Exhibit 10.1

Confidential treatment requested under 17 C.F.R. §§ 200.80(b)(4) and 230.406.
The confidential portions of this exhibit have been omitted and are marked
accordingly. The confidential portions have been filed separately with the
Securities and Exchange Commission pursuant to a Confidential Treatment Request.

PATENT LICENSE AGREEMENT

This Agreement is between the Board of Regents (“Board”) of The University of
Texas System (“System”), an agency of the State of Texas, whose address is 201
West 7th Street, Austin, Texas 78701, and Axogen Corporation., a corporation
having a principal place of business located at 2153 SE Hawthorne Road,
Gainesville, FL, 32641 (“Licensee”).

TABLE OF CONTENTS

 

1. RECITALS      3    2. DEFINITIONS      3    3. GRANT      5   

  3.1   EXCLUSIVE GRANT

     5   

  3.2   AFFILIATES

     5   

  3.3   SUBLICENSING

     5    4. FEES AND ROYALTIES      6   

  4.1   RUNNING ROYALTY

     6   

  4.2   PAST PATENT EXPENSES

     7   

  4.3   SUBLICENSEE FEES AND ROYALITES

     7   

  4.4   MILESTONE FEES AND MILESTONES

     8   

  4.5   ACTIVELY COMMERCIALIZE

     8    5. REPORTS AND PLANS      8   

  5.1   ROYALTY REPORTS

     8   

  5.2   PROGRESS REPORT AND COMMERCIALIZATION PLAN

     8    6. PAYMENT, RECORDS, AND AUDITS      9   

  6.1   PAYMENTS

     9   

  6.2   SALES OUTSIDE THE U.S.

     9   

  6.3   LATE PAYMENTS

     9   

  6.4   RECORDS

     9   

  6.5   AUDITING

     10    7. FUTURE PATENT EXPENSES AND PROSECUTION      10   

  7.1   FUTURE PATENT EXPENSES

     10   

  7.2   DEFAULT IN PAYMENT

     10   

  7.3   PATENT ATTORNEY

     10    8. TERM AND TERMINATION      11   

  8.1   TERMINATION AT END OF TERM

     11   

  8.2   TERMINATION BY LICENSEE

     11   

  8.3   TERMINATION BY BOARD

     12   

  8.4   OTHER CONDITIONS OF TERMINATION

     12   

  8.5   SURVIVAL

     12    9. CONFIDENTIALITY      13   

  9.1   PROTECTION AND MARKING

     13   

  9.2   NON-DISCLOSURE

     13   

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

  9.3   NON-USE

     13   

  9.4   COPIES

     13   

  9.5   CONTINUING OBLIGATIONS

     13   

  9.6   DEGREE OF CARE AND SURVIVAL OF OBLIGATIONS

     14   

  9.7   PUBLICATION BY UNIVERSITY

     14   

  9.8   COPYRIGHT NOTICE

     14    10. INFRINGEMENT AND LITIGATION      14   

10.1   NOTIFICATION

     14   

10.2   LICENSEE PROSECUTION RIGHTS

     14   

10.3   BOARD’S RIGHT TO INTERVENE

     14   

10.4   BOARD’S PROSECUTION RIGHTS

     15   

10.5   COOPERATION BETWEEN BOARD, UNIVERSITY, AND LICENSEE

     15    11. EXPORT COMPLIANCE      15    12. REPRESENTATIONS AND DISCLAIMERS
     16   

12.1   BOARD REPRESENTATION

     16   

12.2   GOVERNMENT RIGHTS

     16   

12.3   BOARD DISCLAIMERS

     16   

12.4   LICENSEE REPRESENTATIONS

     16    13. LIMIT OF LIABILITY      16    14. INDEMNIFICATION      17    15.
INSURANCE      17   

15.1   INSURANCE REQUIREMENTS

     17   

15.2   EVIDENCE OF INSURANCE AND NOTICE OF CHANGES

     17   

15.3   CONTINUING INSURANCE OBLIGATIONS

     17   

15.4   ADDITIONAL INSURANCE

     17    16. ASSIGNMENT      17    17. GOVERNMENTAL MARKINGS      18   

17.1   PATENT MARKING

     18   

17.2   GOVERNMENTAL APPROVALS AND MARKETING OF LICENSED PRODUCTS

     18   

17.3   FOREIGN REGISTRATION

     18    18. USE OF NAME      18   

18.1   BY LICENSEE

     18   

18.2   BY BOARD OR UNIVERSITY

     18    19. NOTICES      18    20. GENERAL PROVISIONS      19   

20.1   BINDING EFFECT

     19   

20.2   CONSTRUCTION OF AGREEMENT

     19   

20.3   COUNTERPARTS

     19   

20.4   ENFORCEMENT

     19   

20.5   COMPLIANCE WITH LAWS

     19   

20.6   E-MAILS

     19   

20.7   GOVERNING LAW

     19   

20.8   MODIFICATION

     19   

20.9   SEVERABILITY

     20   

20.10 SURVIVAL

     20   

20.11 THIRD PARTY BENEFICIARIES

     20   

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 2 of 30

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20.12 Waiver

     20   

Exhibit A: Licensed Patents

Exhibit B: Royalty Report

Exhibit C: Progress Report and Commercialization Plan

Exhibit D: Capitalization Table

 

1. Recitals

A. WHEREAS, Board owns rights to the Licensed Subject Matter that was developed
at The University of Texas at Austin (“University”), a component institution of
System; and

B. WHEREAS, Licensee desires to secure the right and license to use, develop,
manufacture, market, and commercialize the Licensed Subject Matter; and

C. WHEREAS, Board has determined that such use, development and
commercialization of the Licensed Subject Matter is in the public’s best
interest and is consistent with Board’s educational and research missions and
goals; and

D. WHEREAS, Board desires to have the Licensed Subject Matter developed and used
for the benefit of Licensee, Inventor, Board and the public as outlined in
Board’s Intellectual Property Policy.

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

 

2. Definitions

 

2.1 “Actively Commercialize” means having programs for: (i) research and
development for Licensed Product(s) and for obtaining any required regulatory
approvals for said Licensed Product(s), and (ii) in due course, for
manufacturing, marketing and Sales of Licensed Product(s), all in a Licensed
Field in the Licensed Territory, and all in accordance with Licensee’s Progress
Report and Commercialization Plan.

 

2.2 “Affiliate” means any Entity more than 50% owned by Licensee, any Entity
which owns more than 50% of Licensee, or any Entity that is more than 50% owned
by an Entity that owns more than 50% of Licensee.

 

2.3 “Board’s Intellectual Property Policy” means The University of Texas
Regents’ Rule and Regulations, Part Two, Chapter XII.

 

2.4 “Confidential Information” means all information that is of a confidential
and proprietary nature to University or to Licensee and its Affiliates, as
further discussed in Section 9 (“Confidentiality”), including information
disclosed during any discussions or negotiations pertaining to this Agreement,
or information that is disclosed pursuant to this Agreement.

 

2.5 “Effective Date” means July 19, 2005.

 

2.6 “Entity” means a corporation, an association, a joint venture, a
partnership, a trust, a business, an institution, an individual, a government or
political subdivision thereof, including an agency, or any other organization
that can exercise independent legal standing.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 3 of 30

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2.7 “Fair Market Value” means the cash consideration which Licensee or its
Sublicensee would realize from an unaffiliated, unrelated buyer in an arm’s
length Sale of an identical item sold in the same quantity, under the same
terms, and at the same time and place.

 

2.8 “Indemnitees” will have the meaning set forth in Section 15
(“Indemnification”).

 

2.9 “Insolvent” means being unable to meet one’s debt obligations to another
Entity as such debt obligations become due and not being able to provide
reasonable financial assurances of becoming able to meet such obligations.

 

2.10 “Inventor/Principal Investigator” means Dr. Christine Schmidt.

 

2.11 “Valid and Issued Claim” means a valid claim that is included in a patent
issued and approved from the relevant patent authority in the relevant territory
and is included in Licensed Patents.

 

2.12 “Licensed Field” means all applications relating to nerve regeneration and
repair.

 

2.13 “Licensed Patents” means those United States patent applications and
patents listed in Exhibit A and any corresponding foreign patent applications
and patents, and any improvements, divisionals, continuations, reissues, and
reexaminations thereof to the extent that the claims are directed to the subject
matter within the Licensed Field.

 

2.14 “Licensed Product(s)” means any product(s) whose manufacture, use or sale
is covered by any Valid and Issued claim of the Licensed Patents; or product(s)
which are made using a process or machine covered by a Valid and Issued claim of
the Licensed Patents; or product(s) made, at least in part, using Valid or
Issued Claims of the Licensed Patents. Licensed Product(s) will also include any
service rendered through the use of a product, process or machine covered by any
Valid and Issued claim of the Licensed Patent.

 

2.15 “Licensed Subject Matter” means the Licensed Patents and Licensed
Technology within the Licensed Field.

 

2.16 “Licensed Technology” means technical data and information created by
Inventor at University until two years after the Effective Date that are not
included in the Licensed Patents but which are necessary for practicing the
invention covered by Licensed Patents within the Licensed Field.

 

2.17 “Licensed Territory” means worldwide, subject to the then-current
applicable article, item, service, technology, and technical data-specific
requirements of the U.S. export laws and regulations.

 

2.18 “Net Sales” means the gross revenue, monies or cash equivalent, received by
Licensee, Affiliates or Sublicensees from the Sale of Licensed Products less the
following items directly attributable to the Sale of such Licensed Products by
Licensee, Affiliates or Sublicensees, and specifically identified on the
invoice, included in the gross revenues, and borne by the seller: (a) discounts,
rebates, or returns sales, use, customs, duties or other similar taxes and
handling charges and allowances; (b) sales and use taxes actually paid by the
seller;; .and (c) outbound transportation expenses.

 

2.19 “Progress Report and Commercialization Plan” means the progress report and
commercialization plan due from Licensee to University in the form set forth in
Exhibit B as referenced in section 6.2.

 

2.20 “Royalty Report” means the report due from Licensee to University in the
form set forth in Exhibit C.

 

2.21

“Sale or Sold” means any bona fide transaction for which consideration is
received or expected for the sale, use, lease, transfer, or other disposition of
Licensed Product(s). A Sale will be deemed completed at

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 4 of 30

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  the time Licensee or its Affiliate or its Sublicensee invoices, ships, or
receives payment for such Licensed Product(s), whichever occurs first.

 

2.22 “Sublicensee” means any party other than an Affiliate that enters into an
agreement or arrangement with Licensee or receives a license grant from Licensee
under the Licensed Patents to manufacture, have manufactured, offer for sale,
sell, lease, and/or import the Licensed Products.

 

2.23 “Sublicensee Breach” is defined in Section 3.3(d)

 

2.24 “Sublicensee Fees” are defined in Section 4.5

 

2.25 “Term of this Agreement” will commence on the Effective Date and continue
until the date of expiration of the last to expire of the Licensed Patents.

 

3. Grant

 

3.1 Exclusive Grant

 

  a. Board grants to Licensee a royalty-bearing, exclusive license under
Licensed Patents to manufacture, have manufactured, offer for sale, sell, lease,
and/or import Licensed Products in the Licensed Field in the Licensed Territory.
This grant is subject to the payment by Licensee to University of all
consideration required under this Agreement, to any rights of the Government of
the United States as set forth in Section 12.2 (“Government Rights”), and is
further subject to rights retained by Board and University to:

 

  i. publish the general scientific findings from research conducted in whole or
in part at University or otherwise within the System related to Licensed Subject
Matter subject to the terms of Section 9 (“Confidentiality”); and

 

  ii. use the Licensed Subject Matter for research, teaching and other
educationally-related purposes without any royalty obligations for such use.

 

  b. Board grants to Licensee a royalty-bearing, exclusive license under the
Licensed Technology to manufacture, have manufactured, offer for sale, sell,
lease, and/or import Licensed Products in the Licensed Field in the Licensed
Territory.

 

3.2 Affiliates

Licensee may extend the license granted herein to any Affiliate if the Affiliate
consents in writing to be bound by this Agreement to the same extent as
Licensee; provided, however, that any fee or other consideration paid to
Licensee in consideration of such extension will be subject to the provisions of
Section 4.4(“Assignment”). Other agreements or arrangements with Affiliates
relating to Licensed Subject Matter which result in the Sale of Licensed
Product(s) will be subject to the royalty payment and other applicable payment
provisions of this Agreement.

 

3.3 Sublicensing

Licensee will have the right to grant sublicenses to third parties under
Section 3.1 (Grant), subject to the following conditions:

 

  a. In each such sublicense, the Sublicensee will be permitted to grant further
sublicenses, but only on the condition that any such sublicense will be subject
to the terms and conditions of the license granted to Licensee under this
Agreement, including payments to University of Sublicensee Fees based upon
consideration paid by any further sublicensee for any such further sublicense.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 5 of 30

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  b. Licensee will forward to University, within thirty (30) days following its
execution, a fully executed, complete and accurate copy written in the English
language of each sublicense granted under this Agreement. University’s receipt
of such sublicense will not constitute a waiver of any of Board’s rights or
Licensee’s obligations under this Agreement.

 

  c. If Licensee becomes Insolvent, Board’s proportionate share of all payments
then or thereafter due and owing to Licensee from its Sublicensees for the
sublicense of the Licensed Patents will, upon notice from Board or University to
any such Sublicensee, become payable directly to University for the account of
Licensee; provided however, that University will remit to Licensee the amount by
which such payments exceed the amounts owed by Licensee to Board.

 

  d Notwithstanding any such sublicense, Licensee will remain primarily liable
to Board for all of Licensee’s duties and obligations contained in this
Agreement, and any act or omission of a Sublicensee that would be a breach of
this Agreement if performed by Licensee will be deemed to be a breach by
Licensee of this Agreement. Each sublicense will contain a right of termination
by Licensee in the event that the Sublicensee breaches the payment obligations
affecting Board or any other material terms and conditions of the sublicense
that would constitute a breach of the terms and conditions of this Agreement if
such acts were performed by Licensee (a “Sublicensee Breach”). In the event of a
Sublicensee Breach, and if after a reasonable opportunity to cure as provided in
any such Sublicensee, such Sublicensee fails to cure such Sublicensee Breach,
then Licensee will terminate the sublicense unless Board agrees in writing that
such sublicense need not be terminated. Such Sublicensee Breach and termination
of a Sublicensee’s sublicense will not affect the term of Licensee’s license
hereunder or the sublicense of any non-breaching Sublicensee.

 

  e Upon termination of this Agreement for any reason, all sublicenses will, at
Board’s option, be (a) assigned to and assumed by Board, or (b) terminated.

 

4. Fees and Royalties

In consideration of rights granted by Board to Licensee under this Agreement,
Licensee will pay University the following fees and royalties. Each payment will
reference UTAUS Agreement No. PM0505001 and will be made separately from any
other fees or payments due under this Agreement and sent to the address in
Section 6.1 (“Payments”).

 

4.1 Running Royalty

 

4.2 After the first of; two years after the Effective Date; or the issuance of a
Valid and Issued Claim in the relevant territory, Licensee will pay a running
royalty equal to [**]% of Net Sales for Licensed Product(s) Sold by Licensee or
Affiliate that are covered by valid claims of the Licensed Patents [**] or
divisionals, continuations, reissues, and reexaminations thereof.

Royalty payments will be made simultaneously with the delivery of the quarterly
Royalty Reports required under Section 5.1 (“Royalty Reports”).

Notwithstanding the royalty rates set forth in Sections 4.1 (“Running Royalty”)
and, if Licensee, Sublicensee, or Affiliate is required to pay royalties to
third parties in connection with the Sale of Licensed Product(s) either under
license agreements for other technologies which Licensee, in Licensee’s,

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 6 of 30

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Sublicensee’s, or Affiliate’s reasonable judgment, determines are desirable to
be incorporated in such Licensed Product(s), or under license agreements with
third parties that are joint owners of patent applications or patents within the
Licensed Patents, and the total royalties to be paid by Licensee to University
and third parties would exceed [**]% on Sales of Licensed Product(s) (the
“Applicable Royalty Stack Cap”) the amount to be paid under Section 4.1
(“Running Royalty”) will be calculated as follows:

The royalty payments to Board will be reduced by an amount proportionate to the
amount by which the total royalties exceeds the Royalty Stack Cap. Specifically:

 

   R2 = R1 × (Applicable Royalty Stack Cap / T)

where

   R1 is the earned royalties due the Board hereunder;    R2 is the adjusted
reduced royalty rate due hereunder;    T is the total royalty due to all
licensors; and    Applicable Royalty Stack Cap: [**]%.

For example, if one additional licenses are needed from one additional third
party, and this other royalty rate is [**]% and the earned royalties also due
the Board are [**]%, then the value of T is [**]%, and the royalty rate under
this Agreement, as adjusted will be [**] or [**]%. However, the percentage due
the Board will never be reduced to less than [**]%.

 

4.3 Past Patent Expenses

Licensee will pay $[**] as reimbursement for past expenses in filing and
prosecuting patent applications included in Licensed Patents due and payable no
later than October 15, 2005 . Licensee will pay future patent expenses as set
forth in Section 7 (“Future Patent Expenses and Prosecution”).

 

4.4 Sublicensee Fees and Royalites

Within thirty (30) days after receipt of payment by Licensee, Licensee will
promptly pay University the following percent of any sublicense fee, sublicense
milestone payment, royalties and other consideration, excluding equity in
investments in Licensee in which no license or sublicense rights are conveyed,
payable.by each Sublicensee to Licensee or an Affiliate in consideration for
Sublicense of the Licensed Patents, excluding funds or materials paid to
Licensee exclusively for research and development related to Licensed Product(s)
and, provided further, that the rights granted to sublicensee are limited to
research and development work (so long as the funding does not reflect a premium
of more than [**]% over Licensee’s actual costs to perform said work) and do not
permit the Sale of the Licensed Product(s) (collectively called “Sublicensee
Fees”):

 

  a. Before the first Sale of Licensee’s nerve graft product, [**] percent
([**]%) of Sublicense Fees for any Sublicense executed.

 

  b. After the first Sale of Licensee’s nerve graft product, [**] percent
([**]%) of Sublicense Fees for any Sublicense executed.

Any non-cash consideration, not including equity investments in Licensee,
received by Licensee or an Affiliate from such Sublicensees will be valued at
its Fair Market Value as of the date of receipt by Licensee or an Affiliate.

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 7 of 30

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4.5 Milestone Fees and Milestones

Licensee will meet development milestones for Licensed Product(s) as outlined
below in accordance with the following schedule:

 

  a. As of April 1, 2006, Licensee, with Inventor’s input, will submit at least
one grant application for the further development of Licensed Products. Licensee
and Inventor will equitably split any grant monies based on the work scope.
University’s share of grant monies will be payable within 30 days of receipt by
Licensee.

 

  b. Within 24 months of the realization of revenue using Licensed Subject
Matter, Licensee will pay to University a milestone fee of [**] ($[**]).

 

  c. Within 30 days of receiving its first Phase II award for an SBIR or STTR
grant involving the Licensed Technology, Licensee will pay to the University a
milestone fee of $15,000.

 

  d. Within 30 days of receiving a Valid Claim of a Licensed Patent that
protects the ongoing commercial sale of a Licensed Product, or within 30 days of
commercial sale of a Licensed Product protected by a Valid Claim of the Licensed
Patent, whichever comes first, Licensee will pay the University a milestone of
$[**].

Each required payment will be paid to University by the date listed above.

 

4.6 Actively Commercialize

Licensee shall actively commercialize the Licensed Subject Matter during the
Term of this Agreement.

 

5. Reports and Plans

 

5.1 Royalty Reports

Within 30 days after March 31, June 30, September 30, and December 31, beginning
immediately after the Effective Date, Licensee will deliver to University a true
and accurate written Royalty Report, certified by the chief financial officer or
similar officer of Licensee even if no payments are due Board, giving the
particulars of the business conducted by Licensee, Affiliate and its
Sublicensee(s), if any exist, during the preceding 3 (three) calendar months as
are pertinent to calculating payments hereunder. This report will be in the form
set forth in Exhibit C (Form of Royalty Report). University may change the
required Form of Royalty Report upon ninety (90) days notice to Licensee.
Simultaneously with the delivery of each report, Licensee will pay to University
the amount due, if any, for the period of each Royalty Report. Licensee’s
failure to submit a Royalty Report in the required form will constitute a breach
of this Agreement. Licensee will continue to deliver Royalty Reports to
University after the termination or expiration of this Agreement until such time
as all Licensed Product(s) permitted to be Sold after termination have been Sold
or destroyed.

 

5.2 Progress Report and Commercialization Plan

On or before each anniversary of the Effective Date, whether or not a first Sale
or offer for Sale has occurred, Licensee will deliver to University a true and
accurate written Progress Report and Commercialization Plan, certified by the
chief operating officer or similar officer of Licensee, as to Licensee’s (and
any Sublicensee’s) efforts and accomplishments during preceding year in
Commercializing the Licensed Subject Matter in the Licensed Territory and
Licensee’s (and any Affiliate’s and/or Sublicensee’s) plans for the upcoming
year for commercializing the Licensed Subject Matter. The

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 8 of 30

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Progress Report and Commercialization Plan will be in the form set forth in
Exhibit B. University may change the required Form of Progress Report and
Commercialization Plan upon ninety (90) days notice to Licensee. Licensee’s
failure to submit a Progress Report and Commercialization Plan in the required
form will constitute a breach of this Agreement.

The Progress Report and Commercialization Plan will be sent to:

 

   Office of Technology Commercialization    The University of Texas at Austin
  

3925 West Braker Lane, Suite 1.9A

   MCC Building, Mail Code: R3500    Austin, Texas 78759   

Attn: Contract Manager

 

6. Payment, Records, and Audits

 

6.1 Payments

All dollar amounts referred to in this Agreement are expressed in United States
dollars without deductions for taxes, assessments, fees, or charges of any kind.
Each payment will reference UTA US Agreement No. PM0505001 and will be made
separately from any other fees or payments due under this Agreement. All
payments to University will be made in United States dollars by check payable to
“The University of Texas at Austin” and sent to:

 

Office of Technology Commercialization

The University of Texas at Austin

3925 West Braker Lane, Suite 1.9A

MCC Building, Mail Code: R3500

Austin, Texas 78759

Attn: Accounts Receivable

 

6.2 Sales Outside the U.S.

The remittance of royalties payable on Sales made outside the United States will
be payable to University in United States Dollar equivalents; provided, however
if any currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rates
used by Licensee in calculating Licensee’s own revenues for financial reporting
purposes in accordance with Generally Accepted Accounting Principles. If the
transfer of or the conversion into the United States Dollar equivalents of any
such remittance in any such instance is not lawful or possible, the payment of
such part of the royalties as is necessary will be made by the deposit thereof,
in the currency of the country where the Sale was made on which the royalty was
based to the credit and account of University or its nominee in any commercial
bank or trust company of University’s choice located in that country, prompt
written notice of which will be given by Licensee to University.

 

6.3 Late Payments

Amounts that are not paid when due will accrue interest from the due date until
paid, at a rate equal to one percent (1.0%) per month (or the maximum allowed by
law, if less).

 

6.4 Records

Licensee will maintain, and cause its Sublicensees and Affiliates to maintain
complete and accurate books and records that enable all royalties payable under
this Agreement to be verified. The records for each calendar quarter will be
maintained for three (3) years after the submission of each report under
Section 5.1 (“Royalty Reports”).

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 9 of 30

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6.5 Auditing

Upon reasonable prior notice to Licensee, Affiliates, or Sublicensees,
University or its representatives or its appointed accountants will have access
to such books and records relating to Net Sales as necessary to conduct a review
or audit of Net Sales and verify all royalty reports submitted and royalty
payments. Such access will be available to University upon not less than ten
(10) days written notice to Licensee, Affiliates, or Sublicensees, not more than
once each calendar year of the Term, during normal business hours, and once a
year for three years after the expiration or termination of this Agreement.
Whenever these books and records are audited by an independent certified public
accountant, University will, within (thirty) 30 days of the conclusion of such
audit, provide to Licensee a written statement, certified by said auditor,
setting forth the calculation of royalties due to University over the time
period audited as determined from the audit of paid books and records. If such
audit indicates that Licensee, Affiliates, or Sublicensees has underpaid
royalties by more than 10%, Licensee will pay the reasonable costs and expenses
incurred by University and its representatives and accountants, if any, in
connection with the review or audit and Licensee will immediately remit such
underpaid royalties and Sublicensee Fees and any accrued interest to University.

 

7. Future Patent Expenses and Prosecution

 

7.1 Future Patent Expenses

Licensee will pay future expenses incurred after Effective Date for filing,
prosecuting, enforcing, and maintaining the Licensed Patents.

 

7.2 Default in Payment

In the event that Licensee fails to pay any patent expenses required under this
Agreement, and said default is not cured within sixty (60) days after receipt of
notification that such expenses are due, then University may pursue its remedies
as specified in Section 9.3. Alternatively, University may require and request
that Licensee establish with a bank approved by University, an irrevocable and
confirmed letter of credit (not restricted, unless otherwise agreed upon) in the
amount of US $[**] in favor of University available immediately to secure the
payment of patent expenses due under this Agreement. University may draw upon
such letter of credit upon presentation of the letter notifying Licensee of
patent expenses due and payable and a statement from University of Licensee’s
failure to pay; and Licensee will cause the bank to restore the letter of credit
to the US $[**] level. In the event that Licensee does not establish (or
restore) such letter of credit within thirty (30) days of University’s request,
then Board may immediately terminate this Agreement.

 

7.3 Patent Attorney

University will work closely with Licensee to develop a suitable strategy for
the prosecution and maintenance of all Licensed Patents; provided that Board
will maintain final authority in all decisions regarding the patent attorney who
prosecutes and maintains the Licensed Patents. University will confer with
Licensee regarding the choice of patent counsel and will identify to Licensee
the patent attorney selected to prosecute the Licensed Patents. It is intended
that Licensee will interact directly with the selected patent counsel in all
phases of patent prosecution: preparation, office action responses, filing
strategies for continuation or divisional applications, and

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 10 of 30

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other related activities. University will request that copies of all documents
prepared by the selected patent counsel be provided to Licensee for review and
comment prior to filing to the extent practicable under the circumstances.
Licensee will be billed and will pay all documented costs and fees and other
charges incident to the preparation, prosecution, and maintenance of the
Licensed Patents within sixty (60) days of receipt of invoice. All patent
applications and patents will be in the name of Board, owned by Board and
included as part of the Licensed Patents licensed pursuant to this Agreement.

If Licensee has a strong need to use a patent attorney other than the patent
attorney selected by University, Licensee and University will cooperate to
endeavor to select a patent attorney who is mutually approved by both Licensee
and University. Any such mutually selected patent attorney will be required to
keep both Licensee and Board, as co-clients, equally informed and involved as to
all material information, material communications with governmental patent
offices, material issues and decisions, and related matters applicable to
prosecuting the patent applications for the Licensed Patents and for maintaining
the Licensed Patents in good standing. Decisions for prosecuting the patent
applications will be made so as to obtain as broad of patent protection as is
reasonable and practical under the circumstances. Board will request that copies
of all documents prepared by the selected patent attorney be provided to
Licensee for review and comment prior to filing to the extent practicable under
the circumstances.

Licensee will be billed in accordance with 7.1 above and will pay all documented
costs and fees and other charges incident to the preparation, prosecution, and
maintenance of the Licensed Patents, within thirty (30) days after receipt of
invoice from the selected patent attorney. Licensee will promptly notify Board
of its plans to file, revise or drop any patent application or claim which may
adversely affect the Licensed Patents or the rights or royalties of Board in the
Licensed Subject Matter under this Agreement. Licensee and the selected patent
attorney shall not change any inventorship designations, and shall not drop or
reduce any claim in a pending patent application which may adversely affect the
Licensed Patents or royalties of Board in the Licensed Subject Matter without
written University approval.

 

8. Term and Termination

 

8.1 Termination at End of Term

This Agreement, unless sooner terminated as provided herein, will terminate at
the end of the Term of this Agreement as defined in Section 2 (“Definitions”).

 

8.2 Termination by Licensee

Licensee, at its option, may terminate this Agreement at any time by doing all
of the following:

 

  a. By ceasing to develop, make, have made, use and sell and/or import any
Licensed Product(s);

 

  b. By giving sixty days (60) days prior written notice to Board of Licensee’s
termination. Licensee agrees that Board and University may immediately begin
negotiations with other potential licensees upon delivery of such notice to
Board and that all other obligations of Licensee under this Agreement will
continue until the date of termination; and

 

  c. By tendering payment of all accrued royalties and other payments due to
Board as of the date of the termination.

Licensee, at its option, may terminate this Agreement upon written notice to
Board if Board breaches this Agreement and does not cure such breach within
sixty (60) days after the delivery of written notice from Licensee.

 

8.3 Termination by Board

Board, at its option, may immediately terminate this Agreement, or any part of
Licensed Subject Matter, or any part of Licensed Field, or any part of Licensed
Territory, upon delivery of written notice to Licensee of Board’s intent to
terminate, if any of the following occur:

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 11 of 30

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  a. Licensee fails to Actively Commercialize Licensed Subject Matter during the
Term of this Agreement; or

 

  b. Licensee has not had a Sale of any Licensed Product(s) within three
(3) years after the Effective Date; or

 

  c. Licensee has had time to meet and has not met and satisfied any one of the
specified milestones in Section 4.6; or

 

  d. Licensee becomes more than sixty (60) days in arrears in any payments, fees
or other expenses due under to this Agreement; or

 

  e. Licensee is in breach of any provision of this Agreement, and does not cure
such breach within sixty (60) days after delivery of written notice from Board.
“Breach” includes, but is not limited to, provisions of this Agreement for which
Licensee is on specific notice that a specific action, or failure to perform a
specific action, constitutes a breach, including but not limited to Section 6.1
(“Royalty Reports”), Section 8.2 (“Default in Payment”), Section 8.1 (“Future
Patent Expense Payment Plan), and Section 11.4 (“Board’s Prosecution Rights”).

Furthermore, if, in any one twelve (12) month period, Board or University
delivers notice to Licensee of three (3) or more breaches of this Agreement,
even in the event that Licensee cures such breaches in the allowed period, Board
may immediately terminate this Agreement upon delivery of notice of termination
to Licensee.

 

8.4 Other Conditions of Termination

This Agreement will earlier terminate:

 

  a. Immediately without the necessity of any action being taken by Board or
Licensee, if Licensee becomes bankrupt or Insolvent and/or if the business of
Licensee is placed in the hands of a receiver, assignee, or trustee, whether by
voluntary act of Licensee or otherwise; or

 

  b. at any time by mutual written agreement between Licensee and Board and
subject to any terms herein which survive termination.

 

8.5 Survival

If this Agreement is terminated for any reason:

 

  a. except in the case of termination under Section 8.1 (“Termination at End of
Term”), Licensee will immediately cease use of confidential Licensed Subject
Matter;

 

  b. Licensee will comply with the provisions of Section 9.4 (“Copies”);

 

  c. nothing in this Agreement will be construed to release either party from
any obligation that matured prior to the effective date of termination; and

 

  d. after the effective date of termination, Licensee may sell all Licensed
Product(s) and parts thereof that it has on hand at the effective date of
termination; provided, however, that Licensee’s royalty obligations will
continue until all Licensed Product(s) have been sold.

The provisions of Sections 9 (“Confidentiality”), 101 (“Infringement and
Litigation”), 12 (“Representations and Disclaimers”), 14 (“Limit of Liability”),
15 (“Indemnification”), 16 (“Insurance”), 19 (“Use of Name”), and 201 (“General
Provisions”) will survive any termination or expiration of this Agreement.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 12 of 30

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9. Confidentiality

 

9.1 Protection and Marking

Any disclosure of Confidential Information is made in the strictest confidence.
The Licensee and University will make all reasonable efforts to ensure the
protection, confidentiality and security of any Confidential Information in its
possession, such efforts to be no less than the degree of care employed by the
Licensee or University to preserve and safeguard its own confidential
information. Confidential Information will be transmitted in writing and clearly
marked “Confidential”, “Proprietary” or similarly, or if disclosed orally will
be reduced to writing by the University, clearly marked “Confidential”,
“Proprietary” or similarly, and transmitted to the Licensee in accordance with
Section 19 (“Notices”) within thirty (30) days of oral disclosure.

 

9.2 Non-Disclosure

Each party to this Agreement may disclose the Confidential Information to its
own employees in connection with the rights granted under this Agreement;
provided, however, that such employees will have agreed to be bound by the terms
of this Agreement or have entered into an agreement of similar scope and
obligations to protect the confidential information of such party or the
confidential information of third parties in such party’s possession. In no
event will either party disclose Confidential Information to third parties
without the written consent of the other party; provided, however, that Licensee
may disclose Confidential Information to its consultants, other non-employees
retained because of their standing and expertise in the area, and customers or
potential customers; provided, that such consultant, non-employee, or customers
or potential customers have executed a written non-disclosure and non-use
agreement containing terms and conditions approved in writing by University. A
copy of any such executed agreement will be provided to University in the manner
set forth in Section 20 (“Notices”).

 

9.3 Non-Use

Licensee or University will not use any Confidential Information for any reason
other than in connection with practice or exercise of the rights granted under
this Agreement without the prior written consent of the Board or University.

 

9.4 Copies

The Licensee and University agrees not to copy or record any Confidential
Information except as reasonably necessary for University or Licensee to
practice or exercise the rights granted under this Agreement. Within five
(5) days after the termination of this Agreement, upon request of the University
or Licensee, Licensee or University will deliver to the other all copies or
records of Confidential Information in its possession or control, or will
certify in writing to the other that the Confidential Information has been
destroyed.

 

9.5 Continuing Obligations

Subject to the exceptions listed below, the Licensee’s and University’s
obligations under this Agreement will survive termination of this Agreement and
will continue for a period of five (5) years.

Confidential Information will not include any information which:

 

  a. can be demonstrated to have been in the public domain as of the Effective
Date of this Agreement or comes into the public domain during the term of this
Agreement through no fault of the party who received the other party’s
Confidential Information;

 

  b. can be demonstrated, from written records, to have been known to one of the
Parties to this Agreement prior to the Effective Date of this Agreement and was
not acquired, directly or indirectly, from the Board or University or from a
third party under a continuing obligation of confidentiality or limited use;

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 13 of 30

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

  c. can be demonstrated to have been rightfully received by one of the Parties
from a third party who did not require the Parties to hold it in confidence or
limit its use and who did not acquire it, directly or indirectly, from the
Parties a continuing obligation of confidentiality; or

 

  d. is required to be disclosed by a court of competent jurisdiction after
giving maximum practical notice to the Licensee or Board and University.

 

9.6 Degree of Care and Survival of Obligations

Licensee’s and University’s obligation of confidence hereunder will be fulfilled
by using at least the same degree of care with the Confidential Information as
Licensee uses to protect its own confidential information.

 

9.7 Publication by University

University will submit its manuscript for any proposed publication of research
related to Licensed Subject Matter to Licensee at least thirty (30) days before
publication, and Licensee will have the right to review and comment upon the
publication in order to protect Licensee’s confidential information. Upon
Licensee’s request, publication will be delayed up to sixty (60) additional days
to enable Licensee to secure adequate intellectual property protection of
Licensee’s property that would be affected by the publication.

 

9.8 Copyright Notice

The placement of a copyright notice on any Confidential Information will not be
construed to mean that such information has been published and will not release
Licensee from its obligation of confidentiality hereunder.

 

10. Infringement and Litigation

 

10.1 Notification

University and Licensee are responsible for notifying each other promptly of any
infringement of Licensed Patents or any misappropriation of Confidential
Information or Licensed Technology that may come to their attention. University
and Licensee will consult one another in a timely manner concerning any
appropriate response thereto.

 

10.2 Licensee Prosecution Rights

Licensee will have the right, but not the obligation to prosecute such
infringement or misappropriation at its own expense. Licensee will not settle or
compromise any such suit in a manner that imposes any obligations or
restrictions on Board or University or grants any rights to Licensed Patents or
Licensed Technology, without Board’s prior written consent. At the time of
filing any infringement enforcement action, Board and Licensee will determine
how any damages awarded will be distributed between Board and Licensee; using as
a guide and provided that in no event will Board’s distribution be less than an
amount that would have been due Board based upon Section 4.5 (“Sublicensee
Fees”) as if the litigation recovery had been a Sublicensee Fee, or if no
Sublicensee Fee is due to Board, subject first to any payments that would have
been due University based upon Section 4.1 (“Running Royalty”) as if the
litigation recovery had been from a Sale.

 

10.3 Board’s Right to Intervene

If Licensee shall fail, within one hundred twenty (120) days after receiving
notice from Board of a potential infringement, or providing Board with notice of
such infringement, to either (a) terminate such infringement or (b) institute an
action to prevent continuation thereof including, but not limited to,
cross-licensing agreements, marketing agreements, licensing agreements, and
etc.; and, thereafter to prosecute such action diligently, or if Licensee
notifies Board that it does not plan to terminate the infringement or institute
such action, then Board shall have the right to do so at its own expense.
Licensee’s prosecution rights under Section 10.2 (“Licensee Prosecution Rights”)
will be subject to the continuing right of Board or University to intervene at
Board’s or University’s own expense and join Licensee in any claim or suit for
infringement or misappropriation of Licensed Patents or Licensed Technology. Any
consideration

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 14 of 30

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

received in settlement of any claim or suit will be shared between University
and Licensee in a proportionate amount to be determined at the time of
intervention, based on royalties that would have been due if no infringement had
occurred.

 

10.4 Board’s Prosecution Rights

If Licensee fails to prosecute or remedy through agreement or settlement such
infringement or misappropriation within six (6) months of notice of infringement
or misappropriation, Board or University will have the right, but not the
obligation, to prosecute such infringement or misappropriation at its own
expense. Board will have the additional right, if Licensee fails to prosecute or
remedy through agreement or settlement such infringement or misappropriation
within said six (6) months, to (i) terminate any and all license rights granted
to Licensee with respect to the Licensed Subject Matter being infringed or
misappropriated, or (ii) convert the license rights granted to Licensee from
exclusive to non-exclusive with respect to the Licensed Subject Matter being
infringed or misappropriated. In the event Board exercises either of these
options, Board may grant non-exclusive license rights to the infringer for said
Licensed Subject Matter and/or any field(s) of use with Board or University
retaining [**]% of all consideration for said license grant.

 

10.5 Cooperation between Board, University, and Licensee

In any action to enforce any of the Licensed Patents or Licensed Technology,
either party to this Agreement, at the request and expense of the other party,
will cooperate to the fullest extent reasonably possible. This provision will
not be construed to require either party to undertake any activities, including
legal discovery, at the request of any third party except as may be required by
lawful process of a court of competent jurisdiction.

 

11. Export Compliance

Licensee understands that the Arms Export Control Act (AECA), including its
implementing International Traffic In Arms Regulations (ITAR,) and the Export
Administration Act (EAA), including its Export Administration Regulations (EAR),
are some (but not all) of the laws and regulations that comprise the U.S. export
laws and regulations. Licensee further understands that the U.S. export laws and
regulations include (but are not limited to): (1) ITAR and EAR
product/service/data-specific requirements; (2) ITAR and EAR ultimate
destination-specific requirements; (3) ITAR and EAR end user-specific
requirements; (4) ITAR and EAR end use- specific requirements; (5) Foreign
Corrupt Practices Act; and (6) anti-boycott laws and regulations. Licensee will
comply with all then-current applicable export laws and regulations of the U.S.
Government (and other applicable U.S. laws and regulations) pertaining to the
Licensed Technology (including any associated products, items, articles,
computer software, media, services, technical data, and other information).
Licensee certifies that it will not, directly or indirectly, export (including
any deemed export), nor re-export (including any deemed re-export) the Licensed
Technology (including any associated products, items, articles, computer
software, media, services,

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 15 of 30

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technical data, and other information) in violation of U.S. export laws and
regulations or other applicable U.S. laws and regulations. Licensee will include
an appropriate provision in its agreements with its authorized Sublicensees to
assure that these parties comply with all then-current applicable U.S. export
laws and regulations and other applicable U.S. laws and regulations

 

12. Representations and Disclaimers

 

12.1 Board Representation

Except for the rights, if any, of the Government of the United States, as set
forth below, Board represents its belief that (i) it is the owner of the entire
right, title, and interest in and to Licensed Subject Matter, (ii) it has the
sole right to grant licenses to the Licensed Subject Matter, and (iii) it has
not knowingly granted licenses to the Licensed Subject Matter to any other
entity that would restrict rights granted to Licensee except as stated herein.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BOARD MAKES NO REPRESENTATIONS,
WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED.

 

12.2 Government Rights

Licensee understands that the Licensed Subject Matter may have been developed
under a funding agreement with the Government of the United States of America
and, if so, that the Government may have certain rights relative thereto. This
Agreement is explicitly made subject to the Government’s rights under any
agreement and any applicable law or regulation. If there is a conflict between
an agreement, applicable law or regulation and this Agreement, the terms of the
Government agreement, applicable law or regulation will prevail.

 

12.3 Board Disclaimers

Licensee understands and acknowledges that (i) Board, by this Agreement, makes
no representation as to the operability or fitness for any use, safety,
efficacy, ability to obtain regulatory approval, patentability, and/or breadth
of the Licensed Subject Matter or as to whether there are any patents now held,
or which will be held, by others or by Board in the Licensed Field, or as to
whether the inventions contained in Licensed Patents do not infringe any other
patents now held or that will be held by others or by Board, or as to whether
Licensed Technology has been misappropriated; (ii) nothing in this Agreement
will be construed as conferring by implication, estoppel or otherwise any
license or rights to any patents or technology of Board other than the Licensed
Subject Matter, whether such patents are dominant or subordinate to the Licensed
Patents; and (iii) Board has no obligation to furnish to Licensee any technology
or technological information other than the Licensed Technology.

 

12.4 Licensee Representations

By execution of this Agreement, Licensee acknowledges, covenants and agrees that
it has not been induced in any way by Board, System, University or its employees
to enter into this Agreement, and further warrants and represents that (i) it
has conducted sufficient due diligence with respect to all items and issues
pertaining to this Section 12 (“Representations and Disclaimers”) and all other
matters pertaining to this Agreement; and (ii) Licensee has adequate knowledge
and expertise, or has utilized knowledgeable and expert consultants, to
adequately conduct the due diligence, and agrees to accept all risks inherent
herein. Licensee represents that it is a duly organized, validly existing C-
Corporation in good standing under the laws of Delaware and has all necessary
corporate power and authority to execute, deliver and perform its obligations
hereunder.

 

13. Limit of Liability

IN NO EVENT WILL BOARD OR UNIVERSITY BE LIABLE FOR ANY DIRECT, SPECIAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR
LOSS OF PROFITS OR EXPECTED SAVINGS OR OTHER ECONOMIC LOSSES, OR FOR INJURY TO
PERSONS OR PROPERTY) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS
SUBJECT MATTER, REGARDLESS OF WHETHER BOARD OR UNIVERSITY

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 16 of 30

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KNOWS OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. BOARD’S AND
UNIVERSITY’S AGGREGATE LIABILITY FOR ALL DAMAGES OF ANY KIND RELATING TO THIS
AGREEMENT OR ITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNTS PAID BY LICENSEE TO
UNIVERSITY UNDER THIS AGREEMENT DURING THE ONE YEAR PERIOD PRECEDING THE DATE OF
THE EVENT WHICH GAVE RISE TO THE LIABILITY. THE FOREGOING EXCLUSIONS AND
LIMITATIONS WILL APPLY TO ALL CLAIMS AND ACTIONS OF ANY KIND, WHETHER BASED ON
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR ANY OTHER
GROUNDS.

 

14. Indemnification

Licensee agrees to hold harmless and indemnify Board, System, University, its
Regents, officers, employees and agents (the “Indemnitees”) from and against any
claims, demands, or causes of action whatsoever, including without limitation
those arising on account of any injury or death of persons or damage to property
caused by, or arising out of, or resulting from, the exercise or practice of the
license granted hereunder by Licensee, Affiliates, Sublicensees or their
officers, employees, agents or representatives.

 

15. Insurance

 

15.1 Insurance Requirements

Beginning at the time any Licensed Subject Matter is being distributed or Sold
(including for the purpose of obtaining any required regulatory approvals) by
Licensee or a Sublicensee, Licensee will, at its sole cost and expense, procure
and maintain commercial general liability insurance issued by an insurance
carrier with an A.M. Best rating of “A” or better in amounts not less than
$1,000,000 per incident and $1,000,000 annual aggregate. Licensee will use
reasonable efforts to have the Indemnities named as additional insureds. All
rights of subrogation will be waived against Board, University and its insurers.
Such commercial general liability insurance will provide (i) product liability
coverage; (ii) broad form contractual liability coverage for Licensee’s
indemnification under this Agreement; and (iii) coverage for litigation costs.
The specified minimum insurance amounts will not constitute a limitation on
Licensee’s obligation to indemnify the Indemnitees under this Agreement.

 

15.2 Evidence of Insurance and Notice of Changes

Licensee will provide University with written evidence of such insurance upon
request of University. Licensee will provide University with written notice of
at least thirty (30) days prior to the cancellation, non-renewal or material
change in such insurance.

 

15.3 Continuing Insurance Obligations

Licensee will maintain such commercial general liability insurance beyond the
expiration or termination of this Agreement during (i) the period that any
Licensed Subject Matter developed pursuant to this Agreement is being
commercially distributed or Sold by Licensee, any Affiliate, or any Sublicensee
or agent of Licensee; and (ii) for five (5) years after such period.

 

15.4 Additional Insurance

Board reserves the right to request additional policies of insurance where
appropriate and reasonable in light of Licensee’s business operations and
availability of coverage.

 

16. Assignment

This Agreement may be assigned by Licensee without the prior written consent of
Board. In the event this Agreement is so assigned, or in the event of any
transfer by operation of law (e.g., a merger or reorganization or consolidation
of Licensee), Licensee will pay a non-refundable fee of [**] ($[**]) if the
total transaction value is more than [**] ($[**]).

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 17 of 30

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17. Governmental Markings

 

17.1 Patent Marking

Licensee must permanently and legibly mark all products, where feasible, and
documentation manufactured or Sold under this Agreement with patent notice
appropriate under Title 35, United States Code.

 

17.2 Governmental Approvals and Marketing of Licensed Products

Licensee will be responsible for obtaining all necessary governmental approvals
for the development, production, distribution, sale, and use of any Licensed
Subject Matter, at Licensee’s expense, including, without limitation, any safety
studies. Licensee will have sole responsibility for any warning labels,
packaging and instructions as to the use, and for the quality control for any
Licensed Subject Matter.

 

17.3 Foreign Registration

Licensee agrees to register this Agreement with any foreign governmental agency
that requires such registration and Licensee will pay all costs and legal fees
in connection with such registration. Licensee will assure that all foreign laws
affecting this Agreement or the sale of Licensed Subject Matter are fully
satisfied.

 

18. Use of Name

 

18.1 By Licensee

Licensee may use the name “The University of Texas at Austin” in factually based
materials related to the Licensed Subject Matter and the business of the
Licensee; provided, however, that Licensee may not use the name of System, Board
or University in connection with any name, brand or trademark related to
Licensed Subject Matter. For example, Licensee may include a statement in
promotional materials that refers to the fact that a product or service is based
on technology developed at The University of Texas at Austin; Licensee may not
include The University of Texas at Austin in a product or service name.

 

18.2 By Board or University

Board or University may use Licensee’s name in connection with Board or
University publicity related to University intellectual property and
commercialization achievements.

 

19. Notices

Any notice or other communication of the parties required or permitted to be
given or made under this Agreement will be in writing and be deemed effective
when sent to the address set forth below (or as changed by written notice
pursuant to this Section 19) by certified or registered mail, postage prepaid,
return receipt requested or by internationally recognized overnight courier.
Notices required under this Agreement may not be delivered via E-mail.

In the case of Board to:

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 18 of 30

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   Office of Technology Commercialization          The University of Texas at
Austin          3925 West Braker Lane, Suite 1.9A          MCC Building, Mail
Code: R3500          Austin, Texas 78759          Attn: Contract Manager      
   Fax: (512) 475-6894          Phone: (512) 471-2995      

or in the case of Licensee to:

 

   mailto:          AxoGen Corporation          PO Box 357787         
Gainesville, FL 32635-7787      

 

20. General Provisions

 

20.1 Binding Effect

This Agreement is binding upon the parties hereto, their respective executors,
administrators, heirs, assigns, and successors in interest.

 

20.2 Construction of Agreement

Headings are included for convenience only and will not be used to construe this
Agreement. The parties acknowledge and agree that both parties substantially
participated in negotiating the provisions of this Agreement; therefore, both
parties agree that this Agreement shall not be construed more favorably toward
one party than the other party, regardless of which party primarily drafted the
Agreement.

 

20.3 Counterparts

This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.

 

20.4 Enforcement

In the event either party commences any proceeding against the other party with
respect to this Agreement, the prevailing party (as determined by the authority
before whom such proceeding is commenced) will be entitled to recover reasonable
attorneys’ fees and costs as may be incurred in connection therewith in addition
to any such other relief as may be granted.

 

20.5 Compliance with Laws

Licensee will comply with all applicable federal, state and local laws and
regulations, including, without limitation, all export laws and regulations.

 

20.6 E-mails

The parties acknowledge that they may correspond or convey documentation via
Internet e-mail, but that no agreement between the parties will be entered into
or notices provided via e-mail communications.

 

20.7 Governing Law

This Agreement will be construed and enforced in accordance with laws of the
United States of America and the State of Texas, without regard to choice of law
and conflicts of law principles.

 

20.8 Modification

Any modification of this Agreement will be effective only if it is in writing
and signed by duly authorized representatives of both parties.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 19 of 30

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20.9 Severability

If any part of this Agreement is for any reason found to be unenforceable,
invalid, or void, all other parts will remain enforceable.

 

20.10 Survival

The survival provisions of this Agreement are set forth in Section 8 (“Term and
Termination”).

 

20.11 Third Party Beneficiaries

Nothing in this Agreement, express or implied, is intended to confer any
benefits, rights or remedies on any Entity, other than the parties and their
successors and permitted assigns.

 

20.12 Waiver

Neither party will be deemed to have waived any of its rights under this
Agreement unless the waiver is in writing and signed by such party.

 

20.13 Entire Agreement

This Agreement constitutes the entire Agreement between the parties regarding
the subject matter hereof, and supersedes all prior written or verbal
agreements, representations and understandings relative to such matters.

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement.

 

ON BEHALF OF THE BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM     LICENSEE
By  

    /s/ Juan M. Sanchez

    By  

    /s/ Jamie M. Grooms

Juan M. Sanchez, Ph.D.       Vice President for Research       The University of
Texas at Austin       Date  

    July 22, 2005

    Date  

    August 3, 2005

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 20 of 30

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

EXHIBIT A: LICENSED PATENTS

[**]

 

 

** Certain information in this exhibit has been omitted and will be filed
separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 21 of 30

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

EXHIBIT B: PROGRESS PLAN AND COMMERCIALIZATION REPORT

INSTRUCTIONS TO EXHIBIT B

PROGRESS REPORT AND COMMERCIALIZATION PLAN

 

I. General

Licensee shall annually submit a progress report (“Report”) and
commercialization plan (“Plan”), (collectively, the “Submissions”) in the format
outlined below to University beginning on the first anniversary of the Effective
Date of this Agreement, as outlined in Section 2.4. The information provided in
the Submissions is subject to audit by The University of Texas. The University
of Texas may terminate its License with Licensee if any information provided in
the Submissions is intentionally and materially misreported.

 

A. Purpose

The information provided by Licensee in the Submissions is required by the
License Agreement and also is critical to the technology commercialization
process. By providing the information requested in this document, you can help
us:

 

  •  

track the progress and document the successes of the commercialization effort
around the Licensed Subject Matter,

 

  •  

promote research, development and commercialization and

 

  •  

improve the technology licensing process at the University.

Licensee should provide as much information as is necessary to clearly
demonstrate the commercialization of the Licensed Subject Matter. Failure to
demonstrate commercialization of Licensed Subject Matter could result in
termination of the License Agreement pursuant to Section 4.6 of License
Agreement.

 

B. Submissions Format

The following format must be followed for each required submission. Submissions
that deviate substantially from these guidelines or that omit substantial
information will not be considered submitted nor acceptable for the purpose of
determining Licensee’s compliance with License Agreement and its reporting
requirements; provided, however, that unsatisfactory submissions shall be
returned to Licensee with sufficient detail regarding the deviations which make
the submission non-conforming so as to allow Licensee to resubmit a conforming
submission prior to the declaration by Licensor of a Licensee default under the
License Agreement.

 

1.

Page Limitations. Page and paragraph limitations for the different parts of the
Submissions are stipulated in the requirements section (below) and should be
adhered to. If additional explanation is required, please attach typed
explanation on 8  1/2 x 11 inch pages using 1 inch margins. All additional pages
should clearly indicate in the heading, the section and subsection (e.g.,
II.a.1, III.B, etc.) to which they relate and must follow all other Submissions
format requirements.

 

2. Tables Provided in Appendix C. In order to simplify the Submissions review
process, Excel tables are provided for Licensee to complete. Licensee must
complete each table provided or indicate Not Applicable (“N/A”). (Note: Tables
in Excel format may be modified to add additional rows or widen columns as
necessary. For example, in Section II.B.4., a Licensed Product may have more
than one current commercialization partner and thus another column should be
added, however, if the Licensed Product does not have any current
commercialization partners, no columns should be deleted. Simply indicate,
“None”.)

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 22 of 30

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

C. General Instructions

 

1. Period

The Report must cover a one year period, (“Report Period”) beginning on the
anniversary of the Effective Date and ending on the day before the following
anniversary of the Effective Date.

The Plan must cover a minimum of a three year period, (“Plan Period”) beginning
on the anniversary of the Effective Date and ending on the day before the second
following anniversary of the Effective Date.

 

2. Due Date

Paper copies of the completed Submissions are due on the anniversary of the
Effective Date, (“Due Date”), and each anniversary thereafter. Licensee is
responsible for ensuring the Submissions are submitted by the Due Date. The
Submissions will be deemed submitted on time if post-marked or received on or
before the Due Date. It is recommended that Licensee send the completed
Submissions via certified mail-return receipt requested (or via overnight
delivery with signature requested). Submissions not submitted by the Due Date
will be considered late and may result in breach and/or termination of License
Agreement.

All Submissions should be sent to the following address:

Office of Technology Commercialization

The University of Texas at Austin

3925 W. Braker Lane

MCC Building Suite 1.9A

Austin, Texas 78759

Attention: Contract Manager

 

II. Progress Report Requirements

Indicate all achievements and milestones made during the Report Period as
outlined below including the completion of the tables in Appendix C. Attach all
requested documentation and attach additional pages as necessary to the back of
Appendix C.

Note: For each requirement, please include the efforts of each Sublicensee
individually.

 

A. Product Development

 

1. Development Activity

a) Dates of completion of a first commercial prototype for each Licensed
Product.

b) Dates of completion of a manufacturing facility for each Licensed Product (if
different). If a manufacturing facility is currently available, please indicate
N/A.

c) Date of first commercial Sale of each Licensed Product.

d) Working capital invested during the Report Period (e.g., amount of
non-contingent, operating capital to proceed with the exploration and
development of the Licensed Subject Matter) for each Licensed Product for each
stage completed and in progress.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 23 of 30

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

2. Regulatory Approval Process Activity (if applicable, e.g. FDA approvals)

a) List stages of the approval process completed during the Report Period with
corresponding completion dates for each Licensed Product requiring regulatory
approval.

 

3. Intellectual Property Acquisition Activity

a) List any intellectual property (patent #s/patent app#) including inventor
names that the company has licensed or developed in order to commercialize the
Licensed Subject Matter.

 

4. Other Activity

a) List and describe any other achievements made during the Report Period with
respect to Licensed Subject Matter or Licensed Products including relevant test
result data and success metrics. Attach additional pages if necessary.

 

B. Business Development

 

1. Marketing and Sales Activity

a) Denote marketing Plan milestones achieved during the Report Period and other
sales/marketing achievements.

b) List Sales of each Licensed Product containing Licensed Subject Matter during
the Report Period.

c) List Licensed Fields that Licensee has or is in the process of
commercializing, during the Report Period.

d) List and describe all current partnerships relevant to the commercialization
of Licensed Subject Matter existing or formed during Report Period.

e) Provide any other marketing or sales accomplishments and materials
attributable to Report Period (including press releases, product brochures,
etc…).

 

2. Corporate Development Activity

a) List any funding events that occurred during report period (with updated
Capitalization Table if Board, System or University received equity by the
License Agreement).

b) Provide any other Corporate Development Activity during Report Period
(including key hires or organizational changes, and acquisition, divestiture or
other large transaction information).

 

III. Commercialization Plan Requirements

Indicate all commercialization plans, projections and timelines for Licensed
Subject Matter applicable to the Plan Period including the completion of the
tables in Appendix C. Attach all requested documentation and attach additional
pages as necessary to the back of Appendix C.

Note: For each requirement, please include the efforts of each Sublicensee
individually.

 

A. Product Development

Provide an updated product development plan outlining specific product
development milestones and dates by which they will be achieved. Use the tables
provided in Appendix C and be sure to reflect any changes and updates to the
Plan from the previous Plan.

If the Company is also attaching a product development plan prepared for its own
use, please denote all relevant sections of the plan which detail Licensed
Products.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 24 of 30

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

For all changes to the Plan from a prior Plan, please detail reasons for such
changes. Attach additional pages, if necessary.

 

B. Regulatory Approval (if applicable e.g. FDA approval)

Provide an updated timeline with milestones for each stage of the required
government regulatory approval process(es). Please use the tables provided in
Appendix C and be sure to reflect any changes and updates to the Plan from the
previous Plan.

For all changes to the timeline from a prior Plan, please detail reasons for
such changes. Attach additional pages, if necessary.

 

C. Business Development

Provide an updated summary of Licensee’s plans as to projected market(s), sales
forecasts, manufacturing, operations and corporate developments.

The updated marketing plan shall include as a minimum, the following
information: Analysis of target market(s) for each Licensed Product, including
target market size, anticipated partnerships, estimated market share and product
differentiation strategy (approximately 2-3 paragraphs).

If the Company is also attaching a marketing plan prepared for its own use,
please denote all relevant sections of the plan which detail products and
initiatives relating to Licensed Subject Matter.

For all changes to the Plan from a prior plan, please detail reasons for such
changes. Attach additional pages, if necessary.

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 25 of 30

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

FORM FOR PROGRESS REPORT AND COMMERCIALIZATION PLAN

Licensee:

Name of Licensed Subject Matter:

Plan Period:

List of Licensed Products and Corresponding Fields of Use:

Company Representatives

Prepared By:

Approved By:

 

I. Progress Report Requirements

Provide all required information and complete all relevant tables below or
indicate “N/A” for not applicable

 

A. Product Development

 

1. Provide Development Activity into tables provided below:

 

Licensed product

   a. Date Prototype
Completion    b. Date manufacturing
facility available    c. Date of first
commercial sale    d. Working capital
invested                                                

 

2. Provide Regulatory Approval Process Activity, if applicable, into tables
provided below:

Licensed Product                                        

{Regulatory Agency}

 

Approval Stage or Phase

   Completion Date         

Licensed Product                                        

{Regulatory Agency}

 

Approval Stage or Phase

   Completion Date         

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 26 of 30

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

3. Provide Intellectual Property Acquisition Activity into the table provided
below:

 

Patent no./Patent app. no.

   Inventor name(s)    Title(s)                  

 

4. Provide Other Activity below and attached as necessary:

 

B. Business Development

 

1. Provide Marketing and Sales Activity in the tables and space below:

 

  a) Marketing Plan Milestones Achieved

 

Marketing Plan Milestone

   Date Achieved         

 

  b) Sales of each Licensed Product

 

Licensed product name

   Sales         

 

  c) Fields of Use pursued

 

Fields of use

   Yes/No         

 

  d) Commercialization Partnerships

 

Licensed product

   Current or Anticipated    Nature of Relationship                  

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 27 of 30

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

  e) Provide other sales or marketing activity below and attached as necessary
(including press releases and marketing collateral):

 

2. Provide Corporate Development Activity in the tables and space below:

 

  a) Funding Events (attach updated Capitalization Table if applicable)

 

Date

   Investors    Funding Amount                  

 

  b) Provide other corporate development activity below and attached as
necessary.

 

II. Commercialization Plan Requirements

Provide all required information and complete all relevant tables below or
indicate “N/A” for not applicable.

 

A. Product Development.

Provide 2-3 paragraphs describing the product development plan for each Licensed
Product in development during Plan Period.

 

Licensed product

   Date of Prototype
Completion    Date manufacturing
facility available    Date of first commercial
sale    Anticipated Capital
Investment                                    

 

B. Regulatory Approval.

Provide an updated projection of milestones with regard to Regulatory Approvals.
If this Plan represents a change from the previous Plan, please provide the
reasons:

 

{Regulatory Agency

Stage or Phase}

   Key personnel assigned    Estimated start time    Estimated end time   
Estimated cost to
complete                                    

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 28 of 30

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

C. Business Development

Provide 2-3 paragraphs describing the business development plan for each
Licensed Product to be marketed during Plan Period.:

Please enter changes in the following table:

 

Licensed

product

   Year of
expected first
sale    Revenue forecast       Year 1    Year 2    Year 3    Year 4    Year 5   
                                                  

Please enter changes in the following table:

 

Licensed product

   Current partner    Anticipated partner                  

Please enter changes in the following table:

 

Fields of use

   Yes/No         

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 29 of 30

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

EXHIBIT C: FORM OF SALES AND ROYALTY REPORT

INSTRUCTIONS TO EXHIBIT C

 

Licensee:

      UT Agreement No:                                 Period Covered:   
From:         /         /            through:         /         /        
Prepared by:   

 

(company representative)

   Date:    Approved by:   

 

(company representative)

   Date:   

If license covers several major product lines, please prepare a separate report
for each line. Then combine all product lines into a summary report.

 

Report Type:

   ¨         Single Product or Process Line
Report:                                        
                                                                      
(product name)       ¨         Multiproduct Summary Report, page 1 of
             pages   

Other Compensation:

   ¨         Annual payments, milestones, other fees &
compensation:                                                                 
             Amount due:                                           ¨         No
Compensation or Royalty Due this Period              Reason
why:                                        
                                         
                                                                   

 

Country

  

Quantity
Produced

   Quantity
Sold    Gross
Sales ($)    *Net
Sales ($)    Royalty
Rate    Conversion
Rate (if
applies)    Royalty Due
This Period USA                      Canada                      Japan         
            Other:                      Sublicensee # 1                     

 

                     Name                      Sublicensee # 2                  
  

 

                     name                      TOTAL:                     

 

* To calculate Net Sales, use the following space to list separately the
specific types of allowed deductions under our agreement and the corresponding
amount

 

 

Then calculate the final Net Sales amount by subtracting these deductions from
Gross Sales, and note in the column above

 

The University of Texas at Austin      

Licensee:                                                                
              

  

UTA No.:                                                                
             

   Page 30 of 30