Exhibit 10.31

 

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

 

LICENSE AGREEMENT

 

THIS EXCLUSIVE LICENSE AGREEMENT (the “Agreement”) is made this 21 day of June,
2006 by and between UNIVERSITA DEGLI STUDI DI ROMA “LA SAPIENZA” (fiscal code
80209930587, VAT No. 02133771002), located in Rome, piazzale Aldo Moro, 00185,
Rome, Italy (“LICENSOR”), and CAPRICOR INC., a corporation organized and
existing under the laws of the State of Delaware and with principal place of
business located at 2415 Old Bosley Road, Lutherville, Maryland 21093, United
States of America (“LICENSEE”). (LICENSOR and LICENSEE each a “Party”; and
together the “Parties” herein).

 

WHEREAS, LICENSOR is owner by assignment from […***…]; and

 

WHEREAS, LICENSOR is owner by assignment from the Inventors of all their right,
title and interest in the TECHNOLOGY as defined below; and

 

WHEREAS, LICENSEE wishes to obtain an exclusive license in the TERRITORY to
practice the above-referenced invention covered by LICENSED PATENT RIGHTS in the
United States and in certain foreign countries, and to make, have made, use,
have used, sell and have sold in the commercial market the products made in
accordance therewith; and

 

WHEREAS, LICENSOR wishes to grant such a license to LICENSEE in accordance with
the terms of the Agreement.

 

NOW, THEREFORE in consideration of the foregoing premises, the Parties agree as
follows:

 

I. DEFINITIONS

 

1.1AFFILIATES means any corporation, firm, partnership or other entity, whether
de jure or de facto, which directly or indirectly owns, is owned by or is under
common ownership with a party to this Agreement to the extent of at least fifty
percent (50%) of the equity (or such lesser percentage which is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction)
having the power to vote on or direct the affaire of the entity.

 

1.2EFFECTIVE DATE is the date first set Forth above,

 

1.3FIELD OF USE means all fields.

 

1.4LICENSED PATENT RIGHTS means patent rights to any subject matter claimed in
or covered by any of the following: […***…] (both applications together the
“Parent Applications” as set forth in Appendix A); includes any continuations
and divisionals, continuations-in-part, patents issuing thereon and all
reissues, re-examinations, divisions or extensions thereof, and any and all
foreign patents and patent applications

 

*Confidential Treatment Requested

 

 

 

 

1.5LICENSED PRODUCT means any process or method, material, compositions, drug,
or other product, the manufacture, use, or sale of which would constitute, but
for the license granted to LICENSEE pursuant to this Agreement, an infringement
of a claim of Patent Rights (infringement shall include, but is not limited to,
direct, contributory, or inducement to infringe).

 

1.6NET SALES REVENUES means the gross sales revenues and fees billed by LICENSEE
and AFFILIATES from the sale of Licensed Product less trade discounts allowed,
refunds, returns and recalls, amounts allowed for bad debt, outward bound
transportation and delivery charges, transportation and product liability
insurance, government- mandated retroactive price reductions, tariff duties, and
sales taxes.

 

In the event that LICENSEE and/or AFFILIATES sell LICENSED PRODUCT(S) in
combination with a device for delivery or as part of a kit and such other
devices or components (collectively “Other Components”), then NET SALES REVENUES
for purposes of royalty payments shall be calculated using one of the following
methods: (x) if all LICENSED PRODUCT(S) and Other Components contained in the
combination are available separately, then NET SALES REVENUES, shall be
calculated by multiplying the NET SALES REVENUES of the combination by the
fraction A/A+B, where A is the invoice price of all LICENSED PRODUCT(S) in the
combination and B is the invoice price of all Other Components in the
combination; (y) if the combination includes Other Components which are not sold
separately (but all LICENSED PRODUCT(S) contained in the combination are
available separately), then NET SALES REVENUES shall be calculated by
multiplying the NET SALES REVENUES of the combination by the fraction A/C, where
A is defined above and C is the invoice price of the combination; and (z) if the
LICENSED PRODUCT(S) and the Other Components in the combination are not sold or
available separately, then NET SALES REVENUES for purposes of determining
royalties on the combination shall be calculated by multiplying NET SALES
REVENUES of the combination by the fraction D/D+E, where D is the fully burdened
manufacturing cost of LICENSED PRODUCT(S) at the point of assembly into the
combination and E is the fully burdened manufacturing cost of the Other
Components included in the combination at such point.

 

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

 

1.7TERRITORY means worldwide.

 

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II.  

 

II. license grant

 

2.1LICENSOR hereby grants to LICENSEE and LICENSEE accepts, subject to the terms
and conditions hereof, an exclusive right in the FIELD OF USE, in the TERRITORY
to make, have made, use, have used, export, import, offer for sale, sell, and
have sold the Licensed Products in Italy, the United States, and worldwide in
the Exclusive Field, subject to Retained Rights (below) and freely and fully
sublicenseable-LICENSEE shall have a […***…] first right of negotiation to have
the reasonable opportunity to license from LICENSOR any new and separate patent
applications assigned to LICENSOR by any of the Inventors, not falling within
the definition of “PATENT RIGHTS,” but utilizing (or enabling the use of)
cardiac stem cells in cardiac care.

 

2.2LICENSOR also grants to LICENSEE the right to issue sublicenses to third
parties to make, have made, export, import, use, have used, sell, have sold, and
offer for sale LICENSED PRODUCTS as long as LICENSEE has current exclusive
rights thereto under this Agreement and shall compensate LICENSOR pursuant to
Section 3.4 of this Agreement for sublicenses.

 

2.3LICENSOR, subject to Section 10.4, reserves and retains the right (and the
rights granted to LICENSEE herein shall be limited accordingly) to make, use,
and practice for its own internal research by (only) the Inventors and/or for
educational purposes the inventions falling within the scope of the LICENSED
PATENT RIGHTS.

 

III. FINANCIAL OBLIGATIONS, PAYMENT AND REPORTS

 

3.1LICENSEE shall pay to LICENSOR a License Issue Fee of […***…]:

 

-  the first installment of […***…] shall be transferred within […***…]
immediately following the EFFECTIVE DATE;

-  the second installment of […***…] will be due and payable within […***…]
following the EFFECTIVE DATE.

 

3.2LICENSEE shall assure to LICENSOR Minimum Annual Royalties Guaranteed
described below:

-  […***…] per annum for the rolling two years immediately starting with the
third coming year since the EFFECTIVE DATE;

-  […***…] per annum starting with the third year and during the period this
Agreement is in force as set forth below.

 

Minimum Annual Royalties are fully creditable.

 

3.3LICENSEE shall pay LICENSOR […***…] of all royalties received as a result of
sublicenses granted pursuant to Section 2.2 of this Agreement (which royalties
for the purpose of this Section 3.3 shall be “net” of any third-party royalties
paid by LICENSEE (or by any AFFILIATE or sublicensee on behalf of LICENSEE) for
any such third-party royalties due to be paid under a license agreement from any
such third party to LICENSEE).

 

*Confidential Treatment Requested

 

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3.4Royalties shall accrue when LICENSED PRODUCTS, with respect to the NET SALES
REVENUES of which earned royalty payments are required under this Agreement, are
invoiced to the customer by LICENSEE or an AFFILIATE.

 

3.5LICENSEE shall provide LICENSOR with semestral reports as to its R&D,
regulatory, and commercialization progress.

 

3.6LICENSEE shall be responsible for the collection and payment of all royalties
owed to LICENSOR resulting from any sublicense(s) granted by LICENSEE.

 

3.7LICENSEE understands and agrees that a declaration of invalidity by a court
of competent jurisdiction of any patent under the LICENSED PATENT RIGHTS shall
not be prejudicial to this Agreement with respect to royalties previously paid
to LICENSOR by LICENSEE. Therefore, should any such patent be declared invalid,
LICENSOR shall have no obligation to repay to LICENSEE the license issue fee nor
any portion of the royalties already received from LICENSEE in accordance with
the provisions of this Agreement.

 

3.8LICENSEE shall maintain at its principal office usual books of account and
records showing its actions under this Agreement. Such books and records shall
be open to inspection and copying, upon reasonable notice during usual business
hours by an independent certified public accountant reasonably acceptable to
LICENSEE for two (2) years after the calendar quarter to which they pertain, for
purposes of verifying the accuracy of the royalties paid by LICENSEE under this
Agreement at LICENSOR’s expense. Such audits shall not occur more frequently
than once during any period of one year. LICENSOR and any such independent
certified public accountant shall treat LICENSEE’s books and records as
confidential.

 

3.9In the event that any payment due under this Agreement is not made when due,
the payment shall accrue interest from the date due at the rate of 0.8% per
month; provided, however, that in no event shall such rate exceed the maximum
legal annual interest rate.

 

3.10Until such time as LICENSOR provides LICENSEE with written notice to the
contrary, all payments to the LICENSOR by LICENSEE pursuant to this Agreement
shall be paid […***…].

 

3.11Royalties and payments arising from sublicensee royalties shall be paid to
LICENSOR on a quarterly basis on or before each April 30, My 31, October 31, and
January 31 for the preceding quarter ending upon March 31, June 30,
September 30, and December 31, respectively, and shall be paid with a report
detailing such royalties and payments.

 

3.12In accordance with Sections 3.1, 3.2 and 3.3 above, License Issue Fee and
Royalties due by LICESEE to the LICENSOR shall be secured by a first demand
irrevocable bank guarantee (with a branch in Italy). The bank guarantee shall be
presented to LICENSOR within the first rolling month since the EFFECTIVE DATE
and shall terminate automatically in any case of termination of the Agreement.

 

IV. PATENT PROSECUTION

 

 

*Confidential Treatment Requested

 

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4.1During the term of this Agreement, LICENSOR shall control patent filing,
prosecution and maintenance, upon consultation with LICENSEE. Both Parties shall
instruct patent counsel to cross copy each other with copies of all documents
(or drafts thereof) pertaining to the filing, prosecution or maintenance of the
Patent Rights to enable both parties to have a meaningful opportunity to review
and comment thereon.

 

4.2During the period that this Agreement is in force:

a.If LICENSEE desires to have a patent application filed in any country(ies) in
which a patent application is not then being prosecuted LICENSEE shall notify
LICENSOR, in writing, and shall bear the responsibility to file, prosecute such
applications and maintain the resulting patents.

b.LICENSOR shall diligently prosecute and maintain the LICENSED PATENT RIGHTS
(including any additional patents included by virtue of Section 4.2a herein)
using its counsel of choice. LICENSOR shall provide LICENSEE with copies of all
relevant documentation so that LICENSEE may be informed and apprised of the
continuing prosecution and LICENSEE agrees to keep such documentation
confidential.

c.All invoices relating to the reasonable costs of prosecution and maintenance
of patents in the Selected Countries shall be sent directly to LICENSEE by
LICENSOR’s counsel of choice. LICENSEE shall have thirty (30) days from the date
of LICENSEE’s receipt of such invoices to make payment to LICENSOR’s counsel of
choice.

d.It shall be the responsibility of LICENSOR, whether directly or through
LICENSOR’s counsel of choice, to notify and keep LICENSEE informed of the status
of all pending and issued claims under the LICENSED PATENT RIGHTS.

 

V. INFRINGEMENT

 

5.1Each Party shall promptly notify the other Party in writing of any suspected
infringement(s) of the LICENSED PATENT RIGHTS and shall inform the other Party
of any evidence of such infringement(s).

 

5.2LICENSOR shall have the first right to enforce any patent within Patent
Rights and the Field against any infringement or alleged infringement. LICENSOR
shall reasonably cooperate in any such litigation at LICENSEE’s expense,
including being named as a party plaintiff. If LICENSOR does not take all
necessary action to enforce a particular patent, LICENSEE has the option (but
not the obligation) to do so.

 

VI. TERM AND TERMINATION

 

6.1This Agreement, unless extended or earlier terminated as provided herein,
shall remain in effect until the later of: (a) the last claim of any patent or
patent application comprising LICENSED PATENTS RIGHTS has expired or been
abandoned

 

6.2This AGREEMENT may be terminated immediately by either party upon written
notice should the other party become insolvent, file a petition under any
bankruptcy or insolvency act, or have any such petition filed against it, or
offer any general composition to its creditors, because of the happening of such
act, event or offer.

 

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6.3LICENSEE may terminate, for any reason, upon giving LICENSOR ninety (90) days
written notice. Prior obligations, such as payment of owed royalties, are not
affected by termination.

 

6.4Termination of this Agreement shall not terminate LICENSEE’s obligation to
file all reports and to pay all royalties with respect to LICENSED PRODUCTS
which shall have accrued hereunder.

 

6.5All rights and licenses granted under or pursuant to this Agreement are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, as amended (the “Code”), licenses of rights to “intellectual
property” as defined under Section 101 of the Code. The parties agree that
LICENSEE is a licensee of such rights under this Agreement and shall retain and
may fully exercise all rights under the Code. The parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against LICENSOR
or its assignee under the Code, LICENSEE shall be entitled to (x) take control
of the patent prosecution of the Patent Rights and (y) receive a complete
duplicate of (or complete access to, as appropriate) any such intellectual
properly and all embodiments of such intellectual property. Such intellectual
property and embodiments, if not already in LICENSEE’s possession, shall be,
within ten (10) days of the commencement of such proceeding, delivered to it
upon LICENSOR’s receipt of a request therefore, unless LICENSOR (or a trustee on
behalf of LICENSOR) elected to continue to perform all of its obligations under
this Agreement. Nothing herein shall constitute LICENSEE’s acquiescence or
agreement that all or any portion of this Agreement is subject to rejection.

 

VII. BREACH AND CURE

 

7.1In addition to applicable legal standards, LICENSEE shall be in material
breach of this Agreement for failure to pay amounts due pursuant to Section III
(FINANCIAL OBLIGATIONS).

 

7.2Either party shall have the right to cure its material breach. The cure shall
be effected within a reasonable time but in no event later than ninety (90) days
after written notice of breach given by the non-breaching party.

 

VIII. WARRANTY

 

8.1LICENSOR represents and warrants that: (a) it owns the entire right, title
and interest in the patent applications or patents comprising the LICENSED
PATENT RIGHTS in the FIELD OF USE; (b) it has the power and authority to grant
licenses under said LICENSED PATENT RIGHTS; (c) it has not made and shall not
make any commitments to third parties inconsistent with or in derogation of this
Agreement; (d) it shall advise LICENSEE within thirty (30) days (or more
promptly if and as practicable) of learning of any legal action or proceeding
being instituted against LICENSOR relating to the LICENSED PATENT RIGHTS; and,
(e) to the knowledge of LICENSOR, the LICENSED PATENTS RIGHTS are valid and
enforceable and have not been challenged by a third party in any judicial or
administrative proceeding.

 

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8.2Each Party represents and warrants to the other that (a) such Party is an
entity or corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized; (b) such Party has
the legal power and authority to execute, deliver and perform this Agreement;
(c) the execution, delivery and performance by such Party of this Agreement has
been duly authorized; (d) this Agreement constitutes the legal, valid and
binding obligation of such Party, enforceable against such Party in accordance
with its terms; and (e) the execution, delivery and performance of this
Agreement will not cause or result in a violation of any law, of such Party’s
charter documents, or of any contract by which such Party is bound.

 

IX. COMPLIANCE WITH GOVERNMENTAL OBLIGATIONS

 

In exercising its rights in this Agreement, LICENSEE shall fully comply, at its
own expense, with all governmental requirements and binding requests directed to
it, and will provide all information and assistance necessary to comply with the
governmental requests. Failure to take necessary action and to comply with said
requirements and requests shall be considered a material breach of this
Agreement. LICENSOR disclaims any obligations or liabilities arising under the
license provisions of this Agreement if LICENSEE is charged in a governmental
action for not complying with or fails to comply with any governmental
regulations.

 

X. CONFIDENTIALITY

 

10.1During the course of negotiating this Agreement, the Parties may have
exchanged confidential information and may continue to exchange such information
during the term of this Agreement With regard to the other Party’s Confidential
Information, the receiving Party must use the Confidential Information solely
for purposes of fulfilling its obligations under this Agreement and must
safeguard the Confidential Information against disclosure to others with the
same degree of care as each Party exercises with their own confidential
information of a similar nature, but in no event less than a reasonable degree
of care.

 

10.2The obligations of the recipient of the Confidential Information under this
Section X (CONFIDENTIALITY) do not apply to information:

a.that is now, or becomes in the future, public knowledge other than through
unauthorized acts or omissions of the recipient Party;

b.that is lawfully obtained by the recipient Party from a third party without
restrictions on use, duplication or disclosure;

c.that the recipient Party can demonstrate by written records was previously
known to the recipient Party or is developed by the recipient Party without
reference to the Confidential Information; or,

d.that is required to be disclosed by law, provided that the Party intending to
make a disclosure required by law will give written notification to the other
Party prior to such disclosure.

 

10.3Confidential Information covered by this Section X (CONFIDENTIALITY) must be
maintained as confidential for a period of […***…] after termination of this
Agreement.

 

*Confidential Treatment Requested

 

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10.4LICENSEE agrees LICENSOR and/or inventors may publish manuscripts,
abstractsor give seminars presenting the results of the research (by virtue of
Section 2.3 herein) after the proposed publication or presentation has been
notified in writing to LICENSEE thirty (30) days before.

 

XI. DISPUTE RESOLUTION

 

11.1This Agreement, including the performance and enforceability hereof, shall
be governed by and construed in accordance with the laws of Italy without regard
to the conflict of law provisions found therein.

 

11.2Both Parties will use reasonable efforts to reach an amicable negotiated
settlement of any dispute concerning the interpretation or operation of this
agreement. Disputes concerning this agreement shall not be litigated. If
negotiation fails to resolve a dispute within sixty (60) days, either Party can
require binding arbitration under the AAA International Arbitration Rules and
this Article XI (provided that any inventor, sublicense, patent infringer, or
other person or entity involved in such dispute either is already bound to
participate in the same binding arbitration process or agrees in writing to do
so, i.e., a Party cannot be bound to arbitration to resolve a dispute that is or
could also be the subject of a separate litigation proceeding). If the Parties
cannot agree within thirty (30) days on the choice of an arbitrator, each Party
shall appoint its own arbitrator and those arbitrators shall jointly appoint a
chairperson of an arbitral tribunal. Each Party shall be afforded reasonable
opportunity for pre-arbitration discovery. An arbitral award shall not include
punitive damages, costs, or interim measures. Each Party shall pay its own costs
and an equal share of all other costs of mediation and arbitration, except for
the exceptional circumstance in which an arbitral award may require the payment
of all costs by a Party who has brought a plainly frivolous dispute. Unless
otherwise agreed by the Parties when the occasion arises, arbitration shall be
held in Milan, Italy This provision survives the Termination of this Agreement.

 

XII. MISCELLANEOUS

 

12.1This Agreement sets forth the entire agreement between the parties
concerning the subject matter hereof and supersedes all previous and
contemporaneous representations and agreements, written or oral. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed on behalf of each party by an authorized representative.

 

12.2LICENSEE shall not assign or otherwise transfer, whether directly or
indirectly, in whole or in part this Agreement, voluntarily, involuntarily, or
by any other means (except to an AFFILIATE, or by operation of law including any
merger or consolidation, substantial change in ownership or control of
LICENSEE’s business), without the prior written consent of LICENSOR, which
consent shall not be unreasonably withheld. This restriction does not limit or
restrict LICENSEE’s rights under Sections 2.1 and 2.1 to sublicense. This
Agreement shall bind the Parties, their successors and their permitted assigns.

 

12.3This Agreement shall not be binding upon the Parties until it has been
signed below on behalf of each Party by an authorized representative, in which
event, it shall be effective as of the EFFECTIVE DATE.

 

 

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12.4Should any provision of this Agreement be held invalid, illegal or
unenforceable, by a court or other entity of competent jurisdiction, such
provision shall be considered void. All other provisions, rights and obligations
shall remain enforceable.

 

12.5No failure or delay by a party in exercising any of its rights or remedies
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or remedy preclude any other or farther exercise
thereof of any other right or remedy. The rights and remedies of the parties
provided in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.

 

12.6Headings used herein are for descriptive purposes only and shall not control
or alter the meaning of this Agreement as set forth in the text.

 

12.7This Agreement may be signed in counterparts, each of which together shall
constitute one and the same Agreement, binding on the parties as if each had
signed the same document. Any facsimile transmission of this Agreement that is
signed by an authorized representative of a party is legally binding and
enforceable and shall be recognized by the parties as an original document, but
the parties shall nevertheless make commercially reasonable efforts to obtain
original signatures.

 

          UNIVERSITA DEGLI STUDI DI     CAPRICOR INC. ROMA “LA SAPIENZA”        
          /s/ Renato Guarini     /s/ Eduardo Marbán       By: Eduardo Marban,
M.D., Ph.D.  By: Renato Guarini               President  Rector              
(SEAL)                 ATTEST:                 By: /s/ William E. Carlson      
  William E, Carlson, Esquire Secretary

 

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APPENDIX A
LICENSED PATENT RIGHTS

 

[…***…]

 

*Confidential Treatment Requested

 

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*Confidential Treatment Requested

 

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[…***…]

 

*Confidential Treatment Requested

 

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