as defined below) (a "Dilutive Issuance"), then immediately following such
Dilutive Issuance, COMPANY shall issue to M.I.T. shares of Common Stock such
that the M.I.T. Share Number (as defined below) equals the product obtained by
multiplying the M.I.T. Share Number in effect immediately before the Dilutive
Issuance by the Adjustment Fraction defined below. The M.I.T. Share Price in
effect immediately after the Dilutive Issuance shall be adjusted to equal the
result obtained by dividing the M.I.T. Share Price in effect immediately before
the Dilutive Issuance by the Adjustment Fraction defined below.

 

The Adjustment Fraction equals: (A + C)   (A + B)

 

where:

A = the number of shares of Common Stock issued and outstanding on a Fully
Diluted Basis immediately prior to the Dilutive Issuance.

B = the number of shares of Common Stock that could be purchased at the M.I.T.
Share Price immediately prior to the Dilutive Issuance using the net aggregate
consideration received by COMPANY in connection with the Dilutive Issuance.

C = the number of shares of Common Stock or of a security exercisable for or
convertible into Common Stock issued, on a Fully Diluted Basis, pursuant to the
Dilutive Issuance.

 

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In addition, the following definitions shall apply to this Section 4.1(i) (iv):

 

"Fair Market Value" of a share of Common Stock shall be the

highest price per share that the COMPANY could obtain from a willing buyer (not
a current employee or director) for shares of Common Stock sold by the COMPANY,
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the COMPANY, unless the COMPANY shall become subject to a merger,
acquisition or other consolidation pursuant to which the COMPANY is not the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
COMPANY's Common Stock for each share of Common Stock pursuant to the COMPANY's
acquisition.

"M.I.T. Share Number" shall mean the number of shares of

COMPANY's Common Stock that M.I.T. owns on the date of the Dilutive Issuance, as
adjusted from time to time pursuant to this section. Notwithstanding the
foregoing, any shares of Common Stock acquired by M.I.T. pursuant to Section
4.1(i) (iii) shall not be included in the M.I.T. Share Number.

"M.I.T. Share Price" shall mean the value per share of the shares of Common
Stock included in the M.I.T. Share Number, as adjusted from time to time
pursuant to this section. For purposes of this section, the initial M.I.T. Share
Price to be used in an adjustment resulting from the first Dilutive Issuance to
occur after the Funding Threshold Date shall be the Fair Market Value per share
of the Common Stock of the COMPANY effective on the Funding Threshold Date.

 

All rights granted to M.I.T. pursuant to this Section 4.1(i) (iv) shall
terminate immediately after the COMPANY RAISES CAPITAL in excess of $6.0
million.

 

4.2 Royalty Buy-out. At any time prior to thirty (30) days following the earlier
of (i) all or substantially all of the COMPANY being acquired by a third party,
or (ii) COMPANY’s initial public offering of securities, COMPANY or its
successor entity may eliminate its future obligation to pay License Maintenance
Fees as set forth in Section 4.1 (b), Running Royalties as set forth in Section
4.1(c) and sharing of SUBLICENSE INCOME as set forth in Section 4.1(d) for a
one-time and non-refundable payment to M.I.T. of Seven and One Half Million
Dollars ($7,500,000). All other responsibilities under this Agreement will
remain in force for the life of the agreement.

 

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4.3 Payments.

 

(a) Method of Payment. All payments under this Agreement should be made payable
to "Massachusetts Institute of Technology" and sent to the address identified in
Section 14.1. Each payment should reference this Agreement and identify the
obligation under this Agreement that the payment satisfies.

 

(b) Payments in U.S. Dollars. All payments due under this Agreement shall be
drawn on a United States bank and shall be payable in United States dollars.
Conversion of foreign currency to U.S. dollars shall be made at the conversion
rate existing in the United States (as reported in the Wall Street Journal) on
the last working day of the calendar quarter of the applicable REPORTING PERIOD.
Such payments shall be without deduction of exchange, collection, or other
charges, and, specifically, without deduction of withholding or similar taxes or
other government imposed fees or taxes, except as permitted in the definition of
NET SALES.

 

(c) Late Payments. Any payments by COMPANY that are not paid on or before the
date such payments are due under this Agreement shall bear interest, to the
extent permitted by law, at two percentage points above the Prime Rate of
interest as reported in the Wall Street Journal on the date payment is due.

 

5. REPORTS AND RECORDS.

 

5.1 Frequency of Reports.

 

(a) Upon First COMMERCIAL SALE of a LICENSED PRODUCT or Commercial Performance
of a LICENSED PROCESS. COMPANY shall report to M.I.T. the date of first
COMMERCIAL SALE of a LICENSED PRODUCT and the date of first commercial
performance of a LICENSED PROCESS within ninety (90) days of occurrence in each
country.

 

(b) After First COMMERCIAL SALE. After the first COMMERCIAL SALE of a LICENSED
PRODUCT or first commercial performance of a LICENSED PROCESS, COMPANY shall
deliver reports to M.I.T. within ninety (90) days of the end of each REPORTING
PERIOD, containing information concerning the immediately preceding REPORTING
PERIOD, as further described in Section 5.2.

 

19

 

 

5.2 Content of Reports and Payments. Each report delivered by COMPANY to M.I.T.
shall contain at least the following information for the immediately preceding
REPORTING PERIOD:

(i) the number of LICENSED PRODUCTS sold, leased or distributed by COMPANY, its
AFFILIATES and SUBLICENSEES to independent third parties in each country, and,
if applicable, the number of LICENSED PRODUCTS used by COMPANY, its AFFILIATES
and SUBLICENSEES in the provision of services in each country;

 

(ii) a description of LICENSED PROCESSES performed by COMPANY, its AFFILIATES
and SUBLICENSEES in each country as may be pertinent to a royalty accounting
hereunder;

 

(iii) the gross price charged by COMPANY, its AFFILIATES and SUBLICENSEES for
each LICENSED PRODUCT and, if applicable, the gross price charged for each
LICENSED PRODUCT used to provide services in each country; and the gross price
charged for each LICENSED PROCESS performed by COMPANY, its AFFILIATES and
SUBLICENSEES in each country;

 

(iv) calculation of NET SALES for the applicable REPORTING PERIOD in each
country, including a listing of applicable deductions;

 

(v) total royalty payable on NET SALES, or ADJUSTED NET SALES, as appropriate,
in U.S. dollars, together with the exchange rates used for conversion;

 

(vi) the amount of SUBLICENSE INCOME received by COMPANY from each SUBLICENSEE
and the amount due to M.I.T. from such SUBLICENSE INCOME, including an itemized
breakdown of the sources of income comprising the SUBLICENSE INCOME; and

 

(vii) the number of sublicenses entered into for the PATENT RIGHTS, LICENSED
PRODUCTS and/or LICENSED PROCESSES.

 

If no amounts are due to M.I.T. for any REPORTING PERIOD, the report shall so
state.

 

5.3 Financial Statements. On or before the ninetieth (90th) day following the
close of COMPANY's fiscal year, COMPANY shall provide M.I.T. with COMPANY's
financial statements for the preceding fiscal year including, at a minimum, a
balance sheet and an income statement, reviewed by COMPANY's treasurer or chief
financial officer or by an independent auditor.

 

20

 

 

5.4 Records. COMPANY shall maintain, and shall cause its AFFILIATES and
SUBLICENSEES to maintain, complete and accurate records relating to the rights
and obligations under this Agreement and any amounts payable to M.I.T. in
relation to this Agreement, which records shall contain sufficient information
to permit M.I.T. to confirm the accuracy of any reports delivered to M.I.T. and
compliance in other respects with this Agreement. The relevant party shall
retain such records for at least five (5) years following the end of the
calendar year to which they pertain, during which time M.I.T., or M.I.T.'s
appointed agents, shall have the right, at M.I.T.'s expense, to inspect such
records during normal business hours to verify any reports and payments made or
compliance in other respects under this Agreement. In the event that any audit
performed under this Section reveals an underpayment in excess of five percent
(5%), COMPANY shall bear the full cost of such audit and shall remit any amounts
due to M.I.T. within thirty (30) days of receiving notice thereof from M.I.T.

 

6. PATENT PROSECUTION.

 

6.1 Responsibility for PATENT RIGHTS. M.I.T. shall prepare, file, prosecute, and
maintain all of the PATENT RIGHTS. COMPANY shall have reasonable opportunities
to advise M.I.T. and shall cooperate with M.I.T. in such filing, prosecution and
maintenance.

 

6.2 International (non-United States) Filings. Appendix C is a list of countries
in which patent applications corresponding to the United States patent
applications listed in Appendix B shall be filed, prosecuted, and maintained.
Appendix C may be amended by mutual agreement of COMPANY and M.I.T.

 

6.3 Payment of Expenses.

 

(a) PATENT RIGHTS A. COMPANY shall be responsible for payment of twenty percent
(20%) of all fees and costs, including attorneys’ fees, relating to the filing,
prosecution and maintenance of the PATENT RIGHTS A incurred after the EFFECTIVE
DATE. Notwithstanding the foregoing, COMPANY shall not be required to reimburse
M.I.T. for any such expenses associated with PATENT RIGHTS A accrued through
February 28, 2011 (approximately $[______]) until March 1, 2012.

 

21

 

  

(b) PATENT RIGHTS B. Payment of all fees and costs, including attorneys’ fees,
relating to the filing, prosecution and maintenance of the PATENT RIGHTS B shall
be the responsibility of COMPANY, whether such amounts were incurred before or
after the EFFECTIVE DATE. Notwithstanding the foregoing, COMPANY shall not be
required to reimburse M.I.T. for any such expenses associated with PATENT RIGHTS
B accrued through February 28, 2011 (approximately $[45,000]) until March 1,
2012. For clarity, COMPANY shall be responsible for payment of ongoing patent
expenses as they are incurred for the period beginning March 1, 2011.

 

(c) M.I.T shall provide COMPANY with a non-binding good faith estimate of the
above-described expenses for the subsequent twelve (12) month period every
twelve (12) months, on July 1 of each year.

 

(d) In all instances, M.I.T. shall pay the fees prescribed for large entities to
the United States Patent and Trademark Office provided that COMPANY submits
appropriate certification to M.I.T.

 

7. INFRINGEMENT.

 

7.1 Notification of Infringement. Each party agrees to provide written notice to
the other party promptly after becoming aware of any infringement of the PATENT
RIGHTS.

 

 

 

7.2 Right to Prosecute Infringements.

 

(a) COMPANY Right to Prosecute PATENT RIGHTS B. So long as COMPANY remains the
exclusive licensee of the PATENT RIGHTS B in the FIELD B in the TERRITORY,
COMPANY, to the extent permitted by law, shall have the right, under its own
control and at its own expense, to prosecute any third party infringement of the
PATENT RIGHTS B in the FIELD B in the TERRITORY, subject to Sections 7.4 and
7.5. If required by law, M.I.T. shall permit any action under this Section to be
brought in its name, including being joined as a party-plaintiff, provided that
COMPANY shall hold M.I.T. harmless from, and indemnify M.I.T. against, any
costs, expenses, or liability that M.I.T. incurs in connection with such
action. 

Prior to commencing any such action, COMPANY shall consult with M.I.T. and shall
consider the views of M.I.T. regarding the advisability of the proposed action
and its effect on the public interest. COMPANY shall not enter into any
settlement, consent judgment, or other voluntary final disposition of any
infringement action under this Section without the prior written consent of
M.I.T.

 

22

 

 

(b) M.I.T. Right to Prosecute PATENT RIGHTS B. In the event that COMPANY is
unsuccessful in persuading the alleged infringer to desist or fails to have
initiated an infringement action within a reasonable time after COMPANY first
becomes aware of the basis for such action, M.I.T. shall have the right, at its
sole discretion, to prosecute such infringement under its sole control and at
its sole expense, and any recovery obtained shall belong to M.I.T.

 

(c) M.I.T. Right to Prosecute PATENT RIGHTS A : M.I.T. shall have the right, but
shall not be obligated, to prosecute at its own expense all infringements of the
PATENT RIGHTS A and, in furtherance of such right, COMPANY hereby agrees that
M.I.T. may include COMPANY as a party plaintiff in any such suit, without
expense to COMPANY. M.I.T. shall consult with COMPANY and shall consider its
views. The total cost of any such infringement action commenced or defended
solely by M.I.T. shall be borne by M.I.T., and M.I.T. shall keep any recovery or
damages derived therefrom, whether compensatory for past infringement or
punitive.

 

M.I.T. shall not enter into any settlement, consent judgment, or other voluntary
final disposition of any infringement action under this Section without the
prior notification of COMPANY. Should M.I.T. decide not to pursue its right to
prosecute, M.I.T will notify COMPANY, and will request from 3DM-Japan that
COMPANY be granted standing to enforce the PATENT RIGHTS A.

 

7.3 Declaratory Judgment Actions. In the event that a PATENT CHALLENGE TO PATENT
RIGHTS B is brought against M.I.T. or COMPANY by a third party, COMPANY, at its
option, shall have the right within twenty (20) days after commencement of such
action to take over the sole defense of the action at its own expense, subject
to Sections 7.4 and 7.5. If COMPANY does not exercise this right, M.I.T. may
take over the sole defense of the action at M.I.T.'s sole expense.

 

7.4 Offsets. COMPANY may offset a total of fifty percent (50%) of any expenses
incurred under Sections 7.2 and 7.3 against any payments due to M.I.T. under
Article 4, provided that in no event shall such payments under Article 4, when
aggregated with any other offsets and credits allowed under this Agreement, be
reduced by more than fifty percent (50%) in any REPORTING PERIOD.

 

23

 

 

7.5 Recovery. Any recovery obtained in an action brought by COMPANY under
Sections 7.2 or 7.3 shall be distributed as follows: (i) each party shall be
reimbursed for any expenses incurred in the action (including the amount of any
royalty or other payments withheld from M.I.T. as described in Section 7.4),
(ii) as to ordinary damages, COMPANY shall receive an amount equal to its lost
profits or a reasonable royalty on the infringing sales, or whichever measure of
damages the court shall have applied, and COMPANY shall pay to M.I.T. based upon
such amount a reasonable approximation of the royalties and other amounts that
COMPANY would have paid to M.I.T. if COMPANY had sold the infringing products,
processes and services rather than the infringer, and (iii) as to special or
punitive damages, the parties shall share equally in any award.

 

7.6 Cooperation. Each party agrees to cooperate in any action under this Article
which is controlled by the other party, provided that the controlling party
reimburses the cooperating party promptly for any costs and expenses incurred by
the cooperating party in connection with providing such assistance.

 

7.7 Right to Sublicense. So long as COMPANY remains the exclusive licensee of
the PATENT RIGHTS B in the FIELD B in the TERRITORY, COMPANY shall have the sole
right to sublicense any alleged infringer in the FIELD B in the TERRITORY for
future use of the PATENT RIGHTS B in accordance with the terms and conditions of
this Agreement relating to sublicenses. Any upfront fees as part of such
sublicense shall be shared equally between COMPANY and M.I.T.; other revenues to
COMPANY pursuant to such sublicense shall be treated as set forth in Article 4.

 

8. INDEMNIFICATION AND INSURANCE

 

8.1 Indemnification.

 

(a) Indemnity of M.I.T. COMPANY shall indemnify, defend, and hold harmless
M.I.T., Versitech and their trustees, officers, faculty, students, employees,
and agents and their respective successors, heirs and assigns (the
"Indemnitees"), against any liability, damage, loss, or expense (including
reasonable attorneys’ fees and expenses) incurred by or imposed upon any of the
Indemnitees in connection with any claims, suits, investigations, actions,
demands or judgments arising out of or related to the exercise of any rights
granted to COMPANY under this Agreement. For purposes of clarity, COMPANY shall
not be required to indemnify M.I.T. for any claims by third party licensees or
sublicensees of PATENT RIGHTS A claiming that M.I.T. improperly granted COMPANY
any rights under this Agreement.

 

24

 

 

(b) Indemnity of COMPANY. M.I.T. warrants that it has the right to enter into
this license agreement.

 

(c) Procedures. The Indemnitees agree to provide COMPANY with prompt written
notice of any claim, suit, action, demand, or judgment for which indemnification
is sought under this Agreement. COMPANY agrees, at its own expense, to provide
attorneys reasonably acceptable to M.I.T. to defend against any such claim. The
Indemnitees shall cooperate fully with COMPANY in such defense and will permit
COMPANY to conduct and control such defense and the disposition of such claim,
suit, or action (including all decisions relative to litigation, appeal, and
settlement); provided, however, that any Indemnitee shall have the right to
retain its own counsel, at the expense of COMPANY, if representation of such
Indemnitee by the counsel retained by COMPANY would be inappropriate because of
actual or potential differences in the interests of such Indemnitee and any
other party represented by such counsel. COMPANY agrees to keep M.I.T. informed
of the progress in the defense and disposition of such claim and to consult with
M.I.T. with regard to any proposed settlement.

 

8.2 Insurance. COMPANY shall obtain and carry in full force and effect
commercial general liability insurance including product liability, and errors
and omissions insurance which shall protect COMPANY and Indemnitees with respect
to events covered by Section 8.1(a) above. Such insurance (i) shall be issued by
an insurer licensed to practice in the Commonwealth of Massachusetts or an
insurer pre-approved by M.I.T., such approval not to be unreasonably withheld,
(ii) shall list M.I.T. as an additional insured thereunder, (iii) shall be
endorsed to include product liability coverage, and (iv) shall endeavor to
require thirty (30) days written notice to be given to M.I.T. prior to any
cancellation or material change thereof. Product liability insurance shall be in
place thirty (30) days prior to the initiation of a human clinical trial. Errors
and Omissions insurance will be in place thirty (30) days prior to initiation of
any professional Consulting services. The limits of such insurance shall not be
less than One Million Dollars ($1,000,0000) per occurrence with an aggregate of
Two Million Dollars ($2,000,000) for general liability; and One Million Dollars
($1,000,000) per occurrence with an aggregate of Two Million Dollars
($2,000,000) for errors and omissions. In the alternate, COMPANY may self-insure
subject to prior approval of M.I.T. COMPANY shall provide M.I.T. with
Certificates of Insurance evidencing compliance with this Section. COMPANY shall
continue to maintain such insurance or self-insurance after the expiration or
termination of this Agreement during any period in which COMPANY or any
AFFILIATE or SUBLICENSEE continues (i) to make, use, or sell a product that was
a LICENSED PRODUCT under this Agreement or (ii) to perform a service that was a
LICENSED PROCESS under this Agreement, and thereafter for a period of five (5)
years.

 

25

 

 

9. NO REPRESENTATIONS OR WARRANTIES

 

EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T. AND
VERSITECH MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE
PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF
PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not to limit the
foregoing, M.I.T. and Versitech make no warranty or representation (i) regarding
the validity or scope of the PATENT RIGHTS, and (ii) that the exploitation of
the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe
any patents or other intellectual property rights of M.I.T. or Versitech or of a
third party.

 

IN NO EVENT SHALL M.I.T., VERSITECH, THEIR TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS,
REGARDLESS OF WHETHER M.I.T. OR VERSITECH SHALL BE ADVISED, SHALL HAVE OTHER
REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

M.I.T. WARRANTS THAT, TO THE BEST OF ITS KNOWLEDGE, IT HAS THE RIGHT TO ENTER
INTO THIS AGREEMENT WITH COMPANY.

 

10. ASSIGNMENT.

 

This Agreement is personal to COMPANY and no rights or obligations may be
assigned by COMPANY without the prior written consent of M.I.T. except as
otherwise provided in this Agreement. Notwithstanding the foregoing, COMPANY may
assign this Agreement in connection with the sale or transfer of all or
substantially all of COMPANY's equity or assets, by merger, consolidation or
otherwise provided that (a) the assignee shall agree in writing to be bound by
the terms and conditions hereof prior to such assignment, and (b) the total
valuation of the COMPANY is at least seven million five hundred thousand dollars
($7,500,000). In the event that the total valuation of the COMPANY is less than
$7.5 million, then the assignment may be made only with M.I.T.'s written
permission, such permission not to be unreasonably withheld. Failure of such
assignee to agree to be bound by the terms and conditions of this Agreement
shall be grounds for termination by M.I.T. under Section 13.3.

 

26

 

 

11. CONFIDENTIAL INFORMATION

 

(a) Designation. CONFIDENTIAL INFORMATION that is disclosed in writing shall be
marked with a legend indicating its confidential status (such as "Confidential"
or "Proprietary"). CONFIDENTIAL INFORMATION that is disclosed orally or visually
shall be considered confidential if designated as such prior to, during or
immediately after disclosure.

 

(b) Obligations. The Receiving Party shall (i) maintain such CONFIDENTIAL
INFORMATION in strict confidence and shall not disclose, without the consent of
the Disclosing Party, CONFIDENTIAL INFORMATION to third parties, except that the
Receiving Party may disclose or permit the disclosure of any CONFIDENTIAL
INFORMATION to its directors, officers, employees, consultants, and advisors who
are obligated to maintain the confidential nature of such CONFIDENTIAL
INFORMATION and who need to know such Confidential Information for the purposes
of this Agreement; (ii) use such CONFIDENTIAL INFORMATION solely for the
purposes of this Agreement; and (iii) allow its trustees or directors, officers,
employees, consultants, and advisors to reproduce the CONFIDENTIAL INFORMATION
only to the extent necessary for the purposes of this Agreement, with all such
reproductions being considered CONFIDENTIAL INFORMATION. The Receiving Party
shall be responsible for any unauthorized disclosure or use of CONFIDENTIAL
INFORMATION by its trustees or directors, officers, employees, consultants, and
advisors. The obligations set forth in this Article 11 shall survive for a
period of five (5) years after disclosure of any portion of CONFIDENTIAL
INFORMATION, provided that, with respect to any portion of such CONFIDENTIAL
INFORMATION that is a trade secret, such obligations shall survive for so long
as such CONFIDENTIAL INFORMATION remains a trade secret.

 

(c) Exceptions. The obligations of the Receiving Party under Subsection 11(b)
above shall not apply to the extent that the Receiving Party can demonstrate
that certain CONFIDENTIAL INFORMATION (i) was in the public domain prior to the
time of its disclosure under this Agreement; (ii) entered the public domain
after the time of its disclosure under this Agreement through means other than
an unauthorized disclosure resulting from an act or omission by the Receiving
Party; (iii) was independently developed or discovered by the Receiving Party
without use of the CONFIDENTIAL INFORMATION; (iv) is or was disclosed to the
Receiving Party at any time, whether prior to or after the time of its
disclosure under this Agreement, by a third party having no fiduciary
relationship with the Disclosing Party and having no obligation of
confidentiality with respect to such CONFIDENTIAL INFORMATION; or (v) is
required to be disclosed to comply with applicable laws or regulations, or with
a court or administrative order, provided that the Disclosing Party receives
reasonable prior written notice of such disclosure.

 

27

 

 

(d) Ownership and Return. The Receiving Party acknowledges that the Disclosing
Party (or any third party entrusting its own information to the Disclosing
Party) claims ownership of its CONFIDENTIAL INFORMATION in the possession of the
Receiving Party. Upon the expiration or termination of this Agreement, and at
the request of the Disclosing Party, the Receiving Party shall return to the
Disclosing Party all originals, copies, and summaries of documents, materials,
and other tangible manifestations of CONFIDENTIAL INFORMATION in the possession
or control of the Receiving Party, except that the Receiving Party may retain
one copy of the CONFIDENTIAL INFORMATION in the possession of its legal counsel
solely for the purpose of monitoring its obligations under this Agreement.

 

12. GENERAL COMPLIANCE WITH LAWS

 

12.1 Compliance with Laws. COMPANY shall use reasonable commercial efforts to
comply with all commercially material local, state, federal, and international
laws and regulations relating to the development, manufacture, use, and sale of
LICENSED PRODUCTS and LICENSED PROCESSES.

 

12.2 Export Control. COMPANY and its AFFILIATES and SUBLICENSEES shall comply
with all United States laws and regulations controlling the export of certain
commodities and technical data, including without limitation all Export
Administration Regulations of the United States Department of Commerce. Among
other things, these laws and regulations prohibit or require a license for the
export of certain types of commodities and technical data to specified
countries. COMPANY hereby gives written assurance that it will comply with, and
will cause its AFFILIATES and SUBLICENSEES to comply with, all United States
export control laws and regulations, that it bears sole responsibility for any
violation of such laws and regulations by itself or its AFFILIATES or
SUBLICENSEES, and that it will indemnify, defend, and hold M.I.T and Versitech
harmless (in accordance with Section 8.1) for the consequences of any such
violation.

 

28

 

 

12.3 Non-Use of M.I.T. Name. COMPANY and its AFFILIATES and SUBLICENSEES shall
not use the name of "Massachusetts Institute of Technology," "Versitech," "The
University of Hong Kong" or any variation, adaptation, or abbreviation thereof,
or of any of their trustees, officers, faculty, students, employees, or agents,
or any trademark or logo owned by M.I.T., "Versitech," or "The University of
Hong Kong" or any terms of this Agreement in any promotional material or other
public announcement or disclosure without the prior written consent of M.I.T.
The foregoing notwithstanding, without the consent of M.I.T., COMPANY may make
factual statements during the term of this Agreement that COMPANY has a license
from M.I.T. under one or more of the patents and/or patent applications
comprising the PATENT RIGHTS, , and may make disclosures or statements required
by law or regulation.

 

12.4 Marking of LICENSED PRODUCTS. To the extent commercially feasible and
consistent with prevailing business practices, COMPANY shall mark, and shall
cause its AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS that are
manufactured or sold under this Agreement with the number of each issued patent
under the PATENT RIGHTS that applies to such LICENSED PRODUCT.

 

13. TERMINATION

 

13.1 Voluntary Termination by COMPANY. COMPANY shall have the right to terminate
this Agreement, for any reason, (i) upon at least six (6) months prior written
notice to M.I.T., such notice to state the date at least six (6) months in the
future upon which termination is to be effective, and (ii) upon payment of all
amounts due to M.I.T. through such termination effective date.

 

13.2 Cessation of Business. If COMPANY ceases to carry on its business related
to this Agreement M.I.T. shall have the right to terminate this Agreement
immediately upon written notice to COMPANY.

 

13.3 Termination for Default.

 

(a) Nonpayment. In the event COMPANY fails to pay any amounts due and payable to
M.I.T. hereunder, and fails to make such payments within thirty (30) days after
receiving written notice of such failure, M.I.T. may terminate this Agreement
immediately upon written notice to COMPANY.

 

29

 

 

(b) Material Breach. In the event COMPANY commits a material breach of its
obligations under this Agreement, except for breach as described in Section
12.3(a), and fails to cure that breach within sixty (60) days after receiving
written notice thereof, M.I.T. may terminate this Agreement immediately upon
written notice to COMPANY.

 

13.4 Termination as a Consequence of Patent Challenge.

 

(a) By COMPANY. If COMPANY or any of its AFFILIATES brings a PATENT CHALLENGE
against M.I.T., or assists others in bringing a PATENT CHALLENGE against M.I.T.
(except as required under a court order or subpoena), then M.I.T. may
immediately terminate this Agreement and/or the license granted hereunder.

 

(b) By SUBLICENSEE. If a SUBLICENSEE brings a PATENT CHALLENGE or assists
another party in bringing a PATENT CHALLENGE (except as required under a court
order or subpoena), then M.I.T. may send a written demand to COMPANY to
terminate such sublicense. If COMPANY fails to so terminate such sublicense
within thirty (30) days after M.I.T.’s demand, M.I.T. may immediately terminate
this Agreement and/or the license granted hereunder.

 

13.5 Effect of Termination.

 

(a) Survival. The following provisions shall survive the expiration or
termination of this Agreement: Articles 1, 8, 9, 11, 14 and 15, and Sections
4.1(i), 5.2 (obligation to provide final report and payment), 5.4, 12.1, 12.2
and 13.5.

 

(b) Inventory. Upon the early termination of this Agreement, COMPANY and its
AFFILIATES and SUBLICENSEES may complete and sell any work-in-progress and
inventory of LICENSED PRODUCTS that exist as of the effective date of
termination, provided that (i) COMPANY pays M.I.T. the applicable running
royalty or other amounts due on such sales of LICENSED PRODUCTS in accordance
with the terms and conditions of this Agreement, and (ii) COMPANY and its
AFFILIATES and SUBLICENSEES shall complete and sell all work-in-progress and
inventory of LICENSED PRODUCTS within six (6) months after the effective date of
termination.

 

(c) Pre-termination Obligations. In no event shall termination of this Agreement
release COMPANY, AFFILIATES, or SUBLICENSEES from the obligation to pay any
amounts that became due on or before the effective date of termination.

 

30

 

 

14. DISPUTE RESOLUTION.

 

14.1 Mandatory Procedures. The parties agree that any dispute arising out of or
relating to this Agreement shall be resolved solely by means of the procedures
set forth in this Article, and that such procedures constitute legally binding
obligations that are an essential provision of this Agreement. If either party
fails to observe the procedures of this Article, as may be modified by their
written agreement, the other party may bring an action for specific performance
of these procedures in any court of competent jurisdiction.

 

14.2 Equitable Remedies. Although the procedures specified in this Article are
the sole and exclusive procedures for the resolution of disputes arising out of
or relating to this Agreement, either party may seek a preliminary injunction or
other provisional equitable relief if, in its reasonable judgment, such action
is necessary to avoid irreparable harm to itself or to preserve its rights under
this Agreement.

 

14.3 Dispute Resolution Procedures.

 

(a) Mediation. In the event any dispute arising out of or relating to this
Agreement remains unresolved within sixty (60) days from the date the affected
party informed the other party of such dispute, either party may initiate
mediation upon written notice to the other party ("Notice Date"), whereupon both
parties shall be obligated to engage in a mediation proceeding under the then
current Center for Public Resources ("CPR") Model Procedure for Mediation of
Business Disputes (http://www.cpradr.org), except that specific provisions of
this Article shall override inconsistent provisions of the CPR Model Procedure.
The mediator will be selected from the CPR Panels of Neutrals. If the parties
cannot agree upon the selection of a mediator within fifteen (15) business days
after the Notice Date, then upon the request of either party, the CPR shall
appoint the mediator. The parties shall attempt to resolve the dispute through
mediation until the first of the following occurs: (i) the parties reach a
written settlement; (ii) the mediator notifies the parties in writing that they
have reached an impasse; (iii) the parties agree in writing that they have
reached an impasse; or (iv) the parties have not reached a settlement within
sixty (60) days after the Notice Date.

 

(b) Trial Without Jury. If the parties fail to resolve the dispute through
mediation, or if neither party elects to initiate mediation, each party shall
have the right to pursue any other remedies legally available to resolve the
dispute, provided, however, that the parties expressly waive any right to a jury
trial in any legal proceeding under this Article.

 

31

 

 

14.4 Performance to Continue. Each party shall continue to perform its
undisputed obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement; provided, however, that a
party may suspend performance of its undisputed obligations during any period in
which the other party fails or refuses to perform its undisputed obligations.
Nothing in this Article is intended to relieve COMPANY from its obligation to
make undisputed payments pursuant to Articles 4 and 6 of this Agreement.

 

14.5 Statute of Limitations. The parties agree that all applicable statutes of
limitation and time-based defenses (such as estoppel and laches) shall be tolled
while the procedures set forth in Sections 14.3(a) are pending. The parties
shall cooperate in taking any actions necessary to achieve this result.

 

15. MISCELLANEOUS.

 

15.1 Notice. Any notices required or permitted under this Agreement shall be in
writing, shall specifically refer to this Agreement, and shall be sent by hand,
recognized national overnight courier, confirmed facsimile transmission,
confirmed electronic mail, or registered or certified mail, postage prepaid,
return receipt requested, to the following addresses or facsimile numbers of the
parties:

 

If to M.I.T., all matters relating to the license:

 

Massachusetts Institute of Technology Technology Licensing Office, Rms NE25-230
and NE18-501 One Cambridge Center, Kendall Square Cambridge, MA  02142-1601
Attention:  Director Tel:  617-253-6966 Fax:  617-258-6790

 

If to M.I.T., relating to any equity action after the initial issuance of
shares:

 

Massachusetts Institute of Technology Treasurer's Office 238 Main Street
Cambridge, MA  02142 Attention:  Phillips B. Moore Tel:  617-253-5422 Fax:
 617-258-6676

 

32

 

 

If to COMPANY: Arch Therapeutics, Inc   1 Chieftain Lane   Natick, MA 01760  
Attention:  Terrence W. Norchi, President and CEO   Tel:    ________________  
Fax:    ________________

 

All notices under this Agreement shall be deemed effective upon receipt. A party
may change its contact information immediately upon written notice to the other
party in the manner provided in this Section.

 

15.2 Governing Law. This Agreement and all disputes arising out of or related to
this Agreement, or the performance, enforcement, breach or termination hereof,
and any remedies relating thereto, shall be construed, governed, interpreted and
applied in accordance with the laws of the Commonwealth of Massachusetts,
U.S.A., without regard to conflict of laws principles, except that questions
affecting the construction and effect of any patent shall be determined by the
law of the country in which the patent shall have been granted. The state and
federal courts having jurisdiction over Cambridge, MA, USA, provide the
exclusive forum for any PATENT CHALLENGE and/or any court action between the
parties relating to this Agreement. COMPANY submits to the jurisdiction of such
courts and waives any claim that such court lacks jurisdiction over COMPANY or
its AFFILIATES or constitutes an inconvenient or improper forum.

 

15.3 Force Majeure. Neither party will be responsible for delays resulting from
causes beyond the reasonable control of such party, including without limitation
fire, explosion, flood, war, strike, or riot, provided that the nonperforming
party uses commercially reasonable efforts to avoid or remove such causes of
nonperformance and continues performance under this Agreement with reasonable
dispatch whenever such causes are removed.

 

15.4 Amendment and Waiver. This Agreement may be amended, supplemented, or
otherwise modified only by means of a written instrument signed by both parties.
Any waiver of any rights or failure to act in a specific instance shall relate
only to such instance and shall not be construed as an agreement to waive any
rights or fail to act in any other instance, whether or not similar.

 

33

 

 

15.5 Severability. In the event that any provision of this Agreement shall be
held invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect any other provision of this Agreement, and the
parties shall negotiate in good faith to modify the Agreement to preserve (to
the extent possible) their original intent. If the parties fail to reach a
modified agreement within thirty (30) days after the relevant provision is held
invalid or unenforceable, then the dispute shall be resolved in accordance with
the procedures set forth in Article 14. While the dispute is pending resolution,
this Agreement shall be construed as if such provision were deleted by agreement
of the parties.

 

15.6 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective permitted successors and assigns.

 

15.7 Headings. All headings are for convenience only and shall not affect the
meaning of any provision of this Agreement.

 

15.8 Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to its subject matter and supersedes all prior
agreements or understandings between the parties relating to its subject matter.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

 

The EFFECTIVE DATE of this Agreement is May 23, 2011.

 

34

 

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY   ARCH THERAPEUTICS, INC.                
              By:  /s/ Lita Nelson   By: /s/ Terrence W. Norchi, M.D Name: Lita
Nelson   Name: Terrence_W. Norchi, MD Title: Director, Technology Licensing
Office   Title: President and CEO

 

35

 

 

APPENDIX A

List of Patent Applications and Patents

 

 

I. United States Patents and Applications

 

M.I.T. Case No. 6692

United States of America Patent No. 5955343, Issued September 21, 1999

United States of America Patent No. 6800481, Issued October 5, 2004

United States of America Patent No. 7098028, Issued August 29, 2006

United States of America Serial No. 11/512753, Filed August 29, 2006

"Stable Macroscopic Membranes Formed By Self-Assembly Of Amphiphilic Peptides
And Uses Therefor"

by C. Michael Dipersio, Todd Holmes, Curtis Lockshin, Alexander Rich and
Shuguang Zhang

 

M.I.T. Case No. 8813

United States of America Serial No. 09/778200, Filed February 6, 2001

"Peptide Scaffold Encapsulation Of Tissue Cells And Uses Therof"

by Alan J. Grodzinsky, John Kisiday and Shuguang Zhang

 

M.I.T. Case No. 9344

United States of America Serial No. 10/193942, Filed July 15, 2002

"Cellular Reprogramming In Peptide Hydrogel And Uses Thereof"

By Carlos E. Semino, Colette Shen, James L. Sherley and Shuguang Zhang

 

M.I.T. Case No. 9786

United States of America Serial No. 10/968790, Filed October 18, 2004

"Self-Assembling Peptides For Regeneration And Repair Of Neural Tissue"

by Rutledge Ellis-Behnke, Gerald E. Schneider, Carlos E. Semino and Shuguang
Zhang

 

M.I.T. Case No. 10154

United States of America Serial No. 10/877068, Filed June 25, 2004

"Self-Assembling Peptides Incorporating Modifications And Methods Of Use
Thereof"

by Elsa Genove, Carlos E. Semino and Shuguang Zhang

 

36

 

 

II. International (non-U.S.) Patents and Applications

 

M.I.T. Case No. 8813

Australia Serial No. 2002-248406, Filed February 6, 2002

Canada Serial No. 2344954, Filed April 25, 2001

European Patent Convention Serial No. 02717398.8, Filed February 6, 2002

Japan Serial No. 2002-563298, Filed February 6, 2002

Patent Cooperation Treaty Serial No. US02/03482, Filed February 6, 2002

"Peptide Scaffold Encapsulation Of Tissue Cells And Uses Thereof"

by Alan J. Grodzinsky, John Kisiday and Shuguang Zhang

 

M.I.T. Case No. 9344

Patent Cooperation Treaty Serial No. US02/03607, Filed February 6, 2002

"Liver Cellular Reprogramming In Peptide Hydrogel And Uses Thereof"

by Carlos E. Semino, Colette Shen, James L. Sherley and Shuguang Zhang

 

M.I.T. Case No. 10154

Canada Serial No. 2530482, Filed June 25, 2004

European Patent Convention Serial No. 04785965.7, Filed June 25, 2004

Japan Serial No. 2006-517694, Filed June 25, 2004

Patent Cooperation Treaty Serial No. US04/020549, Filed June 25, 2004

"Self-Assembling Peptides Incorporating Modifications And Methods Of Use
Thereof"

by Elsa Genove, Carlos E. Semino and Shuguang Zhang

 

37

 

 

APPENDIX B

List of Patent Applications and Patents

 

 

I. United States Patents and Applications

 

M.I.T. Case No. 11366

United States of America Serial No. 60/758827, Filed January 13, 2006

"Compositions And Methods For Inhibiting Movement Or Leakage Of A Body Substance
And Promoting Tissue Repair"

 

United States of America Serial No. 11/411745, Filed April 25, 2006

"Compositions And Methods For Promoting Hemostasis And Other Physiological
Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider, Kwok-Fai So,
David K C. Tay and Shuguang Zhang

 

M.I.T. Case No. 12061

United States of America Serial No. 11/796132, Filed April 25, 2007

"Compositions And Methods For Affecting Movement Of Contaminants, Bodily Fluids
Or Other Entities, And/Or Affecting Other Physiological Conditions"

 

United States of America Serial No. 60/745601, Filed April 25, 2006

"Compositions And Methods For Promoting Hemostasis And Other Physiological
Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider, Kwok-Fai So and
David K C. Tay

 

 

 

 

 

 

II. International (non-U.S.) Patents and Applications

 

M.I.T. Case No. 11366

Patent Cooperation Treaty Serial No. US06/015850, Filed April 25, 2006

"Compositions And Methods For Promoting Hemostasis And Other Physiological
Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider, Kwok-Fai So,
David K C. Tay and Shuguang Zhang

 

M.I.T. Case No. 12061

Patent Cooperation Treaty Serial No. US07/010041, Filed April 25, 2007

"Compositions And Methods For Promoting Hemostasis And And Other Physiological
Activites"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider, Kwok-Fai So and
David K C. Tay

 

38

 

  

APPENDIX C

 

List of Countries (excluding United States) for which

PATENT RIGHTS B . Applications Will Be Filed, Prosecuted and Maintained

 

 

 

MIT case No. 11366

 

Australia

Canada

China

Europe

India

Israel

Japan

Korea

 

39

 

 

APPENDIX D

 

M.I.T.-Versitech Joint Invention Agreement

 

40

 

 

EXHIBIT A

 

CONFLICT AVOIDANCE STATEMENT

 

Name: Rutledge Ellis-Behnke, PhD     Dept. or Lab.: Brain and Cognitive
Sciences          Company: Clear Nano Solutions     Address:    355 Summer
Street     Manchester, MA 01944     Licensed Technology: Cases: See Appendix A
and B                

  

Because of the M.I.T. license granted to the above company and my equity*
position and continuing relationship with this company, I acknowledge the
potential for a possible conflict of interest between the performance of
research at M.I.T. and my contractual or other obligations to this company.
Therefore, I will not:

1)use students at M.I.T. for research and development projects for the company;

2)restrict or delay access to information from my M.I.T. research;

3)take direct or indirect research support from the company in order to support
my activities at M.I.T.; or

4)employ students at the company, except in accordance with Section 4.5.2,
“Faculty and Students,” in the Policies and Procedures Guide.

 

In addition, in order to avoid the appearance of a conflict, I will attempt to
differentiate clearly between the intellectual directions of my M.I.T. research
and my contributions to the company. To that end, I will expressly inform my
department head/laboratory director annually of the general nature of my
activities on behalf of the company.

 

 

Signed: /s/ Rutledge Ellis-Behnke, PhD Date: 1/22/08

 

 

Approved by: /s/ Mriganka Sur

 

Name (print): Mriganka Sur

(Dept. Head or Lab Dir)

 

* "Equity" includes stock, options, warrants or other financial instruments
convertible into stock, which are directly or indirectly controlled by the
inventor.

 

41

 

 

Conf Avoid Stmnt 990915

 

EXHIBIT B

 

INVENTOR/AUTHOR ACKNOWLEDGMENT

OF NO EQUITY DISTRIBUTION

Form Version 8/22/01

 

In partial reliance on the undersigned’s execution of this Acknowledgment,
M.I.T. has entered into the license agreement to which this Acknowledgment is
attached (the “LICENSE”) in which COMPANY received certain licenses to the
technology listed below, on some or all of which the undersigned is a listed
inventor or author. The undersigned, independently of the LICENSE, has received
or will soon acquire equity in (“COMPANY”), and, in accordance with M.I.T.’s
licensing policies contained in M.I.T.'s Guide to the Ownership, Distribution
and Commercial Development of M.I.T. Technology, as that policy may be amended
from time to time (specifically §4.2.5 as of this Form Version date), the
undersigned, on his/her own behalf and on behalf of his/her heirs and assigns,
acknowledges and agrees that he/she has no right to receive any share of equity
income received by M.I.T. in consideration for the LICENSE.

 

Technology Licensed as of the EFFECTIVE DATE of the LICENSE:

         

 

See Appendix A & B

 

Witness: Juliet Ellis-Behnke: Signed Rutledge Ellis-Behnke     Print Name:   /s/
Rutledge Ellis-Behnke     Date: 12/12/07

 

42

 

 

First Amendment to the Amended and Restated Exclusive Patent License Agreement

 

 

This First Amendment, effective as of the date set forth above the signatures of
the parties below, amends the Amended and Restated Exclusive Patent License
Agreement dated May 23, 2011(the “LICENSE AGREEMENT”) by and between the
Massachusetts Institute of Technology, a Massachusetts corporation having its
principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts 02139
("M.I.T.") and Arch Therapeutics, Inc. ("COMPANY"), a Massachusetts corporation
having its principal office at 1 Chieftain Lane, Natick, MA 01760.

 

WHEREAS, M.I.T. and COMPANY wish to modify the provisions of the LICENSE
AGREEMENT to account for certain unmet financial obligations by COMPANY;

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto agree as follows:

 

1.                 Sections 3.1(e) and 3.1(k) of the LICENSE AGREEMENT are
hereby deleted in their entirety and replaced with the following:

 

3.1 Diligence Requirements.

 

(e) (i) In addition to Section 3.1(d), COMPANY shall RAISE CAPITAL of at least
Two Million dollars ($2,000,000) solely from the sale of the COMPANY’s equity
securities for its own account by December 31, 2012.

(ii) In addition to Section 3.1(e)(i), COMPANY shall RAISE CAPITAL of at least
Three Million dollars ($3,000,000) by July 1, 2014.

 

(k) COMPANY shall conduct a pre-investigational meeting or comparable
consultation with the U.S. Food and Drug Administration (or equivalent European
regulatory authority) to review a clinical testing strategy for a LICENSED
PRODUCT by January 1, 2014.

 

2.                 Sections 4.1(b) and 4.1(e) of the LICENSE AGREEMENT are
hereby deleted in their entirety and replaced with the following:

 

43

 

 

4.1 Consideration for Grant of Rights.

 

(b) License Maintenance Fees. M.I.T. acknowledges that COMPANY previously paid
M.I.T. a license maintenance fee in the amount of $10,000 for the calendar year
commencing on January 1, 2009 and in the amount of $10,000 for the calendar year
commencing on January 1, 2010. There shall be no license maintenance fee for the
calendar year commencing on January 1, 2011 and January 1, 2012. COMPANY shall
pay to M.I.T. the following license maintenance fees within 30 (thirty) days of
the dates set forth below:

 

January 1, 2013 $25,000 January 1, 2014 $35,000 January 1, 2015 $45,000 January
1, 2016 and each January 1 of every year thereafter $50,000

 

This annual license maintenance fee is nonrefundable; however, the license
maintenance fee may be credited to running royalties subsequently due on NET
SALES earned during the same calendar year, if any. License maintenance fees
paid in excess of running royalties due in such calendar year shall not be
creditable to amounts due for future years.

 

(e) Milestone Payments. COMPANY shall pay to M.I.T. the amounts set forth below
upon the first achievement by COMPANY or any of its AFFILIATES or SUBLICENSEES
of certain milestone events as described below.

 

Milestone Event Payment Initiation of human clinical studies, including
evaluation of proof of concept, proof of mechanism and/or efficacy, of a
LICENSED PRODUCT

Ten Thousand dollars

($10,000)

 

Filing of a submission/application for regulatory/marketing approval of a
LICENSED PRODUCT

Twenty Five Thousand dollars

($25,000)

 

First COMMERCIAL SALE of a LICENSED PRODUCT

Fifty Thousand dollars

($50,000)

 

Cumulative NET SALES of Ten Million dollars ($10,000,000) in either or both
FIELD A and FIELD B in the TERRITORY

One Hundred Thousand dollars

($100,000)

 

 

44

 

 

COMPANY shall notify M.I.T. within ten (10) days of the achievement of any of
the above milestones by COMPANY or any of its AFFILIATES or SUBLICENSEES.
COMPANY shall make such non-refundable, non-creditable milestone payments within
sixty (60) days after achievement of each of the milestones.

 

3.                 Section 6.3 of the LICENSE AGREEMENT is hereby deleted in its
entirety and replaced with the following:

 

6.3 Payment of Expenses.

 

Payment of all reasonable out-of-pocket fees and costs, including attorneys’
fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS
shall be the responsibility of COMPANY and other commercial licensees of the
PATENT RIGHTS as they exist from time to time (as used herein a “commercial
licensee” shall mean a for-profit entity that has been granted a license under
the PATENT RIGHTS to develop and sell products).

 

(a) PATENT RIGHTS A. COMPANY shall be responsible for a pro-rata share of all
patent related fees and costs relating to the filing, prosecution and
maintenance of the PATENT RIGHTS A incurred after the EFFECTIVE DATE. As of the
EFFECTIVE DATE, COMPANY’s pro rata share for the PATENT RIGHTS A is twenty five
percent (25%). Notwithstanding the foregoing, COMPANY shall not be required to
reimburse M.I.T. for any such expenses associated with PATENT RIGHTS A incurred
through February 28, 2011 (approximately $9,456.28) until December 31, 2012.

 

(b) PATENT RIGHTS B. Payment of all patent related fees and costs relating to
the filing, prosecution and maintenance of the PATENT RIGHTS B shall be the
responsibility of COMPANY, whether such amounts were incurred before or after
the EFFECTIVE DATE. Notwithstanding the foregoing, COMPANY shall not be required
to reimburse M.I.T. for any such expenses associated with PATENT RIGHTS B
incurred through February 28, 2011 (approximately $71,586.67) until December 31,
2012.

(c) For clarity, COMPANY shall be responsible for ongoing payment of all ongoing
patent expenses in accordance with this Section 6.3 as they are incurred for the
period beginning March 1, 2011.

 

(d) COMPANY shall reimburse all amounts due pursuant to this Section 6.3 within
thirty (30) days of invoicing; late payments shall accrue interest pursuant to
Section 4.2(c). In all instances, M.I.T. shall pay the fees prescribed for large
entities to the United States Patent and Trademark Office.

 

45

 

 

4. For the period beginning April 1, 2012 and ending December 31, 2012, M.I.T.
and COMPANY agree that COMPANY shall reimburse M.I.T. for all patent expenses
associated with PATENT RIGHTS A and PATENT RIGHTS B incurred after February 28,
2011, pursuant to Section 6.3(c) of the LICENSE AGREEMENT (as amended herein),
according to the following schedule:

 

April 1, 2012 $1,000 May 1, 2012 $1,000 June 1, 2012 $2,000 July 1, 2012 $2,000
August 1, 2012 $3,000 September 1, 2012 $3,000 October 1, 2012 $4,000 November
1, 2012 $4,000 December 1, 2012 $5,000

 

This reimbursement schedule shall be effective only until December 31, 2012.
Notwithstanding the foregoing: (i) at any time that COMPANY has RAISED CAPITAL
from the sale of the COMPANY’s equity securities for its own account of at least
Two Hundred Fifty Thousand dollars ($250,000), from that date forward, COMPANY
shall reimburse M.I.T. at a rate of Five Thousand dollars ($5,000) a month until
December 31, 2012; and (ii) all outstanding patent expenses due in accordance
with Section 6.3 shall be reimbursed in full by January 1, 2013.

 

5. Notwithstanding anything to the contrary in the LICENSE AGREEMENT, M.I.T. and
COMPANY agree that in the event COMPANY fails to fulfill any of its obligations
under either of (1) Sections 3.1(e)(i) and 6.3 of the LICENSE AGREEMENT, as
amended by this First Amendment, or (2) Section 4 of this First Amendment, then
M.I.T. may treat such failure as a material breach and shall have the right to
immediately terminate the LICENSE AGREEMENT upon written notice to COMPANY,
without an opportunity to cure.

 

6. Except as specifically modified or amended hereby, all other terms and
conditions of the LICENSE AGREEMENT shall remain unchanged and in full force and
effect. Capitalized terms used herein and not defined shall have the meanings
set forth in the LICENSE AGREEMENT.

 

46

 

  

IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed
under seal by their duly authorized representatives.

 

 

The Effective Date of this First Amendment is May 15, 2012.

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY   ARCH THERAPEUTICS, INC.                
    By:  /s/ Lita Nelson   By: /s/ Terrence W. Norchi, M.D           Name: Lita
Nelson   Name: Terrence W. Norchi, MD           Title: Director, Technology
Licensing Office   Title: President and CEO

 

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SECOND AMENDMENT

 

This Second Amendment, effective as of the date set forth above the signatures
of the parties below, amends the Amended and Restated Exclusive Patent License
Agreement dated May 23, 2011, as amended by the First Amendment on May 15, 2012
(the “LICENSE AGREEMENT”) between the Massachusetts Institute of Technology, a
Massachusetts corporation having its principal office at 77 Massachusetts
Avenue, Cambridge, Massachusetts, 02139 ("M.I.T.") and Arch Therapeutics, Inc.,
a Massachusetts corporation, with a principal place of business at 1 Chieftain
Lane, Natick, MA 01760 (“COMPANY”).

 

WHEREAS, M.I.T. and COMPANY wish to modify the provisions of the LICENSE
AGREEMENT to account for certain unmet financial obligations and diligence
requirements by COMPANY;

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereby agree as follows:

 

1. COMPANY currently owes M.I.T. approximately $120,003 in patent costs incurred
prior to December 31, 2012. For the period beginning February 28, 2013 and
ending April 30, 2013, M.I.T. and COMPANY agree that COMPANY shall reimburse
M.I.T. for these expenses according to the following schedule:

 

a. Payment of $12,000, which is approximately equal to ten percent (10%) of the
outstanding patent costs, by February 28, 2013.

 

b. Payment of $24,000, which is approximately equal to twenty percent (20%) of
the outstanding patent costs, by March 31, 2013.

 

c. Payment of the remaining outstanding patent costs incurred prior to December
31, 2012, which approximately equals $84,003 by April 30, 2013.

 

2. COMPANY currently owes M.I.T. the $25,000 license maintenance fee due January
1, 2013, as set forth in Section 4.1(b) of the LICENSE AGREEMENT. M.I.T. and
COMPANY agree that COMPANY shall pay such fee by April 30, 2013.

 

48

 

 

3. Effective January 1, 2013, COMPANY shall provide M.I.T. with advance payment
of all newly incurred patent costs, as evidenced by M.I.T.’s receipt of such
amounts either (a) at least ten (10) business days after COMPANY has requested
that M.I.T. proceed with the patent action, or (b) at least fifteen (15)
business days prior to the expected date of filing of the relevant material with
the applicable patent office, as shall be determined at M.I.T.’s sole
discretion. Such practice shall continue until (i) all outstanding costs due
under the LICENSE AGREEMENT have been fully paid, as set forth in Sections 1and
2 above, and (ii) COMPANY has been fully compliant with the advance payment of
patent expenses in accordance with this Section 2 for a period of six (6) months
after the effective date of this Second Amendment.

 

4. Section 6.3(d) of the LICENSE AGREEMENT is hereby deleted in its entirety and
replaced with the following:

 

(d) COMPANY shall reimburse all amounts due pursuant to this Section 6.3 within
thirty (30) days of invoicing; late payments shall accrue interest pursuant to
Section 4.3(c). In all instances, M.I.T. shall pay the fees prescribed for large
entities to the United States Patent and Trademark Office.

 

5. Section 3.1(e) of the LICENSE AGREEMENT is hereby deleted in its entirety and
replaced with the following:

 

(e) (i) Notwithstanding Section 3.1(d) and any funds raised prior to May 15,
2012, COMPANY shall raise additional capital of at least Two Million Dollars
($2,000,000) of cash proceeds by April 30, 2013, provided that at least forty
percent (40%) of such cash proceeds are able to be used for general and
administrative costs.

 

(e) (ii) Notwithstanding Section 3.1(d) and any amounts raised prior to May 15,
2012, COMPANY shall raise additional capital of at least Five Million Dollars
($5,000,000) of cash proceeds by September 30, 2014, provided that at least
forty percent (40%) of such cash proceeds are able to be used for general and
administrative costs.

 

For clarity, the parties acknowledge and agree that the funding amount indicated
in the diligence requirement set forth in Section 3.1(e)(i) is not intended to
reflect aggregate capital raised; for example, the Two Million Dollars that
shall be raised by April 30, 2013 pursuant to Section 3.1(e)(i) shall not
include any amounts that were raised prior to May 15, 2012.

 

49

 

 

6. During the month of February 2013, COMPANY shall introduce M.I.T. to
potential investors in COMPANY in connection with the fundraising described in
Section 3.1(e)(i) of the LICENSE AGREEMENT, as amended herein, and shall
facilitate scheduling meetings between M.I.T. and such investors, as requested
by M.I.T.

 

7. Pursuant to Section 4.1(i), 46,700 shares of Common Stock of COMPANY were due
to M.I.T. on the Effective Date of the LICENSE AGREEMENT. COMPANY shall issue
these shares, as well as any additional equity due to M.I.T., by March 31, 2013.

 

8. Failure of COMPANY to meet any of the obligations set forth in this Second
Amendment will result in termination of the LICENSE AGREEMENT, effective
immediately, with no opportunity to cure.

 

9. Except as specifically modified or amended hereby, all other terms and
conditions of the LICENSE AGREEMENT shall remain unchanged and in full force and
effect. Capitalized terms used herein and not defined shall have the meanings
set forth in the LICENSE AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed
under seal by their duly authorized representatives.

 

The Effective Date of this Second Amendment is February 1, 2013.

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY   ARCH THERAPEUTICS, INC.                
    By:  /s/ Lita Nelson   By: /s/ Terrence W. Norchi, M.D           Name: Lita
Nelson   Name: Terrence W. Norchi, MD           Title: Director, Technology
Licensing Office   Title: President and CEO

 

50

 

 

THIRD AMENDMENT

 

This Third Amendment, effective as of the date set forth above the signatures of
the parties below, amends the Amended and Restated Exclusive Patent License
Agreement dated May 23, 2011, as amended by the First Amendment dated May 15,
2012 and the Second Amendment dated February 1, 2013 (the “LICENSE AGREEMENT”)
between the Massachusetts Institute of Technology, a Massachusetts corporation
having its principal office at 77 Massachusetts Avenue, Cambridge,
Massachusetts, 02139 (“M.I.T.”) and Arch Therapeutics, Inc., a Massachusetts
corporation, with a principal place of business at 1 Chieftain Lane, Natick MA
01760 (“COMPANY”).

 

WHEREAS, COMPANY has represented to M.I.T. that COMPANY has made substantial
progress towards raising capital in order to meet certain obligations set forth
in the LICENSE AGREEMENT, including the financial obligations and diligence
requirements set forth in the Second Amendment to the LICENSE AGREEMENT;

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereby agree as follows:

 

1.COMPANY represents and warrants to M.I.T. that:

 

a.In December 2012, COMPANY was awarded a loan from the Massachusetts Life
Sciences Center (the “Center”) Accelerator Loan Program in the amount of One
Million dollars ($1,000,000) (the “MLSC FUNDS”), receivable by COMPANY, subject
to the following conditions:

 

                                                  i.      COMPANY must raise an
additional One Million Five Hundred Thousand dollars ($1,500,000) of new debt or
equity by April 30, 2013, not including any debt or equity existing prior to
December 1, 2012; and

 

                                                ii.      An additional round of
diligence satisfactory to the Center in its sole discretion.

 

b.COMPANY has Raised One Million Five Hundred Thousand dollars ($1,500,000) of
cash proceeds from debt or equity, inclusive of convertible debt, (the “INVESTOR
FUNDS”) between December 1, 2012 and April 30, 2013 which funds are in COMPANY’s
own accounts.

 

51

 

 

c.At least forty percent (40%) of the total of the MLSC FUNDS and the INVESTOR
FUNDS are able to be used for general and administrative costs.

 

d.COMPANY has signed a binding letter of intent with an investor (“COLDSTREAM”),
who shall invest One Million Two Hundred Thousand dollars ($1,200,000) by April
30, 2013 followed by an additional Eight Hundred Thousand dollars ($800,000) by
approximately April 30, 2014. COLDSTREAM has funded $1,200,000 to COMPANY as of
April 29, 2013 which funds are included in the INVESTOR FUNDS described in
Section 1.b. above.

 

2. In view of COMPANY’s representations set forth in Section 1 above, M.I.T.
hereby agrees to extend the April 30, 2013 deadline set forth in Section
3.1(e)(i) of the LICENSE AGREEMENT until June 30, 2013 to allow COMPANY to
execute the Massachusetts Life Sciences Center Life Sciences Accelerator Funding
Agreement.

 

3. Concurrent with the signing of this Third Amendment, on April 30, 2013
COMPANY shall pay to M.I.T. the following amount:

 

a.The $25,000 license maintenance fee (and associated interest of $109.38) due
January 1, 2013, as set forth in Section 4.1(b) of the LICENSE AGREEMENT.

 

4. On or before May 6, 2013, COMPANY shall pay to M.I.T. the following amounts:

 

a.Outstanding patent costs (and associated interest) incurred prior to December
31, 2012 in the amount of $84,303.22.

 

b.Outstanding patent costs incurred as of December 31, 2012 (and associated
interest) in the amount of $29,879.71.

 

c.Pre-payment of patent expenses associated with South Korean patent application
number 10-2010-7019627 in the amount of $12,000.

 

5. COMPANY acknowledges and agrees that it shall continue to comply with the
advanced payment of patent costs as described in Section 3 of the Second
Amendment to the LICENSE AGREEMENT.

 

6. Pursuant to Section 4.1(i), COMPANY shall issue any additional shares of
COMPANY’s Common Stock owed to M.I.T. by June 30, 2013.

 

52

 

 

7. Failure of COMPANY to meet any of the obligations set forth in this Third
Amendment will result in termination of the LICENSE AGREEMENT, effective
immediately, with no opportunity to cure.

 

8. Except as specifically modified or amended hereby, all other terms and
conditions of the LICENESE AGREEMENT shall remain unchanged and in full force
and effect. Capitalized terms used herein and not defined shall have the
meanings set forth in the LICENSE AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused this Third Amendment to be executed
under seal by their duly authorized representatives.

 

The Effective Date of this Third Amendment is April 30, 2013.

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY   ARCH THERAPEUTICS, INC.                
    By: /s/ John H. Turner, Jr.   By: /s/ Terrence W. Norchi, M.D          
Name: John H. Turner, Jr.   Name: Terrence W. Norchi, MD           Title:
Associate Director, Technology Licensing Office   Title: President and CEO

 

53

 

 

LETTER AGREEMENT

 

This Letter Agreement, effective as of the date set forth above the signatures
of the parties below, confirms the understanding between the Massachusetts
Institute of Technology, a Massachusetts corporation having its principal office
at 77 Massachusetts Avenue, Cambridge, Massachusetts, 02139 (“M.I.T.”) and Arch
Therapeutics, Inc., a Massachusetts corporation, with a principal place of
business at 1 Chieftain Lane, Natick MA 01760 (“COMPANY”), with respect to the
Amended and Restated Exclusive Patent License Agreement between M.I.T. and
COMPANY dated May 23, 2011, as amended by the First Amendment dated May 15,
2012, the Second Amendment dated February 1, 2013 and the Third Amendment dated
April 30, 2013 (the “LICENSE AGREEMENT”). Capitalized terms used herein and not
defined shall have the meanings set forth in the LICENSE AGREEMENT.

 

WHEREAS, COMPANY has represented to M.I.T. that COMPANY plans to undergo a
reverse triangular merger with Arch Therapeutics, Inc., a Nevada corporation
(formerly known as Almah, Inc.) (“Parent”), which is a publicly traded “shell
company,” as that term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the “Merger”);

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereby agree as follows:

 

1.COMPANY represents and warrants to M.I.T. that the current and pro forma
capitalization table attached as Exhibit 1 hereto accurately reflects issuances
included in the Funding Threshold through the date hereof and is true and
correct on a Fully Diluted Basis as of the date hereof (with respect to the
current capitalization table) and as of immediately following the closing of the
Merger (with respect to the pro forma capitalization table).

 

2.COMPANY and M.I.T. hereby agree that, subject to and upon the closing of the
Merger, M.I.T. shall be entitled to receive, and COMPANY shall cause to be
issued to M.I.T., an aggregate number of shares equal to Four Percent (4%), or
Two Million Seven Hundred and Twenty Thousand (2,720,000) shares, of the common
stock of Parent on a Fully Diluted Basis as of immediately following the closing
of the Merger.

 

3.COMPANY shall deliver the shares due under Section 2 above to M.I.T. within
fifteen (15) days of the closing of the Merger.

 

4.Upon the delivery of the shares to M.I.T. pursuant to Section 3 above, M.I.T.
agrees that COMPANY has fulfilled in entirety the obligations under Section
4.1(i) of the LICENSE AGREEMENT, and that COMPANY has no further obligations to
M.I.T. thereunder.

 

5.As of the Effective Date of this Letter Agreement, M.I.T. acknowledges that
COMPANY has complied with Sections 1a, 1b, 3, 6 and 7 of the Second Amendment to
the LICENSE AGREEMENT, and Sections 3, 4 and 5 of the Third Amendment to the
LICENSE AGREEMENT.

 

54

 

 

6.As of the Effective Date of this Letter Agreement, solely with respect to
immediate termination with no opportunity to cure in the event of COMPANY
failing to meet the obligations set forth in the Second Amendment to the LICENSE
AGREEMENT and the Third Amendment to the LICENSE AGREEMENT, respectively, M.I.T.
agrees that Section 8 of the Second Amendment to the LICENSE AGREEMENT and
Section 7 of the Third Amendment to the LICENSE AGREEMENT, respectively, shall
no longer apply. The Parties acknowledge and agree that any issues regarding
termination, including for default, shall be governed as set forth in the
relevant provisions of the LICENSE AGREEMENT.

 

7.M.I.T. hereby agrees (a) to attend, in person or by proxy, the special meeting
of the shareholders of Arch to be held on or about June 14, 2013 for the purpose
of voting on the Merger (the “Meeting”), and (b) to vote in favor of the Merger
at the Meeting.

 

8.No amendment or modification of or supplement to the terms of this Letter
Agreement shall be binding on a party unless reduced to writing and signed by
both parties. Any waiver of any rights or failure to act in a specific instance
shall not operate or be construed as an agreement to waive any rights or fail to
act in any other instance, whether or not similar.

 

9.This Letter Agreement, together with the LICENSE AGREEMENT, sets forth the
entire agreement among the Parties as to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, between the Parties as to
the subject matter hereof. This Letter Agreement and all disputes arising out of
or related to this Letter Agreement, or the performance, enforcement, breach or
termination hereof, and any remedies relating thereto, shall be construed,
governed, interpreted and applied in accordance with the laws of the
Commonwealth of Massachusetts, U.S.A., without regard to conflict of laws
principles. Except as expressly set forth in this Letter Agreement, all of the
terms and provisions of the LICENSE AGREEMENT shall remain unchanged and
unmodified, and the LICENSE AGREEMENT as amended hereby shall remain in full
force and effect and be read together and construed with this Letter Agreement.

 

{Signature Page Follows}

 

55

 

 

IN WITNESS WHEREOF, the parties have caused this Letter Agreement to be executed
under seal by their duly authorized representatives.

 

The Effective Date of this Letter Agreement is June 10, 2013.

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY   ARCH THERAPEUTICS, INC.                
    By:  /s/ Lita Nelson   By: /s/ Terrence W. Norchi, M.D           Name: Lita
Nelson   Name: Terrence W. Norchi, MD           Title: Director, Technology
Licensing Office   Title: President and CEO

 

56