LICENSE
AND


SERVICES
AGREEMENT


 


This License
and Services Agreement (“Agreement”) is made and entered into as of June 10, 2013 (the “Effective
Date”) by and between A5 Genetics KFT, Corporation with its principal place of business at Gerecse u. 16, H-2094, Hungary
(“A5”), and Atossa Genetics Inc., a Delaware corporation, with its principal place of business at 1616 Eastlake
Ave. East, Suite 360, Seattle, Washington (“Atossa”).


 


WHEREAS,
A5 has developed proprietary software called RecurrenceOnline for the purpose of analyzing genes in biopsy samples from breast
cancer tumors (the “RecurrenceOnline Software”);


 


WHEREAS,
Atossa is developing a laboratory test called the NextCYTE Breast Health Test which will be used to perform a laboratory diagnostic
test on samples of breast cancer tumors to help inform treatment options and risk of recurrence (the “NextCYTE Test”);
and


 


WHEREAS,
Atossa wishes to acquire rights, and A5 wishes to transfer certain rights, to the RecurrenceOnline Software and other rights
for use with its NextCYTE Test.


 


NOW THEREFORE,
in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:


 


1.LICENSE.


 


1.1.Grant
of License. Subject to the terms and conditions of this Agreement A5 grants to Atossa an exclusive, irrevocable, license in
the Field of Use to use, sell, distribute, patent, sublicense and transfer the Licensed Property in the Territory. For purposes
of this Agreement:


 


“Territory”
means world-wide except the European Union.


 


“Licensed
Property” means all rights to the RecurrenceOnline Software and related, hardware, data bases and related content and
functionality to www.recurrenceonline.com, Documentation, improvements, new versions, Error corrections under Section
3 and bug fixes.


 


“Improvements”
means all modifications, updates and Error corrections under Section 3 to the algorithm used in the RecurrenceOnline Software,
including additions and deletions of genes, altering the weight of genes or otherwise altering the algorithm.


 




    	 



    	 



    

 


“Documentation”
means the user manuals or other documentation accompanying the Licensed Property, as it may be revised and updated from time to
time.


 


“License”
means the license to use the Licensed Property granted to Atossa in this Agreement.


 


“Field of
Use” means the fields of breast cancer and pre-cancerous lesions including ductal carcinoma in situ.


 


1.2.Restrictions.
Atossa may not itself, or through any parent, subsidiary, affiliate, agent or other third party: (a) decompile, disassemble, reverse
engineer or circumvent any technological measure controlling access to the RecurrenceOnline Software in whole or in part; or (b)
modify the RecurrenceOnline Software or write or develop any derivative software or any other software program based upon the RecurrenceOnline
Software.


 


1.3.Specifications.
The RecurrenceOnline Software contains the features and specifications set forth on Exhibit A (the “Specifications”).


 


1.4.Source
Code. The License is to the executable object code of the RecurrenceOnline Software only, and does not include any license
to the related source code.


 


1.5.Copies.
A5 will retain one copy of the RecurrenceOnline Software on a secondary server or other host computer for backup purposes. Atossa
may make additional copies of the RecurrenceOnline Software in the normal course of its back-up and archival operations but all
of such copies will remain subject to the terms of this Agreement.


 


1.6.Documentation.
Atossa may make copies of the Documentation to the extent necessary to enable use of the RecurrenceOnline Software in accordance
with this Agreement.


 


1.7.Shipments.
All A5’s shipments to Atossa under this Agreement, if any, will be F.O.B. Atossa’s facility at the address first set
forth above. A5 will pay for any shipping, handling, insurance and other similar costs.


 


1.8.Right
of First Refusal to New Algorithms. Prior to licensing, selling or distributing any new algorithms in the Field of Use that
are intended for commercialization, A5 shall first offer in writing to Atossa a license in the Territory to such new algorithms
substantially on the terms upon which the Licensed Property is licensed under this Agreement and other commercially reasonable
terms to be agreed upon by the parties. Atossa shall have 60 days to evaluate the potential license of such new algorithms.


 


1.9.Improvements.
Improvements shall be promptly communicated and transferred to Atossa, but subject to A5’s need to validate improvements
with third party clinical partners


 




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2.FEES.


 


2.1.Fees
and Patent Costs.


 


(a)          Within
60 days of the date of this Agreement, Atossa shall pay A5 a one-time fee of $100,000. Atossa shall pay for all costs and expenses
of pursuing all patents under Section 3 of this Agreement.


 


(b)          Within
60 days of the date that the Licensed Property is installed and tested at Atossa’s site to Atossa’s reasonable satisfaction,
Atossa shall pay A5 a one-time fee of $100,000.


 


2.2.Milestones.


 


(a)          Within
three months of the Atossa achieving either of the following milestones Atossa shall pay A5 US$200,000: (i) submission by Atossa
of an application to the U.S. FDA seeking clearance of the NextCYTE Test as a medical device, or (ii) commercial launch by Atossa
of the NextCYTE Test. Atossa agrees to use good faith commercial efforts to submit the application for the foregoing FDA clearance
on or before January 1, 2015.


 


(b)          Within
60 days of receiving FDA clearance for the NextCYTE Test, Atossa shall pay A5 an additional fee of US$1,000,000.


 


2.3.Royalties.
On or before January 31 of each year, Atossa shall pay A5 a royalty fee equal to US$50 for each NextCYTE Test for which Atossa
receives payment. Atossa shall provide a report to A5 of all NextCYTE tests processed and for which Atossa receives payment during
each six month periods ending June 30 and December 31. Such reports shall be provided within 30 days after each such six month
period. Atossa shall be responsible for any third-party royalties that Atossa incurs as a result of commercialization of the NextCYTE
Test.


 


2.4.Support
Services Fees. For the services provided by A5 under Section 3 (the “A5 Services”), Atossa will pay
A5 a service fee equal to US$65 for each NextCYTE Test for which A5 Services are provided; provided, however, that no such fee
shall be due for NextCYTE Tests performed during the validation and pre-commercial launch periods. The service fees shall be paid
quarterly in arrears within 30 days after the end of each calendar quarter.


 


2.5.Payments.
All payments due under this Agreement will be made in U.S. dollars.


 


3.SERVICES.


 


3.1.Support.
A5 will provide Atossa with Support Services consisting of the following (the “Support Services”):


 




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(a)          Installation
and Testing. A5 will provide reasonable support and assistance to Atossa in installing and otherwise integrating the Licensed
Property with the NextCYTE Test and Atossa’s other operations.


 


(b)          Email
Support. A5 will provide assistance via email to Atossa related to Atossa’s operation of RecurrenceOnline Software and
its use with the NextCYTE Test. A5 will respond to emails within 24 hours. A5 will also be available for occasional phone consultations
at mutually agreeable times.


 


(c)          Maintenance.
A5 will provide diagnostic services and other assistance to Atossa for Errors in the RecurrenceOnline Software. A5 may provide
Atossa with a report form for reporting suspected Errors. An “Error” means any defect in the RecurrenceOnline
Software that prevents the RecurrenceOnline Software from operating substantially in accordance with the Specification and Documentation.
A5 will work diligently to provide an immediate correction or modification for all Errors.


 


(d)          Updates
and Upgrades. A5 will make available to Atossa without charge one copy of any update or upgrade generally made available by
A5 without charge to its other licensees.


 


(e)          Operations.
A5 will provide operational support to assist Atossa in processing samples with the NextCYTE Test by performing the quality control
of the processed samples and statistical evaluation for a gene expression based diagnostic report.


 


3.2.Atossa
Responsibilities. Atossa agrees to provide A5 with all information and materials reasonably requested by A5, to the extent
reasonably available to Atossa, for use in replicating, diagnosing and correcting an Error or other problem with the A5 Software
reported by Atossa to the extent such information and materials are reasonably available to Atossa. Atossa will maintain permanent
internet connection with a fixed IP address through which the RecurrenceOnline Software can be accessed and to otherwise facilitate
maintenance and Support Services.


 


4.OWNERSHIP.


 


4.1.Ownership
of Atossa Data. All of Atossa’s data, including the data generated by use of the Licensed Property and the NextCYTE Test
(the “Atossa Data”) will remain the sole and exclusive property of Atossa.


 


4.2.Use
of Atossa Data by A5. Atossa hereby grants to A5 during the Term of this Agreement, the limited, nontransferable and nonexclusive
right and license to Atossa Data to develop Improvements, and for research purposes, publish research papers and for teaching purposes;
provided, however, that at all times A5 shall keep all Atossa Data confidential in accordance with Section 9 (Confidentiality).
Any reference or use by A5 to the names Atossa, Atossa Genetics, National Reference Laboratory for Breast Health, NextCYTE and
other trademarks or service marks of Atossa shall be subject to the prior written approval of Atossa.


 




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4.3.Ownership
by A5. Subject to Section 4.5:


 


(a)          all
inventions, discoveries, improvements, enhancements, methods, processes, models, algorithms, software technology, technical documentation
and other methodologies owned or developed by A5 in the course of providing Services to Atossa or preparing the RecurrenceOnline
Software will remain the property of A5;


 


(b)          no
title or ownership of the RecurrenceOnline Software or any part thereof will be transferred to Atossa; and


 


(c)          Atossa
acknowledges that Atossa is acquiring only a license to use the Licensed Property and not any title to or ownership of the Licensed
Property or any part thereof.


 


4.4.Patent
Prosecution. A5 represents that it has not sought patent protection on the Licensed Property in the Territory and A5 shall
not seek or permit others to seek, any such patent protection in the Territory. Atossa shall have the right, but not the obligation,
to pursue patents in the Territory and in the Field of Use on the Licensed Property (the “Atossa Software Patents”).
If Atossa chooses to apply for such Atossa Software Patents, a person designated by A5 shall be identified as the inventor in all
patent applications; provided that such inventor shall immediately upon request assign to Atossa all right, title and interest
in and to the patent applications and Atossa Software Patents and A5 and any such inventor shall execute and deliver all reasonably
necessary documents reflecting such assignment to Atossa.


 


4.5.Ownership
of Atossa Software Patents. A5 hereby transfers and assigns all right, title and interest in and to any intellectual property
claimed in the Atossa Software Patents, including source and object code, so that Atossa shall be the sole and exclusive owner
of any such Atossa Software Patents and related patent applications. For clarification, the Atossa Software Patents shall include
rights only in the Field of Use and only in the Territory so that A5 is free to pursue patent protection or otherwise commercialize
its intellectual property rights outside the Field of Use and outside the Territory. If the Atossa Software Patents include any
claims outside of the Field of Use Atossa hereby grants a fully-paid, irrevocable license to A5 to any such claims.


 


5.INTELLECTUAL
PROPERTY DEFENSE.


 


5.1.Defense.
Atossa shall have the right but not the obligation to defend the Licensed Property and the Atossa Software Patents against any
assertion that they infringe any issued patent, copyright, or trade secret of any third party in the Territory (an “Infringement
Claim”). If Atossa chooses not to defend any Licensed Property or Atossa Software Patent against an Infringement Claim,
it shall so notify A5 in writing and A5 shall have the right to assume the defense. A5 shall provide reasonable assistance, information
and documentation in prosecuting, defending and enforcing all Licensed Property and Atossa Software Patents. A5 shall immediately
notify Atossa in writing of any infringements or threats of infringement of the intellectual property rights included in the Licensed
Property and Atossa Software Patent.


 




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5.2. Modification
of Licensed Software. Should the Licensed Software become, or in A5’s opinion be likely to become, the subject of an
Infringement Claim, A5 will have the right, at A5’s option and expense, (i) to procure for Atossa, on terms reasonably acceptable
to Atossa, the right to continue using the Licensed Software, or (ii) to replace or modify it with a non-infringing version of
substantially equivalent function and performance.


 


6.WARRANTIES.


 


6.1.Warranties
of Atossa. Atossa represents, warrants, and covenants that it has the power and authority to enter into this Agreement and
that this Agreement does not conflict with any other agreement to which it is a party.


 


6.2.Warranties
of A5. A5 represents and warrants that: (a) it has the power and authority to enter into this Agreement and this Agreement
does not conflict with the any other agreement to which it is a party; (b) the Services will be performed in a professional and
workmanlike manner, (c) the Licensed Property will perform the functions materially in accordance with the Documentation and Specifications,
(d) it has all right, title and interest in and to the Licensed Property and to the knowledge of A5 no third party is infringing
any of the intellectual property rights included in the Licensed Property , (e) there are no governmental or other regulatory approvals,
consents or notices required to enter into and perform under this Agreement, and (f) it will diligently protect the Licensed Property
from and against any claims or threats of infringement of any third party and that it will not allow any lien, claim or encumbrance
to be placed on the Licensed Property.


 


6.3.Regulatory
Support. The parties will provide copies of their respective regulatory submissions in support of each other’s regulatory
submissions.


 


7.LIMITATION
OF LIABILITY.


 


7.1.No
Consequential Damages, Etc. IN NO EVENT WILL A5 OR ATOSSA BE LIABLE, WHETHER IN TORT, CONTRACT OR OTHERWISE (I) FOR ANY LOST
PROFITS, (II) FOR ANY LOSS OR REPLACEMENT OF DATA FILES THAT ARE LOST OR DAMAGED, OR (III) FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL
OR SPECIAL DAMAGES, ARISING OUT OF THIS AGREEMENT, THE DELIVERY, USE, SUPPORT, EVALUATION, OPERATION OR FAILURE OF THE LICENSED
PROPERTY.


 


8.TERM
AND TERMINATION.


 


8.1.Term
of Agreement and License. The term of this Agreement and the License and Support obligations hereunder will commence on the
date hereof and will continue for the later of 10 years from the date hereof or the expiration of any Atossa Software Patent on
a country by country basis; provided, however, that A5 may, with 60 days prior written notice, terminate the services under Section
3 if Atossa has not applied for FDA clearance of the NextCYTE Test on or before January 1, 2015 as contemplated by Section 2.2(a).


 




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8.2.Termination.
Either party may terminate this Agreement if the other party fails to correct, after 60 days written notice, any material breach
of this Agreement.


 


8.3.Effect
of Termination. If the Agreement is terminated by A5 because of a material breach in this Agreement by Atossa, then Atossa
will immediately discontinue usage of the Licensed Property and return to A5 or destroy all copies of the RecurrenceOnline Software.
However, upon any termination by Atossa or A5 Atossa shall continue to be the sole and exclusive owner of all Atossa Software Patents,
related source and object code and any pending patent applications.


 


9.NONDISCLOSURE
AND CONFIDENTIALITY.


 


9.1.Confidential
Information. Each party hereunder may disclose to the other party certain Confidential Information of such party or of such
party’s associated companies, suppliers, or Atossa’s. For purposes of this Agreement, “Confidential Information”
means information which: (a) derives economic value, actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy; and (c) that is of value to its owner and is treated
as confidential. A5’s “Confidential Information” includes without limitation the RecurrenceOnline Software. Atossa’s
“Confidential Information” includes without limitation Atossa Data. “Confidential Information” does not
include information to the extent that the (a) information communicated was already known to Recipient, without obligations
to keep such information confidential, at the time of Recipient’s receipt from Owner; (b) information communicated was received
by Recipient in good faith from a third party lawfully in possession thereof and having no obligation to keep such information
confidential; and (c) information communicated was publicly known at the time of Recipient’s receipt from Owner or has become
publicly known other than by a breach of this Agreement. “Owner” refers to the party disclosing Confidential
Information hereunder, whether such party is A5 or Atossa and whether such disclosure is directly from Owner or through Owner’s
employees or agents; and “Recipient” refers to the party receiving any Proprietary Information hereunder, whether
such party is A5 or Atossa and whether such disclosure received directly or through Recipient’s employees or agents.


 


9.2.Confidentiality.
Recipient agrees to hold the Confidential Information disclosed by Owner in strictest confidence and not to, directly or indirectly,
copy, reproduce, distribute, manufacture, duplicate, reveal, report, publish, disclose, cause to be disclosed, or otherwise transfer
the Confidential Information disclosed by Owner to any third party (other than Recipient’s consultant or agent who has executed
an agreement that will protect the Confidential Information under similar terms as those set forth herein), or utilize the Confidential
Information disclosed by Owner for any purpose whatsoever other than as expressly contemplated by this Agreement. The foregoing
obligations will not apply if and to the extent that the Confidential Information is required to be disclosed by law, whether under
an order of a court or governmental body or other legal obligation, provided the Recipient uses reasonable efforts to give the
disclosing party reasonable notice of such required disclosure.


 




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10.GENERAL


 


10.1.     Entire
Agreement. This Agreement, including any Exhibits, and any agreements between A5 and Atossa specifically referred to herein
or in any Exhibit, constitute the entire agreement between the parties with respect to their subject matter and supersede all other
prior agreements. In the event any provision of an Exhibit conflicts with a provision of this Agreement, the Exhibit will govern.


 


10.2.     Survival.
Any provision of this Agreement that contemplates performance subsequent to any termination of this Agreement, including without
limitation Sections 4.5 (Atossa Software Patents), 5 (Intellectual Property), 6 (Warranties), 7 (Limitation of Liability), 8 (Effect
of Termination), 9 (Confidentiality), and 10 (General), will survive the termination of this Agreement.


 


10.3.     Non-Disclosure
of Terms. Except pursuant to court order or as otherwise required by law, neither party may disclose the terms and conditions
of this Agreement without prior written consent of the other party.


 


10.4.     Assignment.
Atossa may assign or transfer this Agreement; however, the right of Atossa to receive the services under Section 3 may only be
assigned by Atossa with the prior written consent of A5 which shall not be unreasonably withheld, conditioned or delayed. A5 may
transfer this Agreement with the prior written approval of Atossa. This Agreement will bind and inure to the benefit of each party’s
successors and permitted assigns.


 


10.5.     Independent
Principals. A5 and Atossa are independent principals in all relationships and actions under and contemplated by this Agreement.
This Agreement will not be construed to create any employment relation, partnership, joint venture, or agency relationship between
the parties or to authorize either party to enter into any commitment or agreement binding on the other.


 


10.6.     Waiver
or Modification. Any waiver, amendment, supplement or modification of this Agreement will not be effective unless set forth
in writing and signed by an authorized representative of both parties. Any such waivers, amendments, supplements and modifications
will be deemed a part of this Agreement as if incorporated herein. The failure of either party to exercise any of its rights under
this Agreement will not be deemed a waiver or forfeiture of such rights.


 


10.7.     Severability.
If any provision hereof is declared invalid by a court of competent jurisdiction, such provision will be ineffective only to the
extent of such invalidity, so that the remainder of that provision and all remaining provisions of this Agreement will continue
in full force and effect.


 


10.8.     Force
Majeure. Neither party will be liable for any failure or delay in performance of its obligations hereunder by reason of acts
of God or the public enemy, war, fire, flood, shortage or failure of suppliers, interruption or failure of telecommunication or
digital transmission links, Internet disruptions, power failures and other events or circumstances beyond its reasonable control
(“Force Majeure”).


 




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10.9.     Injunctive
Relief. The parties acknowledge that the agreements of the parties are of a special and unique character, and that money damages
alone will not reasonably or adequately compensate the other party for any breach of this Agreement. Therefore, A5 and Atossa expressly
agree that in the event of the breach or threatened breach of the Agreement, in addition to other rights or remedies which A5 or
Atossa may have, at law, in equity or otherwise, A5 or Atossa, as applicable, will be entitled to seek injunctive or other equitable
relief compelling specific performance of, and other compliance with, the terms of the Agreement.


 


10.10.    Headings.
The headings in this Agreement are solely for convenience of reference and will not be given any effect in construction or interpretation
of this Agreement.


 


10.11.    Counterparts.
This Agreement may be executed in counterparts, each of which so executed will be deemed to be an original and such counterparts
together will constitute one and the same agreement.


 


10.12.    Notice.
All communications between the parties which are required or permitted to be in writing will be sent by hand delivery, with receipt
obtained, or by prepaid, overnight courier, certified return receipt requested, or by facsimile with confirmation by overnight
courier, certified return receipt requested, and sent to the addressed specified in the first paragraph of this Agreement. By written
communication, either party may designate a different address for purposes hereof.


 


10.13.    Governing
Law. This Agreement will be governed by, construed, and interpreted in accordance with the laws of the State of Washington
without regard to its rules governing conflicts of law. Any legal action or proceeding arising out of or in relation to this Agreement
must be brought in United States or state courts located in Seattle and such court(s) will have sole and exclusive jurisdiction
with respect to any such legal action or proceeding. Each party hereby submits to the personal jurisdiction of, and venue in, such
court(s) for the purposes thereof, and expressly waives any claim of lack of jurisdiction, improper venue, or that any such venue
constitutes an inconvenient forum.


 


10.14.    Conflict
Between Agreement and Exhibits. In the event there is a conflict between this Agreement and any other exhibits or schedules
to the Agreement, then the terms of such exhibits or schedules will govern.


 


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IN
WITNESS WHEREOF, this Agreement has been executed by the duly authorized representative of A5 and Atossa as of the date first
stated above.


 


	A5 Genetics
    KFT	Atossa Genetics
    Inc.:


 


	By:	/s/
    Balázs Győrffy	 	By:	/s/ Steven C. Quay	 
	 	 	 
	Name:
    Balázs Győrffy M.D., Ph.D.	 	Name:
    Steven C. Quay, M.D., Ph.D.
	 	 	 
	Title:
    Chief Executive Officer	 	Title:
    Chief Executive Officer


 




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EXHIBIT
A


Specifications
and Features of RecurrenceOnline Software


 


Overview


 


The
recurrenceonline software is a decision support tool by providing an online diagnostic system for breast cancer patients utilizing
transcriptomic data to compute:


 


		·	array quality control



		·	survival [by employing two different algorithms as described below],



		·	response to hormonal treatment [ER status] and



		·	response to targeted therapy [HER2 status].



 


Input


 


The
software uses Affymetrix microarrays designated by GEO platforms as GPL96, GPL570 and GPL571 as an input for the analysis. Additionally,
a patient ID and for certain analysis options the lymph node status of the investigated patient must be provided.


 


Array
quality control


 


Heber
and Sick (Heber et al, 2006) suggested eight quality metrics as a basic quality assessment for Affymetrix microarrays. The distribution
of a large database of arrays was assessed and outliers were identified as those having a parameter value outside of the range
of 95% of samples. The “Array quality control” parameter implemented in www.recurrenceonline.com is set to give a warning
in cases in which the thresholds published by Heber et al. are surpassed or outliers are detected as compared to our previous meta-analysis.


 


The
recurrence score algorithm


 


After
an initial quality control the raw Affymetrix .CEL files are MAS5 normalized. The differences of the log-transformed expression
of the 16 genes and the housekeeping genes ACTB, GAPDH, RPLP0, GUS and TFRC are subtracted from the pre-defined range top value
to emulate RT-PCR results. For genes with multiple probe sets available on the Affymetrix microarrays the average expression, the
probe set with the highest average expression can be used. Then, the recurrence score is computed as described previously (Gyorffy
et al, 2012). Finally, the sample is classified as belonging to the high/intermediate/low risk of relapse group based on their
recurrence score.


 


The
re-training algorithm


 


The
system analyzes gene expression data from 3,534 breast cancers with clinical annotation including survival. For each test case
a case-specific training subset is selected that includes only cases with the highest molecular similarity to the tests case. Similarity
is measured by Euclidean distance over all genes. Informative genes are identified in the case-specific training cohort by computing
Cox regression coefficient and a case-specific predictor is developed. This fixed predictor is then applied to the test case. This
dynamic predictor building method yields different training sets and different predictors for each new case. The final output
classifies the patient sample as having high or low risk of relapse (or prediction not significant). The retraining algorithm
can also be used in a similar fashion to predict lymph node involvement based on the primary tumor gene expression.


 


Output


 


The
software generates a report in a PDF format including all analysis details as well as the final classification. The report is generated
in real time and is downloadable directly from the analysis page.