**1.2 “FIELD” means the field of methods and products for glucose sensing for use in the human bodyor in animals, employing RECEPTORS’ proprietary artificial receptor technology or methods,synthetic competitor agent technology or methods, or sensing system technology or methods.**1.3 “LICENSED METHOD” means: (i) any method that is claimed in the PATENT RIGHTS and/or the use ofwhich would constitute, but for the grant of a license under the PATENT RIGHTS within the FIELD, aninfringement of VALID CLAIM in the country in which such method is used or in the country in whichthe resulting products are sold; and (ii) any method that includes or results from RECEPTORS’TECHNOLOGY.1.4 “LICENSED PRODUCT” means: (i) any composition of matter or tangible article (for example, areagent, kit, or instrument) that is covered by any pending or issued claim within the PATENTRIGHTS and/or the use, production or sale of which would constitute, but for the grant of a licenseunder the PATENT RIGHTS within the FIELD, an infringement of any VALID CLAIM in the country inwhich such product is used, produced or sold, (ii) any composition of matter or tangible article(for example, a reagent, kit, or instrument) that is produced according to or through the use of aLICENSED METHOD, (iii) any composition of matter or tangible article (for example, a reagent, kit,or instrument) sold for use predominantly in the performance of a LICENSED METHOD, and (iv) anycomposition of matter or tangible article (for example, a reagent, kit, or instrument) thatincludes or results from RECEPTORS’ TECHNOLOGY.**1.5 “MARKETS” means Diagnostics — an Implantable Glucose Sensing Device for use in the human bodymarkets, the animal markets, and applicational areas in the FIELD.**1.6 “NET SALES” means: The amount billed, invoiced, or received (whichever occurs first) forsales, leases, or other transfers of LICENSED PRODUCTS, less:(a) customary trade, quantity or cash discounts and non-affiliated brokers’ or agents’commissions actually allowed and taken;(b) amounts repaid or credited by reason of rejection or return;(c) to the extent separately stated on purchase orders, invoices, or other documents ofsale, taxes levied on and/or other governmental charges made as to production, sale,transportation, delivery or use and paid by or on behalf of LICENSEE or SUBLICENSEE(s); and(d) reasonable charges for delivery or transportation provided by third parties, ifseparately stated; and(e) LICENSED PRODUCTS used internally for research and development or quality control byLICENSEE
 
 

 
NET SALES also includes the fair market value of any non-cash consideration received by LICENSEEfor the sale, lease or transfer of LICENSED PRODUCTS. Fair market value will be calculated as ofthe time of transfer of such non-cash consideration to LICENSEE. Transfer of a LICENSED PRODUCTbetween LICENSEE and AFFILIATES or SUBLICENSEEs for sale by the transferee shall not be considereda sale for purposes of ascertaining royalty charges. In such circumstances, the gross sales priceand resulting NET SALES price shall be based upon the sale of the LICENSED PRODUCT by thetransferee.1.7 “PATENT RIGHTS” means**:**(i) The patents and patent applications listed in Appendix C andany patent that issues or grants from any patent application listed in Appendix C, and (ii) anypatent or patent application that is a divisional, continuation, national or regional patent orapplication, reissue, renewal, reexamination, substitution or extension of the patents andapplications identified in (i), and (iii) any claim of a continuation-in-part application orpatent, directed to the subject matter specifically described in the patents or patent applicationsidentified in (i).1.8 “RECEPTORS’ TECHNOLOGY” means: the research and development knowledge, experience, technicaldata, methods, applications and the like concerning artificial receptor technology or methods,synthetic competitor agent technology or methods, sensing system technology or methods whichRECEPTORS had in its possession or acquired on or before the date of this Agreement and whichRECEPTORS creates during the effective term of this Agreement, including methods of making anyLICENSED PRODUCT or part thereof and any compositions, articles, methods or artificial receptortechnology or methods, synthetic competitor technology or methods, sensing system technology ormethods disclosed but not claimed in any patent or patent application owned and controlled byRECEPTORS. The term RECEPTORS’ TECHNOLOGY does not include any information which has been acquiredor is acquired by RECEPTORS in confidence from a third party.1.9 “SERVICE” means: Use of a COMPOSITION PRODUCT or performance of a LICENSED METHOD by LICENSEEon a “for-fee” basis for any third party.**1.10 “TERRITORY” means: Worldwide.**1.11 “VALID CLAIM” means either (i) a claim of an issued and unexpired patent included within thePATENT RIGHTS that has not been held permanently revoked, unenforceable, or invalid by a decisionof an agency or a court of competent jurisdiction, that is unappealable or unappealed within thetime allowed for appeal, and which has not been admitted to be invalid or unenforceable throughsurrender, disclaimer or otherwise; or (ii) a claim of a pending patent application included withinthe PATENT RIGHTS that was filed with a good faith belief in its patentability and that has notbeen abandoned or finally rejected without the possibility of appeal or refiling.1.12 The terms “sale(s)”, “sold” and “sell” include, without limitation, leases and other transfersand similar transactions.
 
 

 
2. GRANT2.1. In consideration for 50,000 shares of LICENSEE’s common stock granted from LICENSEE toRECEPTORS, RECEPTORS hereby grants to LICENSEE, and LICENSEE hereby accepts,(a) an exclusive, worldwide license under the PATENT RIGHTS, with the right to grantSUBLICENSEs (subject to Section 3), to make, have made, sell, have sold, offer to sell,import and export tangible LICENSED PRODUCTS for the MARKETS in the FIELD in the TERRITORY.(b) an exclusive license to sell SERVICE, and to use the PATENT RIGHTS and RECEPTORS’TECHNOLOGY for internal research, internal development and internal quality controlpurposes for the MARKETS in the FIELD in the TERRITORY, with no right to grant SUBLICENSEsexcept that LICENSEE shall have the right to grant any SUBLICENSEE(s) under subparagraph(a) of this Paragraph a SUBLICENSE to use the PATENT RIGHTS and RECEPTORS’ TECHNOLOGYsolely for internal research, internal development and internal quality control purposes.Any LICENSED PRODUCT(s), except for SERVICE, sold by LICENSEE or any SUBLICENSEE(s) shalltransfer to the purchaser a limited license, as set forth in Appendix A of this Agreement, to usesuch LICENSED PRODUCT(s).LICENSEE intends to cause the 50,000 shares to be issued to Receptors pursuant to this Section2, by March 15, 2010.2.2 The granting and exercise of this license is subject to the condition that LICENSEE not enterinto any agreement under which LICENSEE grants to- or otherwise creates in any third party asecurity interest in this Agreement or any of the rights granted to LICENSEE herein.2.3 In the event that any patent(s) and/or patent application(s) is/are: outside the PATENT RIGHTS;necessary for freedom to operate in the FIELD and MARKETS of the PATENT RIGHTS is/are owned andcontrolled by RECEPTORS, and such patent(s) and/or patent application(s) is/are available forlicense at such time as LICENSEE requests a license thereunder, RECEPTORS will offer to negotiatein good faith with LICENSEE toward the issuance of an exclusive license on reasonable termsstandard to licensing practice and common in the industry to which the subject technology pertains.3. SUBLICENSE3.1 SUBLICENSEs are subject to RECEPTORS’ prior approval, which approval shall not be unreasonablywithheld.
 
 

 
3.2 To the extent applicable, SUBLICENSEs must include all of the rights of and obligations due toRECEPTORS under this Agreement.3.3 No third party to whom LICENSEE grants a SUBLICENSE may grant further SUBLICENSES.3.4 LICENSEE shall promptly provide RECEPTORS with a copy of each SUBLICENSE issued; collect andguarantee payment of all payments due RECEPTORS from SUBLICENSEEs; and summarize and deliver allreports due RECEPTORS from SUBLICENSEEs.3.5 Upon termination of this Agreement for any reason, RECEPTORS, at its sole discretion, shalldetermine whether LICENSEE shall cancel or assign to RECEPTORS any and all SUBLICENSEs.3.6 The right of LICENSEE to grant SUBLICENSEs shall not survive termination of this Agreement.4. NOT USED5. NOT USED6. ROYALTIES6.1 LICENSEE shall pay to RECEPTORS royalties on NET SALES of the **LICENSED PRODUCTS of forty-fivepercent 45.0%) of NET SALES from all sales**of LICENSED PRODUCTS in the MARKETS in the TERRITORY.6.2 LICENSEE shall pay to RECEPTORS forty-five percent (45%) of any and all revenue received forthe sale of the Licensed Products, other than for the sales described in Section 6.1 above. Forexample, if LICENSEE sold its rights under this Agreement, then RECEPTORS shall be entitled toforty-five percent (45%) of the proceeds from such sale. LICENSEE acknowledges and agrees that itmay not assign or transfer any of its rights under this Agreement without the prior written consentof RECEPTORS. In the event that the License is terminated pursuant to Section 17 of the MasterDevelopment Agreement, RECEPTORS will pay to LICENSEE a ten percent (10%) royalty, defined andgoverned (except reversing the licensor and licensee) in the same manner as described in Section 6through Section 8 in this License Agreement.6.3 The Parties agree that they will examine, prior to starting Phase III of the DevelopmentAgreement, the possibility of assigning the License to a joint venture owned by each of RECEPTORSand LICENSEE (as an example, with each Party owning fifty-percent (50%) of the voting rights ofsuch joint venture but with LICENSEE and RECEPTORS having fifty-five (55%) and forty-five (45%),respectively, of the economic rights in such joint venture).
 
 

 
6.4 Payment of royalties specified in Section 6 shall be made by LICENSEE to RECEPTORS within sixty(60) days after March 31, June 30, September 30 and December 31 each year during the term of thisAgreement. If no royalties are due, LICENSEE shall so report. The last such payment shall be madewithin sixty (60) days after termination of this Agreement.7. REPORTING7.1 (a) LICENSEE shall submit to RECEPTORS within sixty (60) days after each calendar quarter yearending March 31, June 30, September 30 and December 31, a Royalty Report setting forth for suchquarter year at least the following information:(i) the number of LICENSED PRODUCTs sold by LICENSEE and/or its SUBLICENSEEs;(ii) total billings for such LICENSED PRODUCTs;(iii) an accounting of all LICENSED METHODs used;(iv) deductions applicable to determine the NET SALES thereof;(v) the amount of revenue received by LICENSEE pursuant to the sales described inSection 6.2; and(vi) the amount of payment due thereon, or, if no payment is due to RECEPTORS forany reporting period, the statement that no payment is due.Such report shall be certified as correct by an officer of LICENSEE and shall include a detailedlisting of all deductions from royalties. Such officer shall have a reasonable knowledge of, andaccess to, information on which such report is based.(b) All payments due hereunder shall be deemed received when funds are credited toRECEPTORS’ bank account and shall be payable by check or wire transfer in United Statesdollars. If made by wire transfer, such payments shall be marked so as to refer to thisAgreement. Conversion of foreign currency to U.S. dollars shall be made at the conversionrate existing in the United States (as reported in the Wall Street Journal or, if not soreported, then as reported in the New York Times) on the last working day of each royaltyperiod. No transfer, exchange, collection or other charges shall be deducted from suchpayments.(c) All such reports shall be maintained in confidence by RECEPTORS except as required bylaw; however, RECEPTORS may include in its usual reports annual amounts of royalties paid.
 
 

 
(d) In the event that any payment due under this Agreement is not made when due, suchpayment shall be subject to a charge of interest at one and one half percent (1 1/2%) permonth, or $250, whichever is greater. Interest shall accrue beginning on the first dayfollowing the due date as herein specified and shall be compounded quarterly. RECEPTORSshall not be precluded from exercising any other rights it may have as a consequence of thelateness of any payment.8. RECORD KEEPING8.1 LICENSEE shall keep, and shall require each SUBLICENSEE to keep, accurate records (togetherwith supporting documentation) of efforts to meet the diligence milestones set forth on Appendix Battached hereto and of LICENSED PRODUCTs made, used or sold under this Agreement, appropriate todetermine the amount of payments due to RECEPTORS hereunder and compliance with the terms of thisAgreement. Such records shall be retained for at least five (5) years following the end of thereporting period to which they relate. They shall be available during normal business hours forexamination by an auditor selected by RECEPTORS, for the sole purpose of verifying reports,payments due or made hereunder and compliance with the terms of this Agreement. In conductingexaminations pursuant to this paragraph, RECEPTORS’ auditor shall have access to all records whichRECEPTORS reasonably believes to be relevant to the accuracy of reports, calculation of paymentsdue under Article 6 and compliance with the terms of this Agreement.8.2 RECEPTORS’ auditor shall not disclose to RECEPTORS any information other than informationrelating to the accuracy of reports and payments made hereunder and compliance with the terms ofthis Agreement.8.3 Such examination by RECEPTORS’ auditor shall be at RECEPTORS’ expense, except that if suchexamination shows an underreporting or underpayment in excess of five percent (5%) for any twelve(12) month period, then LICENSEE shall pay the cost of such examination as well as any additionalsum that would have been payable to RECEPTORS had the LICENSEE reported correctly, plus interest onsaid sum at the rate of one and one half per cent (1 1/2%) *per*month pursuant to the terms ofsubparagraph 7.1(d) of this Agreement.8.4 In the event of a dispute asserted by RECEPTORS pursuant to this section 8, LICENSEE will havethe right to have the results of RECEPTORS’ audit reviewed by LICENSEE’s auditor. To the extent ofa disagreement between the two auditors’ findings, the Parties agree to resolve the dispute througha mutually agreed arbitration process.9. PATENT PROSECUTION 9.1 RECEPTORS shall control the preparation, filing, prosecution and maintenance (including withoutlimitation conducting or participating in interferences or oppositions), at its own expense, of anyand all RECEPTORS Patents and any Patents claiming or covering any RECEPTORS Inventions.
 
 

 
10. INFRINGEMENT10.1 Infringement of RECEPTORS Patents by Third Parties.(a) LICENSEE agrees to inform RECEPTORS promptly in writing of any suspectedinfringement of the RECEPTORS Patents by a Third Party in the Field of Use.(b) RECEPTORS shall have the sole right and authority to institute suit against anyThird Party suspected of infringing any RECEPTORS Patent. If RECEPTORS does not notifyLICENSEE of its intent to pursue legal action within one hundred and twenty (120) daysafter giving notice of any infringement of the RECEPTORS Patents, LICENSEE may institutesuit; *provided that*RECEPTORS shall have the right, in its sole discretion, to join anysuch suit as a plaintiff and be represented by separate counsel of its own selection. Inany event, RECEPTORS and LICENSEE shall each bear their own fees and expenses related tosuch litigation. Any recovery or settlement in excess of litigation costs and reasonableattorney fees shall be shared equally between RECEPTORS and LICENSEE.10.2 Infringement of Third Party Rights.Each Party shall promptly notify the other in writing of any allegation by a Third Party that theactivity of either of RECEPTORS or LICENSEE pursuant to this Agreement infringes or may infringethe intellectual property rights of such Third Party. Subject to the following sentence, RECEPTORSshall have the sole right to control any defense of any such claim involving alleged infringementof Third Party rights by RECEPTORS’ activities at its own expense and by counsel of its own choice.If any Third Party claim alleges that the manufacture, use or sale of a LICENSED PRODUCT infringessuch Third Party’s patent rights, then LICENSEE shall have the first right to control any defenseof any such claim at its expense and by counsel of its own choice, and RECEPTORS shall have theright, at its own expense, to be represented in any such action by counsel of their own choice;*provided*that if LICENSEE does not defend against any such Third Party claim, then RECEPTORS mayassume such defense at its expense and using counsel of its own choice, in which case RECEPTORSshall keep LICENSEE fully informed with regard to the defense of such Third Party claim. RECEPTORSshall have the sole right to control any defense of any such claim involving alleged infringementof Third Party rights by RECEPTORS’ activities at its own expense and by counsel of its own choice.Neither RECEPTORS nor LICENSEE shall have the right to settle any patent infringement litigationunder this §12.09 in a manner that diminishes the rights or interests of the other Party withoutfirst consulting the other Party.
 
 

 
10.3 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleginginvalidity of any of the PATENT RIGHTS, RECEPTORS may elect to take over the sole defense of theaction at its own expense. RECEPTORS shall consult withLICENSEE in such action, and LICENSEE shall have an opportunity to provide comment; however, finaldecision-making authority shall vest in RECEPTORS. LICENSEE shall cooperate fully with RECEPTORSin connection with any such action.11. TERMINATION OF AGREEMENT11.1 This Agreement, unless terminated as provided herein, shall remain in effect until the lastpatent or patent application in PATENT RIGHTS has expired or been abandoned.11.2 RECEPTORS may terminate this Agreement as follows:(a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment(including the payment of interest in accordance with one or both of Paragraphs 7.1(d) and8.3 within forty-five (45) days after the date of notice in writing of such non-payment byRECEPTORS.(b) Pursuant to the terms of Paragraph 13.6, if LICENSEE defaults in its obligations underParagraph 13.4 to procure and maintain insurance or, if LICENSEE has in any event failed tocomply with the notice requirements contained therein, immediately without notice oradditional waiting period.(c) If LICENSEE shall become insolvent, shall make an assignment for the benefit ofcreditors, or shall have a petition in bankruptcy filed for or against it. Suchtermination shall be effective immediately upon RECEPTORS giving written notice toLICENSEE.(d) If an examination by RECEPTORS’ auditor pursuant to Article 8 shows an underreportingor underpayment by LICENSEE in excess of 20% for any twelve (12) month period (in the eventthe dispute is not settled pursuant to Section 8.4.(e) If LICENSEE is convicted of a felony relating to the manufacture, use, or sale ofLICENSED PRODUCTS. Such termination shall be effective immediately upon RECEPTORS givingwritten notice to LICENSEE.(f) If LICENSEE enters into an agreement that creates a security interest in violation ofthe terms of Section 2.2 of this Agreement, this Agreement shall immediately andautomatically terminate.(g) Except as provided in subparagraphs (a), (b), (c), (d), (e), and (f) above, ifLICENSEE defaults in the performance of any obligations under this Agreement and thedefault has not been remedied within ninety (90) days after the date of notice in writingof such default by RECEPTORS.11.3 LICENSEE may terminate this Agreement as follows:(a) If RECEPTORS shall become insolvent, shall make an assignment for the benefit ofcreditors, or shall have a petition in bankruptcy filed for or against it.
 
 

 
Such termination shallbe effective immediately upon LICENSEE giving written notice to RECEPTORS.(b) Except as provided in subparagraph (a) above, if LICENSEE defaults in the performance ofany obligations under this Agreement and the default has not been remedied within ninety (90) daysafter the date of notice in writing of such default by LICENSEE.11.4 LICENSEE shall provide, in all SUBLICENSEs granted by it under this Agreement, that LICENSEE’sinterest in such SUBLICENSEs shall at RECEPTORS’ option terminate or be assigned to RECEPTORS upontermination of this Agreement.11.5 LICENSEE may terminate this Agreement by giving ninety (90) days advancewrittennotice of termination to RECEPTORS. Upon termination, LICENSEE shall submit a final Royalty Reportto RECEPTORS and any payments owed to RECEPTORS pursuant to Articles 5 and 6 of this Agreement andunreimbursed patent expenses invoiced by RECEPTORS shall become immediately payable.11.6 In the event that this Agreement is terminated pursuant to Paragraph 11.5 or any ofsubparagraphs 11.2(a), (b), (d) or (g), LICENSEE shall be permitted to clear inventory of LICENSEDPRODUCTS existing as of the date of termination for a period of one (1) year commencing on thatdate.11.7 Paragraphs 3.5, 3.6, 6.2, 8.1, 8.2, 8.3, 9.1, 10.1, 10.2, 10.3, 11.6, 11.6, 11.7, 12.2, 13.1,13.2, 13.3, 13.4, 17.1, 17.2, 17.6, 17.7, 17.8, 17.9 and 17.10, subparagraphs 7.1(b), (c) and (d),and Articles 4, 6 and 14 of this Agreement shall survive termination.12. WARRANTY12.1 RECEPTORS does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes norepresentations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that suchPATENT RIGHTS may be exploited by LICENSEE or any SUBLICENSEE without infringing other patents.12.2 RECEPTORS EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESSOR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTSOR INFORMATION SUPPLIED BY RECEPTORS, LICENSED METHODS OR LICENSED PRODUCTS CONTEMPLATED BY THISAGREEMENT.13. INDEMNIFICATION
 
 

 
13.1 LICENSEE shall indemnify, defend and hold harmless RECEPTORS and its current or formerdirectors, board members, and employees, and their respective successors, heirs and assigns(collectively, the “INDEMNITEES”) from and against any claim, liability, cost, expense, damage,deficiency, loss or obligation or any kind ornature (including, without limitation, reasonable attorney’s fees and other costs and expenses oflitigation) (collectively, “Claims”), based upon or arising out of or otherwise relating to thisAgreement, including without limitation any cause of action relating to product liabilityconcerning any product, process, or service made, used or sold pursuant to any right or licensegranted under this Agreement.13.2 RECEPTORS shall indemnify, defend and hold harmless LICENSEE and its INDEMNITEES from andagainst any Claim, based upon or arising out of a breach of the terms of this Agreement byRECEPTORS. In the event LICENSEE is found liable for any damages from a Claim, each party willshare equally in the damages on a pro rata basis, up to their share of the NET SALES and ROYALTIESearned to date.13.3 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL ORCONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS OR EXPECTEDSAVINGS OR OTHER ECONOMIC LOSSES, OR FOR INJURY TO PERSONS OR PROPERTY) ARISING OUT OF OR INCONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER, REGARDLESS OF WHETHER RECEPTORS KNOWS ORSHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES. RECEPTORS’ AGGREGATE LIABILITY FOR ALL DAMAGES OFANY KIND RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNT PAID BYLICENSEE TO RECEPTORS UNDER THIS AGREEMENT. The foregoing exclusions and limitations shall applyto all claims and actions of any kind, whether based on contract, tort (including but not limitedto negligence), or any other grounds.13.4 LICENSEE shall, at its own expense, provide attorneys reasonably acceptable to RECEPTORS todefend against any actions brought or filed against any INDEMNITEE hereunder with respect to thesubject of indemnity contained herein, whether or not such actions are rightfully brought.14. USE OF NAMES AND PRODUCT LABELINGLICENSEE shall not use RECEPTORS’ name or insignia, or any adaptation of them, or the name of anyof RECEPTORS’ employees in any advertising, promotional or sales literature, including withoutlimitation press releases, without the prior written consent of RECEPTORS. LICENSEE shallacknowledge RECEPTORS’ ownership of the PATENT RIGHTS in the manual or datasheet of the relatedproducts as follows:Products in the FIELD are covered by an international patent family, owned by RECEPTORS LLC.“This product or the use of this product may be covered by one or more patents of RECEPTORS LLCincluding, but not restricted to, the following: United States Patent No. 7,504,364.”This acknowledgement may, at LICENSEE’s discretion be included as part of the “Limited Use License”wording.
 
 

 
In addition, LICENSEE must identify LICENSOR on any related products.15. ASSIGNMENTSWithout the prior written consent of RECEPTORS in each instance, neither this Agreement northe rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE toany party, whether voluntarily or involuntarily, by operation of law or otherwise. Any purportedtransfer or assignment made without such consent shall be void.16. NOTICESAny notices to be given hereunder shall be sufficient if signed by the party (or party’sattorney) giving same and either(a) delivered in person,(b) mailed certified mail return receipt requested,(c) made by overnight delivery, or(d) faxed to other party if the sender has evidence of successful transmissionandif the sender promptly sends the original by ordinary mail, in anyevent to the following addresses:If to RECEPTORS:Robert E. Carlson