**Exhibit 10.13**

 

COLLABORATIONAGREEMENT

 

THIS COLLABORATION AGREEMENT (this “Agreement”) datedas of May 17, 2005 (the “Effective Date”), is entered into between BIOSITEINCORPORATED, a Delaware corporation (“Biosite”), having a place of business at11030 Roselle Street, San Diego, California 92121, and POWER3 MEDICALPRODUCTS, INC, a New York corporation (“Power3”), having a place of business at3400 Research Forest Drive, Suite B2-3, The Woodlands, Texas 77381.

 

WHEREAS, Biosite owns or has rights in certainexpertise, technology and intellectual property rights regarding thedevelopment of antibodies.

 

WHEREAS, Power3 owns or has rights in certainexpertise, technology and intellectual property rights regarding certain targetbiomolecules for antibody development.

 

WHEREAS, Biosite and Power3 desire to engage in acollaborative research program to attempt to develop antibodies to certaintarget biomolecules selected by Power3, and to use such antibodies to conductresearch to evaluate the diagnostic and therapeutic potential of such targetbiomolecules, on the terms and subject to the conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoingpremises and the mutual covenants set forth below, the parties hereby agree asfollows:

 

# 1.                                       DEFINITIONS

#  

Forpurposes of this Agreement, the terms defined in this Section 1 shall havethe respective meanings set forth below:

 

## 1.1                                 “Affiliate”shall mean, with respect to any Person, any other Person that directly orindirectly controls, is controlled by, or is under common control with, suchPerson.  A Person shall be regarded as incontrol of another Person if it owns, or directly or indirectly controls, atleast fifty percent (50%) of the voting stock or other ownership interestof the other Person, or if it directly or indirectly possesses the power todirect or cause the direction of the management and policies of the otherPerson by any means whatsoever.

##  

## 1.2                                 “BiositeImprovement” shall mean any Program Invention that constitutes animprovement or enhancement to (a) the antibody development technology ofBiosite or (b) the bodily fluid in vitro diagnostic assay technology ofBiosite.

##  

## 1.3                                 “BiositeInventions” shall mean all Program Inventions that are solely owned byBiosite.

##  

## 1.4                                 “BiositeProduct” shall mean any product for use in the Exclusive Field,Semi-Exclusive Field or Non-Exclusive Field that assays a Program Target andthat if made, used, sold, offered for sale or imported absent the licensesgranted hereunder would infringe at least one Valid Claim, or that otherwiseuses or incorporates the Power3 Know-How Rights.

 

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## 1.5                                 “ConfidentialInformation” shall mean, with respect to a party, all information (and alltangible and intangible embodiments thereof) that is disclosed by such party tothe other party and is marked, identified as or otherwise acknowledged to beconfidential at the time of disclosure to the other party.  Notwithstanding the foregoing, ConfidentialInformation of a party shall not include information that the other party canestablish by written documentation (a) to have been publicly known priorto disclosure of such information by the disclosing party to the receivingparty; (b) to have become publicly known, without the fault of thereceiving party, subsequent to disclosure of such information by the disclosingparty to the receiving party; (c) to have been received by the receivingparty at any time from a source, other than the disclosing party, rightfullyhaving possession of and the right to disclose such information; (d) tohave been otherwise known by the receiving party prior to disclosure of suchinformation by the disclosing party to the receiving party; or (e) to havebeen independently developed by employees or agents on behalf of the receivingparty without access to or use of such information disclosed by the disclosingparty to the receiving party (each, a “Confidentiality Exception”).

##  

## 1.6                                 “ExclusiveField” shall mean the in vitro detection or measurement of one or moreanalytes, by means of a diagnostic device(s), instrument(s) or combinationthereof, with a stated average throughput equal to or less than one hundred(100) patient samples per hour, for use in the detection, prognosis, diagnosisor monitoring of any breast cancer-related disease, state or condition inhumans or animals.

##  

## 1.7                                 “FirstCommercial Sale” shall mean, with respect to any Biosite Product and anycountry, the first bona fide transaction for which consideration is receivedfor the sale, use, lease, transfer or similar disposition of such BiositeProduct by a party, its Affiliate or (sub)licensee to customers who are notAffiliates in such country after all applicable marketing and pricing approvals(if any) have been granted by the applicable governing health authority of suchcountry.

##  

## 1.8                                 “IssuedRoyalty Term” shall mean, with respect to each Biosite Product in eachcountry of sale, the term for which at least one (1) Valid Claim definedin Section 1.28(a) remains in effect and would be infringed, but forthe license granted by this Agreement, by the use, offer for sale, sale orimport of such Biosite Product in such country.

##  

## 1.9                                 “JointInventions” shall mean all Program Inventions that are jointly owned byBiosite and Power3.

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## 1.10                           “MonoclonalPreparation” shall mean a preparation containing a Fab or Fab fragment witha specific affinity to a Program Target.

##  

## 1.11                           “NetSales” shall mean, with respect to any Biosite Product, the gross salesprice of such Biosite Product invoiced by Biosite, its Affiliate, or its(sub)licensee to customers who are not Affiliates (or are Affiliates but arethe end users of such Biosite Product) less, to the extent actually paid oraccrued by Biosite or its Affiliate (as applicable), (a) credits,allowances, discounts and rebates to, and chargebacks from the account of, suchcustomers for spoiled, damaged, out-dated and returned Biosite Product; (b) freightand insurance costs incurred by Biosite or its Affiliate (as applicable) intransporting such Biosite Product in final form to such customers; (c) cash,quantity and trade discounts, rebates and other price reductions for such

 

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## Biosite Product given to such customers under price reduction programsthat are consistent with industry practices and price reductions given forsimilar products by Biosite or its Affiliate (as applicable); (d) sales,use, value-added and other direct taxes incurred on the sale of such BiositeProduct in final form to such customers; and (e) customs duties,surcharges and other governmental charges incurred in exporting or importingsuch Biosite Product in final form to such customers.  Notwithstanding anything to the contrary inthis Agreement, if any reusable instrument (that is itself a Biosite Product)is used in combination with a separate diagnostic reagent-containing device(that is itself a Biosite Product) to detect or measure one or more analytesfrom a patient sample on or in such device, then for purposes of calculatingNet Sales, such device shall constitute a Biosite Product, but such instrumentshall not constitute a Biosite Product.

##  

## 1.12                           “NetSublicensing Revenues” shall mean, with respect to any Biosite Product, theaggregate cash consideration received by Biosite or its Affiliates inconsideration for the sublicense under the Power3 Patent Rights or Power3Know-How Rights by Biosite or its Affiliates to a Third Party sublicensee withrespect to such Biosite Product (excluding (i) royalties received byBiosite or its Affiliates based on Net Sales of such Biosite Product by suchsublicensee, and (ii) amounts received to reimburse Biosite or itsAffiliates’ cost to perform research, development or similar services conductedfor such Biosite Product after signing the agreement with the Third Party, inreimbursement of patent or other out-of-pocket expenses on such BiositeProduct, or in consideration for the purchase of any securities of Biosite orits Affiliates at a price up to one hundred percent (100%) of the thenfair market value of such securities).

##  

## 1.13                           “Non-ExclusiveField” shall mean the in vitro detection or measurement of one or moreanalytes, by means of a diagnostic device(s), instrument(s) or combinationthereof, for use in the detection, diagnosis and monitoring of anyneurological-related disease, state or condition in humans and animals.

##  

## 1.14                           “OmniclonalPreparation” shall mean a mixture containing a variety of Fab or Fabfragments with varying affinity to a Program Target.

##  

## 1.15                           “PendingRoyalty Term” shall mean, with respect to each Biosite Product in eachcountry of sale that is not covered by at least one (1) Valid Claim asdefined in Section 1.28(a), the term during which at least one (1) ValidClaim defined in Section 1.28(b) that has not been abandoned orfinally disallowed without the possibility of appeal or refiling remains ineffect and would be infringed (if in an issued patent), but for the licensegranted by this Agreement, by the use, offer for sale, sale or import of suchBiosite Product in such country.

##  

## 1.16                           “Person”shall mean an individual, corporation, partnership, limited liability company,trust, business trust, association, joint stock company, joint venture, pool,syndicate, sole proprietorship, unincorporated organization, governmentalauthority or any other form of entity not specifically listed herein.

##  

## 1.17                           “Power3Inventions” shall mean all Program Inventions that are solely owned byPower3.

 

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## 1.18                           “Power3Know-How Rights” shall mean all trade secret and other know how rights inall inventions, discoveries, compositions, technology, data and information ofany type whatsoever, (a) that relates to a Program Antibody, ProgramTarget or fragment thereof (or any nucleotide sequence that encodes, or aminoacid sequences of the foregoing); (b) that are reasonably necessary oruseful for Biosite to conduct its obligations or exercise its rights under thisAgreement; (c) that are either (i) disclosed by Power3 to Biosite anddo not fall within the scope of a Confidentiality Exception, or (ii) developedor generated by Power3 in the course of conducting its obligations under theProgram; and (d) in which Power3 has an ownership or other licensableinterest during the term of the Agreement.

##  

## 1.19                           “Power3Patent Rights” shall mean (a) all patent applications heretofore orhereafter filed or having legal force in any country that claim (i) aProgram Antibody, Program Target or fragment thereof (or any nucleotidesequence that encodes, or amino acid sequences of the foregoing), or (ii) anyprocess of manufacture or use of a Program Antibody, Program Target or fragmentthereof (or any nucleotide sequence that encodes, or amino acid sequences ofthe foregoing) made or conceived prior to the Effective Date or in theperformance of the Program; (b) all patents that have issued or in thefuture issue therefrom, including without limitation utility, model and designpatents and certificates of invention; and (c) all divisionals,continuations, continuations-in-part, reissues, reexaminations, renewals,extensions or additions to any such patent applications and patents; in eachcase in which Power3 has an ownership or other licensable interest during theterm of the Agreement.

##  

## 1.20                           “Program”shall mean the collaborative research program to develop antibodies directed tocertain target biomolecules from selected by Power3, and to use such antibodiesto evaluate the diagnostic and therapeutic potential of such targetbiomolecules, described in Section 3 below.

##  

## 1.21                           “ProgramAntibody” shall mean, with respect to each Program Target provided byPower3 under Section 3.1.1(d), (a) any Omniclonal Preparation to suchProgram Target (or any fragment thereof) that is developed by Biosite anddelivered to Power3 pursuant to this Agreement; (b) any MonoclonalPreparation to such Program Target (or any fragment thereof) that is developedby Biosite and delivered to Power3 pursuant to this Agreement; and (c) anyantibody to such Program Target (or any fragment thereof) derived in whole orin part from the preparations described in clauses (a) and (b) above,or the nucleotide sequences encoding or the amino acid sequences of thepreparations described in clauses (a) and (b) above.

##  

## 1.22                           “ProgramInvention” shall mean any invention, discovery, composition, enhancement,technology, data or information (whether or not patentable) made or conceivedby employees or others on behalf of Biosite, Power3 or both in the performanceof the Program during the term of the Program.

##  

## 1.23                           “ProgramTarget” shall mean a target biomolecule that is selected by Power3 pursuantto Section 3.1.1(a), designated by the parties pursuant to Section 3.1.1(b),and for which the parties reach agreement regarding the mutually acceptablespecificity, affinity and other specifications (if any) desired for the antibodythereto pursuant to Section 3.1.1(c), together with (a) anyderivatives, parts or polymorphisms (including without limitation splicevariants) of such target biomolecule, (b) any nucleotide sequences withhomology to such target biomolecule

 

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## (together with any derivatives, parts or splice variants of suchnucleotide sequences) and (c) amino acid sequences and proteins encoded byeach such nucleotide sequences (together with any derivatives or parts of suchamino acid sequences and proteins).

##  

## 1.24                           “Samples”shall have the meaning set forth in Section 3.1.5(a) below.

##  

## 1.25                           “Semi-ExclusiveField” shall mean, collectively, (a) research use for any diagnosticpurpose, and (b) the in vitro detection or measurement of one or moreanalytes, by means of a diagnostic device(s), instrument(s) or combinationthereof, with a stated average throughput greater than one hundred (100)patient samples per hour, for use in the detection, prognosis, diagnosis ormonitoring of any breast cancer-related disease, state or condition in humansor animals.

##  

## 1.26                           “ThirdParty” shall mean any Person other than Biosite, Power3 and theirrespective Affiliates.

##  

## 1.27                           “ThirdParty License Agreement” shall mean a license agreement between Power3 anda Third Party in effect at the time that Power3 designates the applicableproposed target biomolecule under Section 3.1.1(a), or thereafter, whichlicense agreement grants to Power3 a license (with the right to grantsublicenses) under any patent rights or know-how rights that would constitutePower3 Patent Rights or Power3 Know-How Rights relating to such proposed targetbiomolecule.

##  

## 1.28                           “ValidClaim” shall mean (a) a claim of an issued and unexpired patentincluded within the Power3 Patent Rights that has not been held permanentlyunpatentable, revoked, unenforceable or invalid by a decision of a court orother governmental agency of competent jurisdiction, unappealable or unappealedwithin the time allowed for appeal, and that has not been admitted to beinvalid or unenforceable through reissue or disclaimer or otherwise, and (b) aclaim of a pending patent application included within the Power3 Patent Rights,which claim was filed in good faith and has not been abandoned or finally disallowedwithout the possibility of appeal or refiling of such application.

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# 2.                                       REPRESENTATIONSAND WARRANTIES

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Eachparty hereby represents and warrants to the other party as follows:

 

## 2.1                                 CorporateExistence.  Such party is acorporation duly organized, validly existing and in good standing under thelaws of the state in which it is incorporated.

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## 2.2                                 Authorizationand Enforcement of Obligations.  Suchparty (a) has the corporate power and authority and the legal right toenter into this Agreement and to perform its obligations hereunder, and (b) hastaken all necessary corporate action on its part to authorize the execution anddelivery of this Agreement and the performance of its obligationshereunder.  This Agreement has been dulyexecuted and delivered on behalf of such party, and constitutes a legal, valid,binding obligation, enforceable against such party in accordance with itsterms.

 

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## 2.3                                 Consents.  All necessary consents, approvals andauthorizations of all governmental authorities and other Persons required to beobtained by such party in connection with this Agreement have been obtained.

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## 2.4                                 NoConflict.  The execution and deliveryof this Agreement and the performance of such party’s obligations hereunder (a) donot conflict with or violate any requirement of applicable laws or regulationsand (b) do not conflict with, or constitute a default under, anycontractual obligation of such party.

##  

## 2.5                                 DISCLAIMEROF WARRANTIES.  NOTWITHSTANDINGANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY MAKES ANYREPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROGRAMANTIBODIES OR PROGRAM TARGETS, INCLUDING WITHOUT LIMITATION ANY WARRANTY OFMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT OF THEPATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY OTHER PERSON.

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# 3.             THEPROGRAM

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## 3.1                                 Responsibilities.

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### 3.1.1        TargetDesignation.

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#### (a)                                  Eachcalendar quarter during the term of the Program, Power3 shall select up to ten (10) targetbiomolecules from that Power3 desires to use in the Program, provided that atleast one half (1/2) of the target biomolecules proposed by Power3 in any suchcalendar quarter shall be target biomolecules with application in the ExclusiveField and/or Semi-Exclusive Field.  Withrespect to each such target biomolecule with which Power3 desires to conductimmunizations hereunder, Power3 shall provide to Biosite in writing thefollowing information:  (i) thecommon name of such target biomolecule, if any; (ii) other publicly knownnames of such target biomolecule and any fragment thereof; (iii) thenucleic acid sequence of the gene or cDNA encoding such target biomolecule, orsufficient information to enable access to such sequence from public databases;(iv) identification of the source of biological materials that resulted inthe identification of such target biomolecule by Power3 in sufficient detail toallow Biosite to determine the potential disease specificity of such targetbiomolecule and whether, to the best of Power3’s knowledge, such targetbiomolecule is difficult to express or to generate antibodies thereto; (v) whetheror not Power3 owns or has a licensable interest in any patent or otherintellectual property rights in such target biomolecule, antibodies to suchtarget biomolecule or the use thereof, which would be licensed to Biosite asset forth in Section 4.2; (vi) whether or not there exist any ThirdParty License Agreements relating to such proposed target biomolecule or antibodiesthereto, and thereafter during the term of this Agreement Power3 shall notifyBiosite of any additional Third Party License Agreements relating to a ProgramTarget or antibodies thereto and provide a description of the applicablefinancial terms; (vii) whether or not such proposed target biomolecule orantibodies thereto are the subject of a collaboration, research, development,commercialization, out-license or similar agreement between Power3 and anyThird Party; and (viii) copies of all patents and patent applicationscovering such target biomolecule, an antibody thereto, or any use of theforegoing.

 

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#### (b)                                 Withinthirty (30) days after Biosite receives from Power3 all the informationrequired under Section 3.1.1(a) for a proposed target biomolecule,the parties shall attempt to reach mutual agreement on designating suchproposed target biomolecule as a Program Target.

####  

#### (c)                                  Withrespect to each proposed target biomolecule that the parties mutually agree todesignate as a Program Target, Biosite and Power3 shall discuss in good faithand attempt to reach mutually acceptable agreement regarding the specificity,affinity and other specifications (if any) desired for the antibody to suchproposed target biomolecule to be developed under the Program.  A proposed target biomolecule that theparties mutually agree to designate as a Program Target shall be designated aProgram Target upon the agreement by the parties on the mutually acceptablespecificity, affinity and other specifications desired for the antibodythereto.

####  

#### (d)                                 Withrespect to each Program Target with which Biosite is to conduct immunizationshereunder, within thirty (30) days after designation of such ProgramTarget, Power3 shall provide Biosite with (i) at least two (2) milligramsof purified protein of such Program Target or a reasonably sufficient quantityof a cell line producing or cDNA clone of such Program Target or cDNA sequenceencoding such Program Target; provided that immunizations and antibodydevelopment will be delayed by at least three (3) months if a cDNA cloneis provided, and an additional period equal to the time reasonably required byBiosite to express the target biomolecule if just the cDNA sequence isprovided, and (ii) such information and data regarding such Program Target(including without limitation the nucleotide sequence encoding and the aminoacid sequence of such Program Target), as reasonably necessary for Biosite toconduct its obligations under the Program.

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### 3.1.2                        Antibody Development andDelivery.  With respect to eachProgram Target, Biosite shall use commercially reasonable efforts (a) todevelop antibodies to the Program Target provided by Power3 under Section 3.1.1(d) withthe specificity, affinity and such other specifications as mutually agreed bythe parties, and (b) to deliver such antibodies within nine (9) monthsfollowing the date Biosite first conducts immunizations with such ProgramTarget.  Biosite shall: (i) make alibrary of antibodies for each Program Target, (ii) screen the antibodiesin such library with the specified antigen or antigen mixture, and (iii) determinewhich such antibodies satisfy the specificity, affinity and otherspecifications mutually agreed by the parties. After consultation with Power3, Biosite shall select one OmniclonalPreparation that meets such specifications for each Program Target, and Biositeshall sell and deliver to Power3 a minimum of one milligram (1mg) of suchOmniclonal Preparation, and at least twenty (20) Monoclonal Preparationsselected from such Omniclonal Preparation.

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### 3.1.3                        Limitations on Use.  Power3 shall use all Omniclonal Preparationsand Monoclonal Preparations sold and delivered by Biosite under Section 3.1.2solely to conduct its obligations under the Program, or to conductresearch.  Power3 shall not, and shallnot cause or permit any other Person to, use any such Omniclonal Preparation orMonoclonal Preparation sold and delivered by Biosite under Section 3.1.2,other than to conduct its obligations under the Program, or to conductresearch.

 

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### 3.1.4                        Target Validation andEvaluation.  Power3 shall conductsuch tests (if any) as Power3 determines reasonably necessary to validate eachProgram Target, to evaluate the potential diagnostic and therapeutic utility ofeach Program Target, and to otherwise evaluate each Program Antibody.

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### 3.1.5                        Sample Analysis.

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#### (a)                                  UponBiosite’s written request, Power3 shall provide to Biosite, prior to one (1) monthfollowing the first delivery of Program Antibodies, non-degraded, intact,properly shipped, blood-based clinical samples (each sample being approximately2ml, but not less than 1.5ml, in volume) previously obtained by Power3 from itsclinical trials being conducted at New York University, Mercy Hospital and OGA(the “Samples”).  With respect to eachSample, Power3 shall (i) provide Biosite with such information, that isnot subject to confidentiality obligations pursuant to the Health InsurancePortability and Accountability Act (“HIPPA”) and the clinical trial andmaterial transfer agreements under which the Samples and clinical data werecollected, regarding such Sample as Power3 has in its possession and control; (ii) haveobtained the requisite patient consent forms to permit the use contemplatedhereunder of all such Samples and associated clinical data, together with allprogeny, products and information derived therefrom, for research anddevelopment without compensation to the donor; (iii) prepare and maintain completeand accurate records of Sample sources, donor medical history, Sampleprocurement and any infectious disease screening, together with any otherrecords regarding the Samples required by applicable laws and regulations; (iv) provideBiosite with copies of all such patient consent forms and records upon request,provided that Power3 shall redact patient names and other patient identifyinginformation for confidentiality purposes; and (v) advise Biosite of anyThird Party restrictions applicable to the use of such Samples at the time of,or prior to, providing such Samples to Biosite.

####  

#### (b)                                 Biositeshall treat all Samples and clinical data as Confidential Information and shallnot publish, sell, lease, or otherwise transfer or disclose such Samples and clinicaldata to any other party without the express consent of Power3; provided,however, that Biosite shall have the right to publish and include in itsmarketing brochures summaries of the clinical data.  Notwithstanding the foregoing, Biosite shallhave the right to use all Samples and associated clinical data, together withall progeny, products and information derived therefrom, for research anddevelopment purposes, as long as Biosite use complies with HIPPA, Third Partyrestrictions provided to Biosite under Section 3.1.5(a) above, andany other current or future government regulations governing the transfer anduse of such Samples and clinical data.

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#### (c)                                  Biositeshall use commercially reasonable efforts to generate an ELISA-based assay foreach Program Target with application in the Exclusive Field and/orSemi-Exclusive Field and for which Biosite has generated appropriate antibodies(as determined by Biosite in its reasonable discretion) under the Program.

####  

#### (d)                                 IfBiosite successfully develops an ELISA-based assay for any such Program Target,Biosite shall analyze each of the Samples provided by Power3 under Section 3.1.5(a) withsuch assay and shall provide the resulting data to Power3.

 

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### 3.1.6                        Conduct of Program.  Each party shall conduct the Program in goodscientific manner, and in compliance in all material respects with allrequirements of applicable laws and regulations to attempt to achieve itsobjectives efficiently and expeditiously. Each party shall proceed diligently with its responsibilities under theProgram, and shall allocate such personnel, equipment, facilities and otherresources as reasonably necessary to conduct its obligations under the Programand to accomplish the objectives thereof.

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## 3.2                                 Results.

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### 3.2.1                        Reports.  Within thirty (30) days following theend of each calendar year during the term of the Program and withinthirty (30) days following the expiration or termination of the Program,each party shall prepare, and provide to the other party, a reasonably detailedwritten report that shall describe the work performed by such party, and theresults achieved, to date under the Program, together with copies of all dataresulting from the tests and evaluation performed by such party to date underthe Program.

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### 3.2.2                        Records.  Each party shall maintain records, insufficient detail and in good scientific manner appropriate for patentpurposes, which shall be complete and accurate and shall fully and properlyreflect all work done and results achieved in the performance of the Program.

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### 3.2.3                        Inspection of Records.  Each party shall have the right, duringnormal business hours and on reasonable notice, to inspect and copy suchrecords of the other party regarding the work done and results achieved in theperformance of the Program, to the extent reasonably necessary to enable suchparty to conduct its obligations under the Program or to exercise its rightshereunder.  Each party shall maintain suchrecords of the other party (together with the information contained therein) inconfidence in accordance with Section 7 below and shall not use suchrecords (or information) except to the extent otherwise permitted by thisAgreement.

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## 3.3                                 ProgramLeaders.  Each party shall appoint aperson (a “Program Leader”) to coordinate its part of the Program.  The Program Leaders shall be the primarycontacts between the parties with respect to the Program.  Each party shall notify the other withinthirty (30) days after the date of this Agreement of the appointment ofits Program Leader and shall notify the other party as soon as practicable uponchanging this appointment.

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## 3.4                                 Subcontracts.  Either party may subcontract portions of theProgram to be performed by it in the normal course of its business without theprior consent of the other party; provided, however, that (a) suchsubcontracting shall not involve the transfer of Confidential Information ofthe other party to any Third Party unless the subcontracted party shall enterinto a confidentiality agreement with the subcontracting party in accordancewith Section 7 below; (b) the subcontracting party shall supervisesuch subcontract work; and (c) the subcontracted party shall be incompliance in all material respects with all requirements of applicable lawsand regulations.

 

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## 3.5                                 Termof Program.  Unless this Agreement isterminated earlier under Section 10 below, the term of the Program shallcommence on the Effective Date of this Agreement and shall continue for aperiod of three (3) years thereafter.

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## 3.6                                 Ownershipof Inventions.

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### 3.6.1                        As between Biosite and Power3,all right, title and interest in (a) all Program Targets, (b) allnucleotide sequences encoding Program Targets and (c) all amino acidsequences of Program Targets, in each case that are patented, patentable orConfidential Information of Power3, together with all patent rights and otherintellectual property rights therein, shall be owned by Power3.

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### 3.6.2                        As between Biosite and Power3,all right, title and interest in all uses of Program Targets, nucleotidesequences encoding Program Targets and amino acid sequences of Program Targets,in each case that are conceived in the performance and during the term of theProgram (whether or not patentable), together with all patent rights and otherintellectual property rights therein, shall be owned by Power3.  Biosite hereby sells, assigns and transfersto Power3 all of Biosite’s right, title and interest therein and thereto.

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### 3.6.3                        As between Biosite and Power3,all right, title and interest in all Program Antibodies and all uses thereof,in each case that are conceived in the performance and during term of theProgram (whether or not patentable), together with all patent rights and otherintellectual property rights therein, shall be owned by Power3.  Biosite hereby sells, assigns and transfersto Power3 all of Biosite’s right, title and interest therein and thereto.

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### 3.6.4                        All right, title and interestin all Biosite Improvements, together with all patent rights and otherintellectual property rights therein, shall be owned by Biosite.  Power3 hereby sells, assigns and transfers toBiosite all of Power3’s right, title and interest therein and thereto.

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### 3.6.5                        All right, title and interestin all Program Inventions constituting or pertaining to phage display librariesand cells containing any plasmid that encodes or secretes Program Antibodiesand with all cell lines therefor, together with all patent rights and otherintellectual property rights therein, shall be owned by Biosite.  Power3 hereby sells, assigns and transfers toBiosite all of Power3’s right, title and interest therein and thereto.Notwithstanding anything to the contrary in this Agreement, Biosite shall haveno obligation to sell, assign or transfer to Power3 any phage display librariesor cells containing any plasmid that encodes or secretes Program Antibodies, orany cell lines therefor  Notwithstandingthe foregoing, if Biosite does not pursue the commercialization of a Program Antibodyused to designate a Reduced Royalty Rate Target within 6 months following thedate of such designation, then Biosite shall negotiate in good faith withPower3 mutually acceptable and commercially reasonable terms and conditions fora supply agreement with Power3 for providing reasonable quantities of thatProgram Antibody to Power3, or a third party licensee, for research anddiagnostic purposes within the neurological field.

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### 3.6.6                        Subject to the provisions ofSections 3.6.1 through 3.6.5 above, Biosite and Power3 shall jointly ownall right, title and interest in all non-patentable data resulting from

 

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### testing of the Program Targets or Program Antibodies by employees orothers on behalf of Biosite and Power3 or in the performance and during theterm of the Program.

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### 3.6.7                        Except as otherwise set forthin Sections 3.6.1 through 3.6.5 above, all right, title and interest inall Program Inventions, together with all patent rights and other intellectualproperty rights therein, (a) made or conceived solely by employees orothers acting on behalf of Biosite shall be owned solely by Biosite, (b) madeor conceived solely by employees or others acting on behalf of Power3 shall beowned solely by Power3, and (c) made or conceived jointly by employees orothers acting on behalf of Biosite and by employees or others acting on behalfof Power3 shall be owned jointly by Biosite and Power3.

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### 3.6.8                        Each party shall have theright, subject to the provisions of this Agreement, to freely exploit,transfer, license or encumber its rights in any Joint Invention (or the patentand other intellectual property rights therein) without the consent of, orcompensation or accounting to, the other party.

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### 3.6.9                        Each party shall cause allemployees and other Persons acting on its behalf in performing its obligationsunder the Program to be obligated under a binding written agreement to assignto it, or as it shall direct, all Program Inventions made or conceived by suchemployees or other Persons.

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# 4.                                       LICENSEGRANTS

#  

## 4.1                                 ProgramLicense.  On the terms and subject tothe conditions of this Agreement, Power3 hereby grants to Biosite anon-exclusive, worldwide, royalty-free license (without the right to grantsublicenses) under the Power3 Patent Rights and Power3 Know-How Rights duringthe term of the Program to conduct Biosite’s obligations under the Program.

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## 4.2                                 CommercializationLicenses.

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### 4.2.1                        On the terms and subject to theconditions of this Agreement, Power3 hereby grants to Biosite an exclusive,worldwide, royalty-bearing license (together with the right to grantsublicenses) under the Power3 Patent Rights and Power3 Know-How Rights todevelop, make, have made, use, offer for sale, sell and import Biosite Productsfor use in the Exclusive Field.

###  

### 4.2.2                        On the terms and subject to theconditions of this Agreement, Power3 hereby grants to Biosite a semi-exclusive,worldwide, royalty-bearing license (together with the right to grant one (1) sublicenseas described below) under the Power3 Patent Rights and Power3 Know-How Rightsto develop, make, have made, use, offer for sale, sell and import BiositeProducts for use in the Semi-Exclusive Field. With respect to each Program Target, Biosite shall only have the rightto grant one (1) exclusive (even as to Biosite) sublicense for suchProgram Target under the rights granted by Power3 to Biosite under this Section 4.2.2.  For purposes of this Section 4.2.2, “semi-exclusive”shall mean, with respect to a Program Target, that there shall not exist morethan two (2) Persons (excluding Biosite, its Affiliates andsublicensees, but including Power3) at any time having either license fromPower3, or, with respect to Power3, retaining the rights in any country underthe Power3 Patent Rights or the Power3 Know-How Rights that permits such Personto use such Program Target in the Semi-Exclusive Field.

 

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### 4.2.3                        On the terms and subject to theconditions of this Agreement, Power3 hereby grants to Biosite a non-exclusive,worldwide, royalty-bearing license (together with the right to grant one (1) sublicenseas described below) under the Power3 Patent Rights and Power3 Know-How Rightsto develop, make, have made, use, offer for sale, sell and import BiositeProducts for use in the Non-Exclusive Field. With respect to each Program Target, Biosite shall have the right togrant one (1) sublicense for such Program Target under the rights grantedby Power3 to Biosite under this Section 4.2.3; however, the grant of suchsublicense will replace Biosite’s own right to develop, make, have made, use,offer for sale, sell and import Biosite Product for use in the Non-ExclusiveField.

###  

### 4.2.4                        Biosite shall have the right todevelop such assays, and conduct such tests as Biosite determines reasonablynecessary to evaluate the potential diagnostic utility of such Program Targetand to otherwise evaluate each Program Antibody.

###  

### 4.2.5                        Any data generated by Biositein the development of such assays and such tests to determine the potentialdiagnostic utility of such Program Target shall be owned by Biosite.  Biosite shall promptly provide such data toPower3.  Any data provided to Power3under this Section 4.2.5 shall be treated as Confidential Information ofBiosite subject to the provisions of Section 7.  Any data generated by Power3 in the testingof the Program Antibodies, including any data generated to determine thepotential therapeutic or diagnostic utility of the Program Antibodies orProgram Target shall be owned by Power3. Power3 shall promptly provide such data to Biosite.  Any data provided to Biosite under this Section 4.2.5shall be treated as Confidential Information of Power3 subject to theprovisions of Section 7.

###  

## 4.3                                 Option.  If Biosite reasonably believes that, withrespect to a Program Target, there is a diagnostic application or field of usethat is outside of the Exclusive Field, Semi-Exclusive Field and Non-ExclusiveField, then, if such application or field of use has not then been exclusivelylicensed to a Third Party by Power3, Biosite shall have the right upon writtennotice to Power3 to designate such diagnostic application or field of use aswithin either (a) the Exclusive Field and Semi-Exclusive Field, or (b) theNon-Exclusive Field of this Agreement. Following the date of such written notice and provided that Power3 onsuch date has the right to grant the inclusion of the designated diagnosticapplication or field of use within this Agreement and that such a grant wouldnot result in a breach of the terms of a written agreement that Power3previously entered into with a Third Party, the parties shall amend thisAgreement to include such diagnostic application or field of use within theapplicable Field(s) subject to the royalties and milestones owing on BiositeProducts sold within such Field(s).

##  

## 4.4                                 Sublicenses.  Biosite’s right to sublicense under thisAgreement is subject to the following conditions: (a) in each suchsublicense, the sublicensee shall be prohibited from granting further sublicensesand shall be subject to the applicable terms and conditions of the licensegranted to Biosite under this Agreement; (b) Biosite shall forward toPower3, within thirty (30) days following execution, a complete andaccurate copy written in the English language of each sublicense grantedhereunder; (c) notwithstanding any such sublicense, Biosite shall remainprimarily liable to Power3 for all of Biosite’s duties and obligationscontained in this Agreement, and any act or omission of a sublicensee whichwould be a breach of this Agreement if performed by Biosite shall be deemed tobe a breach by Biosite of this Agreement; provided, however, that if anysublicensee breaches any duty or obligation under its agreement with Biosite

 

12

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## that would result in Biosite being deemed in breach of this Agreement,Biosite shall have the right to cure such breach by immediately terminatingsuch sublicense; and (d) upon termination of this Agreement for anyreason, all sublicenses shall, at Power3’s option, be terminated or assigned toPower3.

##  

# 5.                                       FINANCIALTERMS

#  

## 5.1                                 AntibodyFees Payable by Power3.  Inconsideration for the sale of the Program Antibodies to Power3, Power3 shallpay to Biosite one thousand dollars ($1,000) for the approximately onemilligram (1mg) quantity of Omniclonal Preparation, and the panel oftwenty (20) Monoclonal Preparations selected from the OmniclonalPreparation, generated for each Program Target under the Program that is soldand delivered to Power3 under Section 3.1.2 above.  Biosite shall invoice Power3 for such amountat the time of delivery of such Omniclonal Preparation and twenty (20)Monoclonal Preparations, and Power3 shall pay to Biosite such amount withinthirty (30) days after receipt by Power3 of such invoice.  Power3 shall pay all federal, state, countyor municipal sales or use tax, excise or similar charge, or other taxassessment (other than that assessed against income), assessed or charged onthe sale of the Omniclonal Preparations and Monoclonal Preparations sold anddelivered to Power3 pursuant to this Agreement.

##  

## 5.2                                 AnnualMaintenance Fee.  Commencing with thethird (3rd) anniversary of the date Biosite makes a milestone payment to Power3pursuant to Section 5.4 below following demonstration of a panel ofantibodies is suitable for development of a commercial product for use in theExclusive Field and/or Semi-Exclusive Field, and on each subsequent anniversaryof such date until the date of submission by Biosite of the first 510k or PMAto the FDA for the first Biosite Product for use in the Exclusive Field and/orSemi-Exclusive Field, Biosite shall pay to Power3 an annual maintenance fee ofone hundred thousand dollars ($100,000).

##  

## 5.3                                 BloodSample Collection Fees.  In considerationfor the collection and transfer of Samples requested by Biosite in writing,Biosite shall pay to Power3 (a) if Power3 collects and transfers toBiosite at least four hundred (400) approximately 2ml volume, but not less than1.5ml volume, Samples, together with the associated clinical data andinformation (as the parties mutually determine as requested by Biosite andconsistent with Section 3.1.5), three hundred and fifty thousand dollars($350,000), and (b) for each approximately 2ml volume, but not less than1.5ml volume, Sample in excess of four hundred (400) that is collected andtransferred by Power3 together with the associated clinical data andinformation (as the parties mutually determine), four hundred and seventeendollars ($417); provided, however, that in no event shall Biosite be obligatedto pay more than six hundred thousand dollars ($600,000) in the aggregate for atotal of 1000 Samples under this Section 5.3.  However, if Biosite requests in writingSamples in addition to the first 1000 Samples, Biosite will continue to pay$417 per Sample supplied by Power3.

##  

## 5.4                                 MilestonesPayable by Biosite.  Biosite shallpay to Power3 the following milestone payments within thirty (30) daysfollowing the applicable event:

##  

| $ | 150,000 |   | upon the earlier of (a) the First Commercial  Sale by Biosite of a Biosite Product for use in the Semi-Exclusive Field, or (b) the |
|---|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   |      | effective date of the first written agreement  between Biosite and a Third Party sublicensee for a sublicense under the  rights in the Semi-Exclusive Field granted to Biosite under Section 4.2.2; |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                                                                     |
| $      | 250,000   |                                                                                                                                                                                                     | upon demonstration, as determined in Biosite’s sole  and reasonable discretion, that a panel of antibodies (including one or more  antibodies to a Program Target) is suitable for development of a commercial  product for use in the Exclusive Field and/or Semi-Exclusive Field; |
|   |      |                                                                                                                                                                                                     |
| $      | 500,000   |                                                                                                                                                                                                     | upon the first submission by Biosite of the first  510k or PMA to the FDA for the first Biosite Product for use in the Exclusive  Field and/or Semi-Exclusive Field; |
|   |      |                                                                                                                                                                                                     |
| $      | 300,000   |                                                                                                                                                                                                     | upon the first  submission by Biosite of the first 510k or PMA to the FDA for the first  Biosite Product for use in the Non-Exclusive Field; |
|   |      |                                                                                                                                                                                                     |
| $      | 1,000,000 |                                                                                                                                                                                                     | upon the first FDA  approval of the first 510k or PMA submitted by Biosite for the first Biosite  Product for use in the Exclusive Field and/or Semi-Exclusive Field; and |
|   |      |                                                                                                                                                                                                     |
| $      | 300,000   |                                                                                                                                                                                                     | upon the first FDA approval of the first 510k or PMA  submitted by Biosite for the first Biosite Product for use in the  Non-Exclusive Field. |

##  

## 5.5                                 RoyaltiesPayable by Biosite.

##  

### 5.5.1                        Annual Minimum Royalty.  Commencing at the end of the first fullcalendar year following the date of First Commercial Sale for the first BiositeProduct, and at the end of each subsequent calendar year during the term ofthis Agreement, Biosite shall pay to Power3 a fully-creditable annual minimumroyalty of (a) for the first year, two hundred thousand dollars($200,000), (b) for the second year, three hundred thousand dollars($300,000), and (c) for the third and each subsequent year, five hundredthousand dollars ($500,000).  Biositeshall make each such payment within sixty (60) days following the end of theapplicable year.  All royalties under Section 5.5.2below paid by Biosite during the applicable year shall be fully creditableagainst royalties owing under this Section 5.5.1.

###  

### 5.5.2                        Running Royalties.

###  

#### (a)                                  Duringthe applicable Issued Royalty Term for a Biosite Product for use in theExclusive Field and/or Semi-Exclusive Field, on a country-by-country basis,Biosite shall pay to Power3 royalties, with respect to each such BiositeProduct, equal to (i) seven percent (7%) of Net Sales of such BiositeProduct in such country, or (ii) if such Program Target has beendesignated as a Reduced Royalty Rate Target (as defined below), three andone-half percent (3.5%) of Net Sales of such Biosite Product in suchcountry.  For each Program Target withapplication in the Non-Exclusive Field for which Biosite generates and deliversProgram Antibodies to Power3 pursuant to Section 3.1.2, Biosite shall havethe right upon written notice

 

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#### to Power3 to designate one (1) Program Target with application inthe Exclusive Field and/or Semi-Exclusive Field as a “Reduced Royalty RateTarget.”  Once a Program Target withapplication in the Exclusive Field and/or Semi-Exclusive Field is designated asa Reduced Royalty Rate Target, Biosite shall not have the right to transfer thedesignation to another Program Target even if Biosite discontinues developmentof Biosite Products that assay the first such designated Program Target.  Notwithstanding the foregoing, if any BiositeProduct contains antibodies that are not Program Antibodies or controlantibodies, and are included in order to get FDA approval and/or tocommercialize such Biosite Product, then the Net Sales of, and milestones owingfor, such Biosite Product under this Section 5.5.2(a) shall bemultiplied by the quotient of (i) the total number of different ProgramAntibodies (for detecting analytes) contained in such Biosite Product, dividedby (ii) the total number of different antibody types contained in suchBiosite Product that specifically bind known, non-antibody target biomoleculesand do not represent experimental controls; provided, however, that if suchBiosite Product is covered by intellectual property rights granted to Power3under a Third Party License Agreement, then in no event shall the applicableroyalty rate set forth in this Section 5.5.2(a) be reduced by reasonof this sentence to a percentage rate less than one and one-half (1 1/2) timesthe applicable percentage rate owing by Power3 under such Third Party LicenseAgreement.

####  

#### (b)                                 Duringthe applicable Issued Royalty Term for a Biosite Product for use in theNon-Exclusive Field, on a country-by-country basis, Biosite shall pay to Power3royalties, with respect to each Biosite Product, equal to three and one-halfpercent (3.5%) of Net Sales of such Biosite Product in such country.  Notwithstanding the foregoing, if any BiositeProduct contains antibodies that are not Program Antibodies or controlantibodies, and are included in order to get FDA approval and/or to commercializesuch Biosite Product, then the Net Sales of, and milestones owing for, suchBiosite Product under this Section 5.5.2(b) shall be multiplied bythe quotient of (i) the total number of different Program Antibodies (fordetecting analytes) contained in such Biosite Product, divided by (ii) thetotal number of different antibody types contained in such Biosite Product thatspecifically bind known, non-antibody target biomolecules and do not representexperimental controls; provided, however, that if such Biosite Product iscovered by intellectual property rights granted to Power3 under a Third PartyLicense Agreement, then in no event shall the applicable royalty rate set forthin this Section 5.5.2(b) be reduced by reason of this sentence to apercentage rate less than two (2) times the applicable percentage rateowing by Power3 under such Third Party License Agreement.

####  

#### (c)                                  Notwithstandingthe foregoing (i) only one (1) royalty shall be due for each BiositeProduct, and (ii) if any Biosite Product contains two (2) or moreantibodies that bind to two (2) or more Program Targets, respectively, andfor which different royalty rates apply pursuant to Sections 5.5.2(a) and/or5.5.2(b), then the applicable royalty rate for such Biosite Product shall becalculated by taking the average of each applicable royalty rate.

####  

#### (d)                                 Duringthe applicable Pending Royalty Term for a Biosite Product covered byintellectual property rights granted to Power3 under a Third Party LicenseAgreement, on a country-by-country basis, Biosite shall pay to Power3royalties, with respect to each such Biosite Product, equal to the royaltiesowing by Power3 under such Third Party License Agreement for Net Sales of suchBiosite Product in such country.

 

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## 5.6                                 NetSales Milestones.  In addition to theaforementioned royalty payments, if (a) after one (1) year followingthe date of First Commercial Sale for the first Biosite Product, Biosite hasaggregate Net Sales of at least ten million dollars ($10,000,000), Biositeshall pay to Power3 one million dollars ($1,000,000), or (b) if within two(2) years following the date of First Commercial Sale for the firstBiosite Product, Biosite has aggregate Net Sales of at least twenty milliondollars ($20,000,000), Biosite shall pay to Power3 five hundred thousanddollars ($500,000), or (c) if within two (2) years following the dateof First Commercial Sale for the first Biosite Product, Biosite has aggregateNet Sales of at least ten million dollars ($10,000,000), Biosite shall pay toPower3 two hundred and fifty thousand dollars ($250,000); provided, however,that if Biosite achieves one or more of the foregoing milestones, Biosite shallonly be obligated to make one (1) payment under this Section 5.6,corresponding to the highest applicable payment.

##  

## 5.7                                 ThirdParty Royalty Offset.  If Biosite,its Affiliates or sublicensees are required, in any country in any calendarquarter, to pay Third Party royalties or milestones in consideration for the(sub)license of rights under issued patents necessary to make, use, sell orimport a Biosite Product in such country during such calendar quarter, thenBiosite shall have the right to credit such Third Party royalties and milestonepayments against the royalties and milestones owing under Sections 5.4 and5.5 with respect to such Biosite Product during such calendar quarter.  In no event shall the royalties or milestonesdue under Sections 5.4 and 5.5 on any Biosite Product in any calendarquarter be reduced due to credits for Third Party royalties under this Section 5.7to less than fifty percent (50%) of the amounts due under Sections 5.4 and5.5 with respect to such Biosite Product in such country in such calendarquarter before giving effect to the application of this Section 5.7.  Notwithstanding the foregoing, if  a Biosite Product is covered by intellectualproperty rights granted to Power3 under a Third Party License Agreement, thenin no event shall the effective royalty rate set forth in Section 5.5 bereduced by reason of this Section 5.7 to a percentage rate less than oneand one-half (1 1/2) times the applicable percentage rate owing by Power3 undersuch Third Party License Agreement.

##  

# 6.                                       PAYMENTREPORTS AND PAYMENT TERMS

#  

## 6.1                                 PaymentReports.

##  

### 6.1.1                        Within sixty (60) daysafter the end of each calendar quarter during the term of this Agreementfollowing the First Commercial Sale of a Biosite Product by Biosite or itsAffiliate or the first grant of a sublicense hereunder, and withinsixty (60) days following the expiration or termination of this Agreement,Biosite shall furnish to Power3 a written report showing in reasonably specificdetail, on a Biosite Product-by-Biosite Product and country-by-country basis, (a) thegross sales of all Biosite Products sold by Biosite or its Affiliates duringsuch calendar quarter and the calculation of Net Sales from such gross sales; (b) allcash consideration received by Biosite from such sublicensees during suchcalendar quarter, the reason for each such payment, and the calculation of NetSublicensing Revenues for such quarter; (c) the calculation of theroyalties, if any, that shall have accrued based upon such Net Sales; (d) thewithholding taxes, if any, required by law to be deducted with respect to suchsales; and (e) the exchange rates, if any, used in determining the amountof United States dollars.

 

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### 6.1.2                        With respect to (a) salesof Biosite Products by Biosite or its Affiliate and invoiced in United Statesdollars and (b) cash consideration paid in United States dollars byBiosite’s sublicensees hereunder, all such amounts shall be expressed in UnitedStates dollars.  With respect to (i) salesof Biosite Products by Biosite or its Affiliate and invoiced in a currencyother than United States dollars and (ii) cash consideration paid in acurrency other than United States dollars by Biosite’s sublicensees hereunder,all such amounts shall be expressed both in the currency in which thedistribution is invoiced and in the United States dollar equivalent.  The United States dollar equivalent shall becalculated using the average of the exchange rate (local currency per US$1)published in The Wall Street Journal, Western Edition, under the heading“Currency Trading” on the last business day of each month during the applicablecalendar quarter.

###  

### 6.1.3                        Biosite shall keep complete andaccurate records in sufficient detail to enable the amounts payable hereunderto be determined.

###  

## 6.2                                 Audits.

##  

### 6.2.1                        Upon the written request ofPower3 and not more than once in each calendar year, Biosite shall permit anindependent certified public accounting firm, selected by Power3 and reasonablyacceptable to Biosite, at Power3’s expense, to have access during normalbusiness hours to such of the records of Biosite as may be reasonably necessaryto verify the accuracy of the payment reports hereunder for the eight (8) calendarquarters immediately prior to the date of such request (other than records forwhich Power3 has already conducted an audit under this Section).

###  

### 6.2.2                        If such accounting firmconcludes that additional amounts were owed during the audited period, Biositeshall pay such additional amounts within thirty (30) days of the datePower3 delivers to Biosite such accounting firm’s written report soconcluding.  The fees charged by suchaccounting firm shall be paid by Power3; provided, however, if the auditdiscloses that the royalties payable by Biosite for such period are more thanone hundred ten percent (110%) of the royalties actually paid for suchperiod, then Biosite shall pay the reasonable fees and expenses charged by suchaccounting firm.

###  

### 6.2.3                        Power3 shall cause itsaccounting firm to retain all financial information subject to review underthis Section 6.2 in strict confidence; provided, however, that Biosite shallhave the right to require that such accounting firm, prior to conducting suchaudit, enter into an appropriate non-disclosure agreement with Biositeregarding such financial information. The accounting firm shall disclose to Power3 only whether the reportsare correct or not and the amount of any discrepancy.  No other information shall be shared.  Power3 shall treat all such financialinformation as Biosite’s Confidential Information.

###  

## 6.3                                 PaymentTerms.  All amounts shown to haveaccrued by each payment report provided for under Section 6.1 above shallbe payable on the date such payment report is due.  Payment of amounts in whole or in part may bemade in advance of such due date.

##  

## 6.4                                 PaymentMethod.  All payments by a party tothe other party under this Agreement shall be paid in United States dollars andall such payments shall be originated from a

 

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## United States bank located in the United States and made by bank wiretransfer in immediately available funds to such account as the payee shalldesignate before such payment is due.

##  

## 6.5                                 ExchangeControl.  If at any time legalrestrictions prevent the prompt remittance of part or all royalties withrespect to any country where a Biosite Product is sold by Biosite or itsAffiliate, Biosite shall have the right, at its option, to make such paymentsby depositing the amount thereof in local currency to Power3’s account in abank or other depository in such country. If the royalty rate specified in this Agreement should exceed thepermissible rate established in any country, the royalty rate for sales in suchcountry shall be adjusted to the highest legally permissible orgovernment-approved rate.

##  

## 6.6                                 WithholdingTaxes.  Biosite shall be entitled todeduct the amount of any withholding taxes, value-added taxes or other taxes,levies or charges with respect to such amounts, other than United States taxes,payable by Biosite, or any taxes required to be withheld by Biosite, to theextent Biosite pays to the appropriate governmental authority on behalf ofPower3 such taxes, levies or charges. Biosite shall use reasonable efforts to minimize any such taxes, leviesor charges required to be withheld on behalf of Power3 by Biosite.  Biosite promptly shall deliver to Power3proof of payment of all such taxes, levies and other charges, together withcopies of all communications from or with such governmental authority withrespect thereto.

##  

# 7.                                       CONFIDENTIALITY

#  

## 7.1                                 ConfidentialInformation.  During the term of thisAgreement, and for a period of five (5) years following theexpiration or earlier termination hereof, each party shall maintain inconfidence all Confidential Information disclosed by the other party (includingall Confidential Information disclosed prior to the term of this Agreementpursuant to a written confidentiality agreement between the parties), and shallnot use, grant the use of or disclose to any third party the ConfidentialInformation of the other party other than as expressly permitted hereby.  Each party shall notify the other promptlyupon discovery of any unauthorized use or disclosure of the other party’sConfidential Information.

##  

## 7.2                                 Termsof this Agreement.  Except asotherwise provided herein, during the term of this Agreement and for a periodof five (5) years thereafter, neither party shall disclose any termsor conditions of this Agreement to any Third Party without the prior consent ofthe other party.  Notwithstanding theforegoing, prior to execution of this Agreement, the parties have agreed inwriting upon the substance of information that can be used to describe theterms of this transaction, and each party may disclose such information, asmodified by mutual agreement from time to time, without the other party’sconsent.

##  

## 7.3                                 Limitationson Disclosure.  Each party shalllimit the disclosure of the Confidential Information of the other party and theterms of this Agreement on a need-to-know basis to those directors, officers,employees, consultants, licensors, legal and financial advisors, clinicalinvestigators, contractors, (sub)licensees, distributors or permittedassignees, to the extent such disclosure is reasonably necessary in connectionwith such party’s activities as expressly authorized by this Agreement.  To the extent that disclosure is authorizedby this Agreement, prior to disclosure, each party hereto shall obtainagreement of any such Person to

 

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## hold in confidence and not make use of the Confidential Information forany purpose other than those permitted by this Agreement.

##  

## 7.4                                 PermittedDisclosures.  The confidentialityobligations contained in this Section 7 shall not apply to the extent thatsuch disclosure is reasonably necessary in the following instances: (a) complyingwith an applicable law, regulation of a governmental agency or order of a courtof competent jurisdiction, or responding to a subpoena, request for productionof documents or other lawful court process, (b) complying with any ThirdParty License Agreement requirements; (c) obtaining approval to test ormarket a Biosite Product, (d) filing or prosecuting patents relating toProgram Inventions owned by the receiving party, (e) prosecuting ordefending litigation, and (f) disclosure to investment bankers, investors,and potential investors, each of whom prior to disclosure must be bound bysimilar obligations of confidentiality and non-use at least equivalent in scopeto those set forth in this Section 7, provided in each case that the partyseeking to make such disclosure shall provide written notice thereof to theother party and reasonable opportunity to object to such disclosure or torequest confidential treatment thereof, if available.

##  

# 8.                                       PUBLICATIONS.  Neither party shall publish or present (otherthan to applicable regulatory agencies for approval of a product) any data orinformation resulting from the Program unless such party has first submitted tothe other party for its review, a copy of any such proposed publication orother presentation at least sixty (60) days prior to the date of submission forpublication or other presentation.  If noresponse is received within sixty (60) days after the date such materials aresubmitted to the other party, the submitting party may proceed with the publicationor presentation without delay.  If theother party, in good faith and for reasonable business purposes, notifies thesubmitting party that it does not want the publication or presentationdisclosed, the submitting party shall not disclose the publication orpresentation.

#  

# 9.                                       PATENTRIGHTS

#  

## 9.1                                 ProgramInventions.

##  

### 9.1.1                        Except as otherwise set forthin Section 9.2 below, Biosite shall have the right at its sole expense andin its sole discretion to control the preparation, filing, prosecution, maintenanceand enforcement of all patent applications and patents that claim BiositeImprovements and Biosite Inventions.

###  

### 9.1.2                        Except as otherwise set forthin Section 9.2 below, Power3 shall have the right at its sole expense andin its sole discretion to control the preparation, filing, prosecution,maintenance and enforcement of all patent applications and patents that claimPower3 Inventions.

###  

### 9.1.3                        Except as otherwise set forthin Section 9.2 below, the parties shall determine by mutual consent whichparty shall control the preparation, filing, prosecution, maintenance andenforcement of the patent applications and patents that claim Joint Inventions.

 

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## 9.2                                 Power3Patent Rights.

##  

### 9.2.1                        Power3 (or its licensor, asapplicable) shall have the right and obligation at its sole expense to controlthe preparation, filing, prosecution and maintenance of the Power3 PatentRights.  If Power3 and its licensor electnot to file such a patent application in any country, or decides to abandonsuch a pending application or issued patent in any country, Power3 shallprovide written notice to Biosite, and Biosite shall have the right at its soleexpense to assume control of the preparation, filing, prosecution, maintenanceand enforcement of such patent application or patent at its own expense;provided, however, that except for the right to prepare, file, prosecute andmaintain such patent rights, the rights of each party to such patent rightsshall not be affected by reason of this Section 9.2.1.

###  

### 9.2.2                        Power3 shall have the right atits sole expense and in its sole discretion to control the enforcement of thePower3 Patent Rights against infringers. If (a) within three (3) months of receipt of writtennotice from Biosite that a Third Party is marketing in the Exclusive Fieldand/or Semi-Exclusive Field a diagnostic product that infringes the Power3Patent Rights and that assays a Program Target, Power3 fails to abate theinfringement or file suit to enforce such Power3 Patent Rights against theinfringing party in the Exclusive Field and/or Semi-Exclusive Field, or (b) Power3fails to, or notifies Biosite that it does not desire to, defend a declaratoryjudgment action brought by a Third Party against Power3 alleging that one ormore of the Power3 Patent Rights are invalid or otherwise unenforceable, thenBiosite shall have the right to take whatever action it deems appropriate inits own name or, if required for purposes of standing, in the name of Power3 toenforce or defend such Power3 Patent Rights in the Exclusive Field and/orSemi-Exclusive Field, and Power3 shall reasonably cooperate with Biosite in theplanning and execution of any such action to enforce or defend the Power3Patent Rights in the Exclusive Field and/or Semi-Exclusive Field.  The party controlling any such enforcementaction may not settle, or otherwise consent to an adverse judgment in, suchaction that diminishes the rights or interests of the non-controlling partywithout the prior express written consent of the non-controlling party.  All monies recovered upon the final judgmentor settlement of such action shall be shared, after reimbursement of expenses,seventy five percent (75%) by the controlling party and twenty fivepercent (25%) by the non-controlling party.

###  

## 9.3                                 Cooperation.  Each party shall cause its employees, agentsor consultants, at the sole expense of the other party, to execute suchdocuments and to take such other actions as reasonably necessary or appropriateto enable the other party to prepare, file, prosecute, maintain and enforce theother party’s patent rights.

##  

## 9.4                                 NoOther Technology Rights.  Except asspecifically provided in this Agreement, no other rights or licenses to any ofPower3’s or Biosite’s technology are implied or granted hereunder.

##  

## 9.5                                 ThirdParty License Agreements.  Power3shall use its best efforts to comply with all the applicable terms andconditions of each Third Party License Agreement and shall maintain in fullforce and effect each Third Party License Agreement.  Power3 shall promptly notify Biosite if itreceives any notices regarding, or otherwise obtains any information thatwould, or has the potential to, result in, termination of a Third Party LicenseAgreement, or any reduction or limitation of rights under a Third Party LicenseAgreement.

 

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# 10.                                 TERMAND TERMINATION

#  

## 10.1                           Expiration.  Unless terminated earlier pursuant to Section 10.2or 10.3 below, this Agreement shall expire upon the expiration of the last toexpire patent contained within the Power3 Patent Rights.  The provisions of Section 4.2 shallsurvive the expiration of this Agreement on a fully-paid basis.

##  

## 10.2                           Terminationfor Cause.  A party may terminatethis Agreement by written notice to the other party upon or after the breach ofany material provision of this Agreement by the other party, if the other partyhas not cured such breach within sixty (60) days after written noticethereof from the non-breaching party. Upon such termination by Biosite, the provisions of Sections 4.2,4.3, 4.4, 5.5, 5.7 and 6 shall survive any such termination of this Agreement.

##  

## 10.3                           Terminationby Either Party.  At any timefollowing twenty-four (24) months of the Effective Date of this Agreement,either party may terminate this Agreement upon ninety (90) days priorexpress written notice to the other party. The provisions of Sections 4.2, 4.3, 4.4, 5 and 6 shall survive anysuch termination of this Agreement.

##  

## 10.4                           Terminationby Biosite.  Biosite may terminatethis Agreement with respect to any Program Target at any time bythirty (30) days prior written notice to Power3 if, despite itscommercially reasonable efforts, Biosite is unable to develop and deliverProgram Antibodies to such Program Target pursuant to Section 3.1.  Upon any such termination, this Agreementshall remain in full force and effect with respect to any unaffected ProgramTarget.

##  

## 10.5                           Effectof Expiration and Termination. Expiration or termination of this Agreement shall not relieve theparties of any obligation accruing prior to such expiration ortermination.  In addition to thoseprovisions that expressly survive pursuant to Sections 10.1 -10.4 above,the provisions of Sections 3.1.3, 3.1.5(b), 3.2.3, 3.6, 6.2, 7, 8, 9,10.5, 11 and 12 shall survive the expiration or any termination of thisAgreement.

##  

# 11.                                 INDEMNITY

#  

## 11.1                           Indemnity.

##  

### 11.1.1                  By Biosite.  Biosite shall indemnify and hold harmless,and hereby forever releases and discharges Power3 and its Affiliates and theirrespective officers, directors, employees and agents, from and against alllosses, liabilities, damages and expenses (including reasonable attorneys’ feesand costs) resulting from all claims, demands, actions and other proceedings byany Third Party to the extent arising from (a) the breach of anyrepresentation, warranty or covenant of Biosite under this Agreement, (b) theuse of the Program Antibodies by Biosite, its Affiliates or sublicensees,(other than under the Program), (c) the making, using or selling of BiositeProducts (without regard to culpable conduct), or (d) the gross negligenceor willful misconduct of Biosite, its Affiliates or sublicensees in theperformance of its obligations, and its permitted activities, under thisAgreement.

###  

### 11.1.2                  By Power3.  Power3 shall indemnify and hold harmless, andhereby forever releases and discharges Biosite and its Affiliates and theirrespective officers, directors, employees and agents, from and against alllosses, liabilities, damages and expenses (including

 

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### reasonable attorneys’ fees and costs) resulting from all claims,demands, actions and other proceedings by any Third Party to the extent arisingfrom (a) the breach of any representation, warranty or covenant of Power3under this Agreement, (b) the use of the Program Antibodies by Power3, itsAffiliates or licensees (other than Biosite, its Affiliates or sublicensees), (c) themaking, using or selling of products (without regard to culpable conduct) byPower3, its Affiliates or licensees (other than Biosite, its Affiliates orsublicensees), which products were developed or derived through the use of theProgram Antibodies, or (d) the gross negligence or willful misconduct ofPower3, its Affiliates or licensees (other than Biosite, its Affiliates orsublicensees) in the performance of its obligations, and its permittedactivities, under this Agreement.

###  

## 11.2                           Procedure.  A party (the “Indemnitee”) that intends toclaim indemnification under this Section 11 shall promptly notify theother party (the “Indemnitor”) of any claim, demand, action or other proceedingfor which the Indemnitee intends to claim such indemnification.  The Indemnitor shall have the right toparticipate in, and to the extent the Indemnitor so desires jointly with anyother indemnitor similarly noticed, to assume the defense thereof with counselselected by the Indemnitor; provided, however, that the Indemnitee shall havethe right to retain its own counsel, with the fees and expenses to be paid bythe Indemnitor, if representation of the Indemnitee by the counsel retained bythe Indemnitor would be inappropriate due to actual or potential differinginterests between the Indemnitee and any other party represented by suchcounsel in such proceedings.  Theindemnity obligations under this Section 11 shall not apply to amountspaid in settlement of any claim, demand, action or other proceeding if suchsettlement is effected without the prior express written consent of theIndemnitor, which consent shall not be unreasonably withheld or delayed.  The failure to deliver notice to theIndemnitor within a reasonable time after notice of any such claim or demand,or the commencement of any such action or other proceeding, if prejudicial toits ability to defend such claim, demand, action or other proceeding, shallrelieve such Indemnitor of any liability to the Indemnitee under this Section 11with respect thereto, but the omission so to deliver notice to the Indemnitorshall not relieve it of any liability that it may have to the Indemniteeotherwise than under this Section 11. The Indemnitor may not settle or otherwise consent to an adversejudgment in any such claim, demand, action or other proceeding that diminishesthe rights or interests of the Indemnitee without the prior express writtenconsent of the Indemnitee, which consent shall not be unreasonably withheld ordelayed.  The Indemnitee, its employeesand agents, shall reasonably cooperate with the Indemnitor and its legalrepresentatives in the investigation of any claim, demand, action or otherproceeding covered by this Section 11.

##  

## 11.3                           Insurance.  Each party shall maintain such insurance withrespect to the development, manufacture and sales of Biosite Products or Power3products developed or derived through the use of the Program Antibodies, asapplicable, by such party, its Affiliates, licensees, or (sub)licensees in suchamounts as such party customarily maintains with respect to the development,manufacture and sales of its other products. Each party shall maintain such insurance for so long as it continues todevelop, manufacture or sell Biosite Products or Power3 products developed orderived through the use of the Program Antibodies, as applicable, andthereafter for so long as it customarily maintains insurance for itselfcovering the development, manufacture and sales of its other products.

 

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# 12.                                 MISCELLANEOUS

#  

## 12.1                           Notices.  Any consent, notice or report required orpermitted to be given or made under this Agreement by one of the parties to theother shall be in writing and addressed to such other party at its addressindicated below, or to such other address as the addressee shall have lastfurnished in writing to the addressor, and shall be effective upon receipt bythe addressee.

##  

| If to Biosite:  |   | Biosite  Incorporated               |
|-----------------|--------|-------------------------------------|
|            |   | 11030 Roselle  Street               |
|            |   | San Diego,  California 92121        |
|            |   | Attention: Chief  Executive Officer |
|            |   | With a copy to:  Legal Dept.        |
|            |   |                                |
| with a copy to: |   | Morrison & Foerster LLP    |
|            |   | 3811 Valley  Centre Drive, Site 500 |
|            |   | San Diego,  California 92130        |
|            |   | Attention: Mark  R. Wicker          |
|            |   |                                |
| If to Power3:   |   | Power3 Medical  Products, Inc       |
|            |   | 3400 Research  Forest Drive         |
|            |   | Suite B2-3                     |
|            |   | The Woodlands,  Texas 77381         |
|            |   | Attention: CEO                      |

 

## 12.2                           Assignment.  Except as otherwise expressly provided underthis Agreement neither this Agreement nor any right or obligation hereunder maybe assigned or otherwise transferred (whether voluntarily, by operation of lawor otherwise), without the prior express written consent of the other party;provided, however, that either party may, without such consent, assign thisAgreement and its rights and obligations hereunder in connection with thetransfer or sale of all or substantially all of its business, or in the event ofits merger, consolidation, change in control or other similar transaction.  Any permitted assignee shall assume allobligations of its assignor under this Agreement.  Any purported assignment or transfer inviolation of this Section 12.2 shall be void.

##  

## 12.3                           Resolutionof Disputes.  In the event of anydispute or disagreement between the parties either in interpreting anyprovision of this Agreement or about the performance of either party and uponthe written request of either party, each of the parties will appoint adesignated representative to attempt to resolve such dispute ordisagreement.  The designatedrepresentatives will discuss the problem and negotiate in good faith in aneffort to resolve the dispute without any formal proceedings.  The specific format of such discussion shallbe left to the discretion of the designated representatives.  No litigation for the resolution of suchdispute may be commenced until the designated representatives have met and eitherparty has concluded in good faith that amicable resolution through continuednegotiation does not appear likely (unless either party fails or refuses toappoint a designated representative and schedule a meeting of suchrepresentatives within thirty (30) days after a request to do so by the otherparty).  Notwithstanding the foregoing,either party shall have the right, without waiving any right or remedyavailable to such party under this Agreement or otherwise, to seek and obtainfrom any

 

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## court of competent jurisdiction any interim or provisional relief thatis necessary or desirable to protect the rights or property of such party,pending the discussions and negotiations set forth above.

##  

## 12.4                           ApplicableLaw.  This Agreement shall be governedby and construed in accordance with the laws of the State of Texas, withoutregard to the conflicts of law principles thereof.

##  

## 12.5                           EntireAgreement.  This Agreement containsthe entire understanding of the parties with respect to the subject matter hereof.  All express or implied representations,agreements and understandings with respect to the subject matter hereof, eitheroral or written, heretofore made are expressly superseded by this Agreement.  This Agreement may be amended, or any termhereof modified, only by a written instrument duly executed by both parties.

##  

## 12.6                           Headings.  The captions to the several Sections hereofare not a part of this Agreement, but are merely guides or labels to assist inlocating and reading the several Sections hereof.

##  

## 12.7                           IndependentContractors.  Each party herebyacknowledges that the parties shall be independent contractors and that therelationship between the parties shall not constitute a partnership, jointventure or agency.  Neither party shallhave the authority to make any statements, representations or commitments ofany kind, or to take any action that shall be binding on the other party,without the prior consent of the other party to do so.

##  

## 12.8                           Waiver.  The waiver by a party of any right hereunder,or of any failure to perform or breach by the other party hereunder, shall notbe deemed a waiver of any other right hereunder or of any other breach orfailure by the other party hereunder whether of a similar nature or otherwise.

##  

## 12.9                           ForceMajeure.  A party shall neither beheld liable or responsible to the other party, nor be deemed to have defaultedunder or breached this Agreement, for failure or delay in fulfilling orperforming any obligation under this Agreement (other than an obligation forthe payment of money) to the extent, and for so long as, such failure or delayis caused by or results from causes beyond the reasonable control of such partyincluding but not limited to fire, floods, embargoes, war, acts of war (whetherwar be declared or not), insurrections, riots, civil commotions, strikes,lockouts or other labor disturbances, acts of God or acts, omissions or delaysin acting by any governmental authority or the other party.

##  

## 12.10                     Other Activities.  Except as otherwise expressly provided inthis Agreement, nothing in this Agreement shall preclude either party fromconducting other programs (either for its own benefit or with or for thebenefit of any other Person) to conduct research, or to develop orcommercialize products or services, for use in any field.

##  

## 12.11                     Counterparts.  This Agreement may be executed in two or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

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INWITNESS WHEREOF, the parties have executed this Agreement as of the EffectiveDate.

 
|   | BIOSITE  INCORPORATED         |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By                            |       /s/ Chris  Hibberd |   |
|   | Name                          | Chris Hibberd |
|   | Title                         | SVP, Corporate  Development |
|   |                          |
|   | POWER3 MEDICAL  PRODUCTS, INC |
|   |                          |
|   |                          |
|   | By                            |        /s/  Steven B. Rash |   |
|   | Name                          |  Steven B.  Rash |   |
|   | Title                         |  Chairman/CEO |   |
|        |                               |  |  |  |  |  |

 

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