ex10-17.htm


    
      
        

      

    

    EXHIBIT
10.17

     

    DEVELOPMENT
AGREEMENT

     

    THIS
DEVELOPMENT AGREEMENT (this “Agreement”) dated as of March 11, 2010 (the
“Effective Date”) is entered into among and between SMART PERSONALIZED MEDICINE,
LLC, a Delaware limited liability company (“SPM”), having a registered office at
203 NE Front Street, Suite 201, Milford, Kent County, DE 1996, QUEST DIAGNOSTICS
INCORPORATED (“QUEST”), having a place of business located at 3 Giralda Farms,
Madison, New Jersey 07940 and HEALTH DISCOVERY CORPORATION, a Georgia
corporation (“HDC”) having a place of business located at 2 East Bryan Street,
Suite 601, Savannah, GA 31401 (each, a “Party,” and collectively, the
“Parties”).

     

    RECITALS

     

    WHEREAS,
SPM is a research and development company in the medical industry which is
working to develop breast cancer tests; and

     

    WHEREAS,
HDC is the owner of intellectual property, including patents, pending and
issued, and know-how, all relating to support vector machine (“SVM”) and other
learning machine technology, based upon which it has developed, or is engaged in
developing, applications including, inter
alia, digital image analysis, biomarker discovery, and gene- and
protein-based diagnostic and prognostic testing; and

     

    WHEREAS,
HDC and SPM entered into a License Agreement dated August 22, 2008 (as amended
from time to time, the “HDC License Agreement”) pursuant to which HDC licensed
its intellectual property, hereinafter referred to as the “Licensed Technology”
(as further defined in the HDC License Agreement) to SPM for use in the Field of
Use (as defined in the HDC License Agreement) for development of breast cancer
Product(s)) (the “Development Technology”); and

     

    WHEREAS,
SPM entered into a Sponsored Research Agreement (the “Sponsored Research
Agreement”) dated May 1, 2009 with The University of Texas, M.D. Anderson Cancer
Center (“MD Anderson”), a member institution of The University of Texas System,
pursuant to which MD Anderson and SPM agreed to undertake a Research Project (as
defined in said Sponsored Research Agreement, relevant portions of which are
attached hereto as Exhibit C) to develop a statistical database (the “Database”)
including clinical and genomic information using gene expression data, tissue
biopsies and related patient historical information of breast cancer patients,
which Database would be exclusively owned by MD Anderson, but would be available
for use by SPM for the development of Product(s); and

     

    WHEREAS,
Quest Diagnostics is a provider of reference laboratory diagnostic services
providing diagnostic and/or prognostic technology, know-how and information to
patients and their caregivers; and

     

    WHEREAS,
concurrently with the execution of this Agreement, SPM, HDC and QUEST will enter
into a license agreement (the “Quest License Agreement”) to sublicense the
Development Technology to QUEST for use in the Field (as that term is defined
herein); and

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    WHEREAS,
SPM, HDC and QUEST desire to enter into this Agreement to develop information to
be included in the Database, to enable Quest to develop Product(s) (as defined
herein) and to validate such Product(s) for commercialization.

     

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

     

    ARTICLE
1

     

    DEFINITIONS

     

    For
purposes of this Agreement, the terms defined in this Article 1 shall have the
respective meanings set forth below:

     

    1.1     
     “Affiliate”
shall mean, with respect to any Person, any other Person which directly or
indirectly controls, is controlled by, or is under common control with, such
Person. A Person shall be regarded as in control of another Person if it owns,
or directly or indirectly controls, at least thirty five percent (35%) of the
voting stock or other ownership interest of the other Person, or if it directly
or indirectly possesses the power to direct or cause the direction of the
management and policies of the other Person by any means
whatsoever.

     

    1.2      
     “Background
IP” shall mean a Party’s solely owned and/or Controlled (as defined below
in Section 1.3) Technology existing prior to the Effective Date. For purposes of
clarification, SPM Background IP shall include, without limitation, the
Development Technology. HDC Background IP shall include all Technology owned or
Controlled by HDC, including the Licensed Patents, to the extent that they are
not licensed to SPM pursuant to the HDC License Agreement, and QUEST Background
IP shall include, without limitation, its proprietary diagnostic testing
methods, processes, SOPs, expertise and technologies.

     

    1.3  
         “Controlled”
in the context of specific Technology shall mean either having a sole ownership
interest in, having a license for, or having the right to grant licenses or
sublicenses to such Technology.

     

    1.4          
 “Database”
shall mean the statistical database that is to be developed in conjunction with
the Research Project that is the subject of the Sponsored Research
Agreement.

     

    1.5     
      “Database
Development” shall mean the portion of the Program related to the
development of the Database.

     

    1.6           
“Field”
shall mean clinical laboratory services, In Vitro Diagnostic kits, research use,
clinical trials services (including provision of clinical trial services to
customers utilizing Quest Diagnostics’ testing services for pharma discovery
programs) to provide predisposition, early detection, screening, diagnosis,
prognosis, chemoprediction/companion and recurrence/monitoring applications on
all types of samples (e.g. tissue, blood, serum, etc.) using genomic and/or any
other biomarkers related to breast cancer or the exclusion of breast cancer. For
purposes of clarification, the Field includes, but is not limited to, methods
involving immunohistochemistry (“IHC”) markers, expression, microRNA, digital
pathology, pathological features, SNPs and other methods to be determined but
expressly excluding radiologic imaging applications.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    1.7      
     “HDC
Development Costs” shall mean any and all costs incurred by HDC and
associated with using the Development Technology and their know-how to analyze
the data in the Database for development of Product(s), as requested by
QUEST.

     

    1.8        
   “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, governmental
authority or any other form of entity not specifically listed
herein.

     

    1.9         
  “Product(s)”
shall mean the applications in the Field developed under the Program using the
Development Technology and/or the Database.

     

    1.10      
  “Product
Inventions” shall mean Technology which is developed by the Parties,
independently or jointly, as part of the development of the Product(s) under the
Program. The definition of Product(s) Inventions shall not include Background
IP, the Database or Quest Inventions. All Product Inventions developed by QUEST
or HDC under this Agreement shall be the property of SPM but shall be included
in the license grant to QUEST under the Quest License Agreement for developed
Commercialized Product(s) applications on the terms hereof.

     

    1.11     
   “Program”
shall mean the QUEST and SPM development program described below in Article 3,
including Database Development and all Project(s) relating to the development of
each Product.

     

    1.12       
  “Program
Period” shall mean the period of time running from initiation of Database
Development to completion of the final Project Plan.

     

    1.13   
     “Project”
shall mean a development project which uses the Database for the development of
Product(s). A project plan describing the Project will be prepared for each
Product (the “Project Plan”). Each Project Plan will be appended to this
Agreement as a part of Exhibit A and will be assigned a number upon its
incorporation in the Agreement. Project Plan 1 and Project Plan 2 are the first
and second Project Plans approved by the Parties and are or will be attached as
Exhibit A. The Parties contemplate the potential for the attachment of
additional Project Plans (as Project Plan 3, Project Plan 4, and so forth)
during the course of the Program Period.

     

    1.14      
  “Project
Period” for each Product shall mean the period commencing on the date
that Exhibit A with respect to a Project is attached to this Agreement pursuant
to Section 1.12 above and ending on earlier of (i) the date that the Steering
Committee determines that a Product is ready to for Commercialization or (ii)
the date that the Steering Committee determines that a Product cannot be
Commercialized.

     

    1.15      
  “Quest
Development Costs” shall mean any and all costs and expenses associated
with and incurred in the analysis of the tissue biopsies provided by MD Anderson
and other data required in the development of the Database and in the
development of Product(s) and shall include the payments made by QUEST to SPM
and HDC under Section 3.6 hereof but shall exclude SPM Development Costs and HDC
Development Costs.

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    1.16     
   “Quest
Inventions” shall mean Technology which is developed by QUEST, does not
incorporate any Background IP of SPM or HDC or the Database, and is an
improvement or modification to QUEST Background IP. Quest Inventions shall
include Products where the underlying Product Invention is non-patentable and
the Steering Committee has decided to publish the proprietary Technology;
provided, however that no amount is owed to MD Anderson with respect to such
Product pursuant to any contractual obligation under the Sponsored Research
Agreement.

     

    1.17         “SPM
Development Costs” shall mean the costs incurred by SPM to gain access to
the tissue biopsies and related patient histories from MD Anderson pursuant to
the Sponsored Research Agreement.

     

    1.18      
  “SPM
Improvements” shall mean Technology with applications for use in the
Field that is developed outside of this Agreement or the Development Agreement,
either by SPM or by a Third Party working with or licensed by SPM as part of a
collaboration with such Third Party, which Technology may be useful to improve
the Products.

     

    1.19     
   “Quest
License Agreement” shall mean the license agreement between SPM, HDC and
QUEST executed concurrently with this Agreement. The form of the Quest License
Agreement is attached hereto as Exhibit B.

     

    1.20       
 “Technology”
shall mean any patents, patent applications, provisional patent applications or
foreign equivalents, including any patent extensions, certificates of invention
and .applications for certificates of invention, together with any divisionals,
continuations, continuations-in-part, reissues, renewals, reexaminations or
additions thereof, as well as know-how, discoveries, claims, formulae,
processes, methods, techniques, practices, trade secrets, technologies,
specifications, designs, knowledge, data, results, information, financial and
business processes and information, whether or not
patentable.

     

    1.21      
   “Territory”
shall mean worldwide.

     

    1.22   
      “Third
Party” shall mean any Person other than SPM, QUEST, HDC and their
respective Affiliates.

     

    1.23         “Validation
Work” shall mean such commercially reasonable and necessary primary
testing associated with the validation of a Product, including without
limitation, gene expression test training and test set(s) and additional
technical and clinical support for final CLIA (Clinical Laboratory Improvement
Amendments) validation, but expressly excluding any filing or approval process
with the U.S. Food & Drug Administration.

     

    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    ARTICLE
2

     

    REPRESENTATIONS
AND WARRANTIES

     

     2.1           
SPM
hereby represents and warrants to QUEST and HDC as follows:

     

     2.1.1          Corporate
Existence and Power. SPM (a) is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (b) has the requisite power and authority and the legal right to own
and operate its property and assets, to lease the property and assets it
operates under lease, and to carry on its business as it is now being conducted
and (c) is in compliance with all requirements of applicable law, except to the
extent that any noncompliance would not have a material adverse effect on the
properties, business, financial or other condition of it and would not
materially adversely affect its ability to perform its obligations under this
Agreement.

     

     2.1.2          Authorization
and Enforcement of Obligations. SPM (a) has the requisite power and authority
and the legal right to enter into this Agreement and to perform its obligations
hereunder and (b) has taken all necessary corporate action on its part to
authorize the execution and delivery of this Agreement and the performance of
its obligations hereunder. This Agreement has been duly executed and delivered
on behalf of SPM, and constitutes a legal, valid, binding obligation,
enforceable against SPM in accordance with its terms, except to the extent that
such enforcement may be limited by bankruptcy, insolvency, moratorium or other
laws affecting creditors rights generally.

     

     2.1.3          No
Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by SPM in
connection with this Agreement have been obtained.

     

     2.1.4          Rights
in Development Technology. SPM Controls the Development Technology to the
extent required to perform its obligations, and grant the rights granted,
hereunder. Except as otherwise set forth in this Agreement, SPM has not sold,
assigned, conveyed, mortgaged, encumbered, transferred or granted any license or
other right to the Development Technology to any Person to develop, make, have
made, use and sell products for use in the Field. SPM will not sell, assign,
convey, mortgage, encumber, transfer or grant any license or other rights to the
Development Technology for use in the Field except as permitted under the Quest
License Agreement.

     

     2.1.5          No
Infringement. SPM has no actual knowledge (without any independent
investigation), that the use of the Development Technology or the granting of a
license to practice the Development Technology violates, infringes or otherwise
conflicts or interferes with any patent or any other intellectual property or
proprietary right of any Third Party. To the best of SPM’s knowledge, no Third
Party is currently infringing upon the Development Technology in the
Field.

     

    2.2           
QUEST
hereby represents and warrants to SPM and HDC as follows:

     

     2.2.1          Corporate
Existence and Power. QUEST (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; (b) has
the corporate power and authority and the legal right to own and operate its
property and assets, to lease the property and assets it operates under lease,
and to carry on its business as it is now being conducted and (c) is in
compliance with all requirements of applicable law, except to the extent that
any noncompliance would not have a material adverse effect on the properties,
business, financial or other condition of it and would not materially adversely
affect its ability to perform its obligations under this
Agreement.

     

    
      
         


      

      
        5

        
          

        

      

      
         


      

    

     

     2.2.2          Authorization
and Enforcement of Obligations. QUEST (a) has the corporate power and
authority and the legal right to enter into this Agreement and to perform its
obligations hereunder and (b) has taken all necessary corporate action on its
part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered on behalf of QUEST, and constitutes a legal, valid, binding
obligation, enforceable against QUEST in accordance with its terms except to the
extent that such enforcement may be limited by bankruptcy, insolvency,
moratorium or other laws affecting creditors rights
generally.

     

     2.2.3          No
Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by QUEST in
connection with this Agreement have been obtained.

     

    2.3           
HDC
hereby represents and warrants to QUEST and SPM as follows:

     

     2.3.1          Corporate
Existence and Power. HDC (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia; (b) has
the requisite power and authority and the legal right to own and operate its
property and assets, to lease the property and assets it operates under lease,
and to carry on its business as it is now being conducted and (c) is in
compliance with all requirements of applicable law, except to the extent that
any noncompliance would not have a material adverse effect on the properties,
business, financial or other condition of it and would not materially adversely
affect its ability to perform its obligations under this
Agreement.

     

     2.3.2          Authorization
and Enforcement of Obligations. HDC (a) has the requisite power and
authority and the legal right to enter into this Agreement and to perform its
obligations hereunder and (b) has taken all necessary corporate action on its
part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered on behalf of HDC, and constitutes a legal, valid, binding
obligation, enforceable against: HDC in accordance with its terms, except to the
extent that such enforcement may be limited by bankruptcy, insolvency,
moratorium or other laws affecting creditors rights.

     

     2.3.3          No
Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by HDC in
connection with this Agreement have been obtained.

     

    
      
         


      

      
        6

        
          

        

      

      
         


      

    

     

     2.3.4          Development
Technology Applications. HDC has know-how and access to expertise to be
able to apply the Development Technology to the extent required herein in order
to perform its Product(s) development obligations for QUEST hereunder. Except as
otherwise set forth in this Agreement and in the Quest License Agreement, HDC
has not sold, assigned, conveyed, mortgaged, encumbered, transferred or granted
any license or other right under the Development Technology to any Person to
develop, make, have made, use and sell Product(s) for use in the Field except as
indicated in this Agreement. HDC hereafter will not sell, assign, convey,
mortgage, encumber, transfer or grant any license or other right under the
Development Technology to develop Product(s) for use in the Field or directly or
indirectly provide services, know-how or expertise in the use of the Development
Technology in the Field, except as permitted under this Agreement and under the
Quest License Agreement.

     

     2.3.5          No
Infringement. To the best of HDC’s knowledge, neither the rise of the
Development Technology nor the granting of a license to practice the Development
Technology violates, infringes or otherwise conflicts or interferes with any
patent or any other intellectual property or proprietary right of any Third
Party. To the best of HDC’s knowledge, no Third Party is currently infringing
upon the Development Technology in the Field.

     

     2.3.6          Notwithstanding
Section 9.5 below, nothing in this Agreement shall be construed to expand or
modify the Licensed Technology rights and obligations of SPM under the HDC
License Agreement.

     

    ARTICLE
3

     

    THE
PROGRAM

     

    3.1           
Development
of Database Information: Obligations of SPM:

     

     3.1.1          Upon
execution of this Agreement, SPM shall obtain from MD Anderson and deliver, or
cause to be delivered, to QUEST any and all tissue biopsies available to SPM
under the Sponsored Research Agreement and identified as necessary for
proceeding with and pursuing the goals of a specified Project Plan (the
“Database Samples”), expected to be approximately one thousand (1,000) samples.
Project Plan 1 and Project Plan 2 are attached hereto as of the Effective Date.
As additional Project Plans are agreed upon by SPM and QUEST, SPM will obtain
any and all additional Database Samples identified by SPM and QUEST as being
necessary for performance of the applicable Project Plan

     

     3.1.2          Upon
delivery of the data generated by QUEST’s laboratory data development work
pursuant to Section 3.2 hereof, SPM will communicate such data to MD Anderson
for use in the development of the Database.

     

     3.1.3          Notwithstanding
the foregoing, neither Quest nor HDC shall work directly with MD Anderson in
connection with the development of the Product(s). The Parties acknowledge that
ownership rights to the Database shall remain with MD
Anderson.

     

     3.1.4          SPM shall
permit QUEST to access the Database Samples and Database as necessary to perform
its obligations in conjunction with development of the
Database.

     

    
      
         


      

      
        7

        
          

        

      

      
         


      

    

     

    3.2           
Development
of Database Information: Obligations of QUEST

     

     3.2.1          Upon
receipt of the Database Samples provided by SPM pursuant to Section 3.1.1 above,
QUEST will commence gene expression analysis and any other work described in the
applicable Project Plan to generate the data and information needed for
development of the Database and will deliver such data and information to SPM in
a computer-readable format specified by SPM.

     

     3.2.2          QUEST
acknowledges that the Database Samples are to be used solely for performing its
obligations under this Agreement (including Validation Work) and that no further
use of the Database Samples is authorized. Database Samples that are no longer
being utilized in the development of the Database or Product(s) shall be
returned to SPM for return to MD Anderson. In addition, upon the termination or
expiration of this Agreement or the Sponsored Research Agreement, any remaining
Database Samples shall be returned to SPM for return to MD
Anderson.

     

    3.3           
Development
of the Database: Obligations of HDC

     

     3.3.1          HDC shall
have no obligations with regard to development of the
Database.

     

     3.3.2          HDC shall
have no access to the Database or information contained in the Database except
as set forth in Section 3.6.1.

     

    3.4           
Development
of the Products: Obligations of SPM

     

     3.4.1          SPM shall
provide access to the Database as required by QUEST to perform its obligations
related to development of Product(s) and will provide any other assistance as
reasonably requested by QUEST.

     

     3.4.2          Except
where otherwise provided in this Agreement, SPM shall be responsible for any and
all SPM Development Costs.

     

     3.4.3          At least
one time per year, SPM shall notify the Steering Committee of any SPM
Improvements generated during the previous year and provide enough information
for the Steering Committee to evaluate the utility of such SPM Improvements to
the Products.

     

    3.5   Development
of the Products: Obligations of QUEST.

     

     3.5.1          QUEST
will develop the Product(s) utilizing the Technology: licensed under the License
Agreement and, with the prior written consent of SPM and HDC, any other
Background IP or Technology Controlled by one of the Parties
hereto.

     

     3.5.2          QUEST
acknowledges that the Database is to be used solely for performing its
obligations under this Agreement and that no further use of the Database or the
information set forth therein is authorized.

     

    
      
         


      

      
        8

        
          

        

      

      
         


      

    

     

     3.5.3          With
respect to those Product(s) for which QUEST has issued a Commercialization
Notice to SPM (as set forth in Section 5.3 below), QUEST will perform Validation
Work for each such Product.

     

     3.5.4          QUEST
will perform the services set forth in Sections 3.2, and 3.5 (the “Services”) in
accordance with all applicable standards, laws, rules and regulations. All
Services shall be performed in accordance with QUEST’s professional
standards.

     

     3.5.5          QUEST
shall be responsible for the QUEST Development Costs relating to the Services
and for any and all other costs and expenses relating to the work to be
performed hereunder except for the HDC Development Costs and the SPM Development
Costs.

     

    3.6           
Development
of the Products: Obligations of HDC

     

     3.6.1          HDC will
use the Development Technology to analyze the data in the Database for
development and/or validation of Product(s) and will provide any other
assistance as reasonably requested by QUEST. HDC acknowledges that the Database
is to be used solely for performing its obligations under this Agreement and
that no further use of the Database or the information set forth therein is
authorized.

     

     3.6.2          Except
where otherwise provided in this Agreement, HDC shall be responsible for any and
all HDC Development Costs.

     

    3.7      
     SPM
and HDC Service Charges - Project Plans 1 and 2. In consideration of the
right and opportunity to develop the Product(s) identified in Project Plan 1 and
Project Plan 2 and the right to Commercialize the Product(s) as set forth
herein, QUEST hereby agrees to pay to each of SPM and HDC an amount equal to
Three Hundred Seventy-five Thousand Dollars ($375,000) (the “Development Fee”).
The Development Fee shall be paid to each of HDC and SPM in nine (9) equal
monthly installments of Forty-one Thousand Six Hundred Sixty-six Dollars
(41,666.00), with the first installment payable no later than March 31, 2010 and
subsequent installments payable on the last day of each month thereafter. No
additional amounts shall be due and payable by QUEST to either SPM or HDC as a
Development Fee for Project Plans 1 and 2 hereunder, regardless of the length of
time required for completion of each Project Plan. The amounts to be paid
pursuant to this Section 3.7 are separate and exclusive from any amounts to be
paid by QUEST to SPM and HDC under the Quest License
Agreement.

     

    3.8            Steering
Committee. A steering committee consisting of three (3) members shall be
established for direction and management of the Program. Each of QUEST, HDC and
SPM shall have the right to appoint one (1) member to such committee. The
Steering Committee may meet as frequently as monthly, but shall meet at least
quarterly during the Program Period. The following persons shall represent the
Parties on the Steering Committee and shall serve of the primary contact for the
corresponding Party:

     

    For SPM:
Richard E. Caruso or his designee

     

    For HDC:
Stephen D. Barnhill or his designee

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    For
QUEST: Nicholas J. Conti or his designee.

     

    3.9           
Records
and Reports.

     

     3.9.1          QUEST
shall maintain accurate records of all activities related to the Project Plan
for each Product in accordance with established, commercially reasonable
laboratory practices. SPM and HDC shall have the right, upon reasonable notice
and during reasonable business hours, to inspect and make copies of such
records.

     

     3.9.2          QUEST
shall provide SPM and HDC with: (a) quarterly written reports regarding QUEST’s
activities under the Project Plan for each Product, the results thereof and any
Product Inventions arising therefrom; and (b) copies of all data resulting from
activities under the Program. QUEST shall provide such reports and data within
(30) days after the end of each calendar quarter beginning with the calendar
quarter that includes the Effective Date . A final report shall be provided
within thirty (30) days after the expiration or earlier termination of the
Program Period.

     

     3.9.3          In
addition to the quarterly reports pursuant to Section 3.9.2 above, QUEST shall
provide to SPM and HDC, within ten (10) days of the document date, copies of all
documents filed with any applicable regulatory agency(ies) having jurisdiction
over the Product(s), and any other communications with such regulatory
agency(ies) relating to the Product(s), whether to or from the agency. QUEST
shall also provide copies; of other communications between. QUEST and any Third
Party relating to the Product(s).

     

    ARTICLE
4

     

    CONFIDENTIALITY

     

    4.1      
     Confidential
Information. Except as otherwise provided in Section 4.3 below, during
the term of this Agreement, and for a period of ten (10) years following the
expiration or earlier termination hereof, each Party shall maintain in
confidence all information of the other Parties (including without limitation
samples, testing data and feedback regarding test performance, the Database and
all information included in the Database) disclosed after the Effective Date by
another Party and identified as, or acknowledged to be, confidential (the
“Confidential Information”), and shall not use, disclose or grant the use of the
Confidential Information to any Third Party (including without limitation to MD
Anderson except as specifically permitted hereby) except on a need-to-know basis
to those of its own, and its Affiliates’, sublicensees’ and assignees’,
directors, officers, affiliates, employees, agents, consultants, clinical
investigators and contractors, to the extent such disclosure is reasonably
necessary in connection with such Party’s activities as expressly authorized by
this Agreement. To the extent that disclosure is authorized by this Agreement,
prior to disclosure, each Party hereto shall obtain written agreement of any
such Person to hold in confidence and not make use of the Confidential
Information for any purpose other than those permitted by this Agreement. Each
Party shall notify the other Parties promptly upon discovery of any unauthorized
use or disclosure of another Party’s Confidential
Information.

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    

     

    4.2         
  Terms
of this Agreement. Except as otherwise provided in Section 4.3 below, no
Party shall disclose any terms or conditions of this Agreement to any Third
Party without the prior consent of the other Parties. Notwithstanding the
foregoing, prior to execution of this Agreement, the Parties shall agree upon
the substance of information that can be used to describe the terms of this
transaction, and any Party may disclose such information, as modified by mutual
agreement from time to time, without the other Parties’
consent.

     

    4.3      
     Permitted
Disclosures. The confidentiality obligations contained in Sections 4.1
and 4.2 above shall not apply to the extent that (a) any receiving Party (the
“Recipient”) is required (i) to disclose information by law, order or regulation
of a governmental agency or a court of competent jurisdiction, or (ii) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a Product, provided in either case: that the
Recipient shall provide written notice thereof to the other Parties and
sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof; or (b) the Recipient can demonstrate that (i)
the disclosed information was public knowledge at the time of such disclosure to
the Recipient, or thereafter became public knowledge, other than as a result of
actions of the Recipient in violation hereof; (ii) the disclosed information was
rightfully known by the Recipient (as shown by its written records) prior to the
date of disclosure to the Recipient by the other Parties hereunder; (iii) the
disclosed information was disclosed to the Recipient on an unrestricted basis
from a source unrelated to any Party to this Agreement and not under a duty of
confidentiality to any other Party; or (iv) the disclosed information was
independently developed by the Recipient without access to or use of the
Confidential Information disclosed by any other Party.

     

     4.3.1          The
Parties acknowledge that HDC has certain time-critical reporting obligations by
virtue of its status as a public corporation and agree to cooperate with HDC in
preparation of a press release regarding the execution and general terms of this
Development Agreement and the Quest License Agreement to be issued concurrently
with the Form 8-K report that must be filed by HDC within four (4) business days
of the Effective Date. The Parties agree that no press release shall mention MD
Anderson without the prior written approval of MD Anderson or otherwise in
contravention of the provisions of Section 9.1 of the Sponsored Research
Agreement attached hereto as Exhibit C.

     

    4.4         
  Publication.
Subject to the provisions of Sections 4.1 and 4.2 above, QUEST shall have the
right to publish the results of its work under the Project, so long as such
publication does not include the Database or any of the data or information
included therein; provided,
however, that if the proposed publication contains proprietary information owned
by SPM or HDC, QUEST shall provide SPM or HDC, as applicable, the opportunity to
review any proposed manuscripts or any other proposed disclosure describing said
work thirty (30) days prior to their submission for publication or other
proposed disclosure and provided further that prior to such publication, SPM
will submit such results to MD Anderson for its approval. If SPM or HDC believes
that patentable subject matter is disclosed in the manuscript or other
disclosure and so notifies QUEST, or if such submission for publication or other
disclosure would cause the loss of significant foreign patent rights, QUEST
shall withhold such publication for a reasonable period of time, not to exceed
sixty (60) days, until all applicable patent filings are
completed.

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    4.5          
 Equitable
Relief. Each Party hereby acknowledges that, in the event of any breach
or threatened breach of this Article 9 by the Recipient, the disclosing Party
may suffer irreparable injury for which damages at law may not be an adequate
remedy. Accordingly, without prejudice to any other rights and remedies
otherwise available to the disclosing Party, the disclosing Party shall be
entitled to seek equitable relief, including injunctive relief and specific
performance, for any breach or threatened breach of this Article 4 by the
Recipient, its Affiliates, or any of its or their employees, directors,
officers, members, agents, or representatives.

     

    4.6          
 Non-Use of
Names: Confidentiality of Agreement. No Party hereto shall make
any public announcement, issue any press release or publish any study
(collectively, all such communications, “Publication”) concerning the
transactions contemplated herein, or make any Publication which includes the
name of any other Party or any of its Affiliates, or otherwise use the name or
names of any other Party or any of their employees or any adaptation,
abbreviation or derivative of any of them, whether oral or written, related to
the terms, conditions or subject matter of this Agreement, without the prior
written permission of such other Party, except as may be required by (i) law or
(ii) judicial order (and then only following consultation with the other
Parties).

     

    4.7           
Compliance
with Laws: Reporting Obligation with Respect to Protected Health
Information. Each Party shall comply with all Applicable Laws. “Applicable Laws”
are the international, federal, state, and local laws, rules and regulations
that relate to the conduct of the Parties’ business and the performance by the
Parties of their respective obligations under this Agreement. If a Party or its
permitted representatives gain access to protected health information (“PHI”),
as that term is defined under The Health Insurance Portability and
Accountability Act of 1996, that is not required for performance of this
Agreement, each Party shall immediately report to the other Parties any
incidents of access to PHI or any incidents of use, reproduction or disclosure
of PHI of which it or its Permitted Representatives become(s)
aware.

     

    ARTICLE
5

     

    RIGHTS
OF FIRST REFUSAL REGARDING

    COMMERCIALIZATION
OF THE PRODUCT(S) AND OTHER DEVELOPMENT

     

    5.1           
Commercialization.
All Product(s) and Product Inventions developed under this Agreement are owned
by SPM. SPM shall not, nor shall it attempt to, transfer, assign, sell have
sold, lease, offer to sell or lease, distribute, license, sublicense or
otherwise transfer title to or an interest in, or clinically develop,
commercialize or exploit the Product(s) unless it shall have first complied with
the provisions set forth in this Article 5. All QUEST Inventions are owned by
QUEST.

     

    5.2           
QUEST
Rights to Commercialize. The Steering Committee shall determine if a
particular Project has been completed and if the related Product has been
developed and is ready for Validation Work under this Agreement. Upon such
determination, the Steering Committee shall notify SPM, HDC and QUEST of such
determination. Following such notice, QUEST shall have ninety (90) days (the
“Evaluation Period”) to determine if it wishes td i perform Validation Work and
obtain exclusive rights to perform, sell and market such Product (collectively,
“Commercialize”).

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    5.3           
Election
by QUEST to Commercialize. Should QUEST elect to Commercialize a
particular Product, prior to the end of the Evaluation Period, QUEST shall
submit to SPM and HDC a written notice of its election to Commercialize the
Product (a “Commercialization Notice”). Upon receipt of the Commercialization
Notice, SPM and HDC shall grant to QUEST a Product License for Commercialization
according to the terms of Section 5.2 of the Quest License Agreement, under
which QUEST will have the right to perform all required work, including the
Validation Work, relating to the specified Product, subject to all relevant
provisions of the Quest License Agreement. QUEST shall be responsible for
payment of all costs and expenses relating to such work to Commercialize such
Product (the “Product Costs”). For purposes of clarification, such costs do not
include use of the Database Samples in connection with Validation Work, which
use is covered by the one-time upfront fee for use of the Database Samples
hereunder.

     

    5.3.1          
 Each
Commercialization Notice submitted by QUEST will be associated with a separate
Product License

     

    5.3.2  
Upon
grant of the Product License for a specified Product, QUEST will continue to
work with HDC, and will continue to have access to the Database, to perform the
Validation Work.

     

    5.4           
Failure
to Commercialize. If QUEST elects not to Commercialize a developed
Product, it shall notify SPM and HDC in writing (a “Refusal Notice”). In the
event that QUEST issues a Refusal Notice, or fails to issue a Commercialization
Notice or a Refusal Notice for a Product prior to the expiration of the
Evaluation Period, SPM shall have the right but not the obligation to
Commercialize such Product, subject to the terms and conditions of this
Agreement, the Quest License Agreement and the HDC License Agreement. Should SPM
elect not to Commercialize the Product, HDC shall have the right to
Commercialize such Product, subject to the terms and conditions of this
Agreement, the Quest License Agreement and the HDC License
Agreement.

     

    5.4.1  
QUEST and
HDC agree to cooperate with any Third Party that may have entered into a license
agreement with SPM to Commercialize such Product.

     

    5.4.2  
QUEST and
SPM agree to cooperate with any Third Party that may have entered into a license
agreement with HDC to Commercialize such Product.

     

    5.5           
Right
of First Refusal on Other SPM Projects. QUEST shall have a right of first
refusal to perform similar services, and obtain similar rights, for any other
project with other academic or research institutions that SPM pursues to develop
applications in the Field (“New SPM Projects”). SPM shall provide written notice
to QUEST of any New SPM Project it is contemplating. QUEST shall have ninety
(90) days to provide written notice to SPM that it wishes to participate in the
New SPM Project (“New Project Negotiation Notice”). The parties shall have
ninety (90) days following the New Project Negotiation Notice to negotiate in
good faith regarding the terms and conditions of QUEST’s participation in such
New SPM Project. If the parties are unable to agree within this timeframe, or
any mutually agreeable extension thereof, SPM shall have the right to offer the
New SPM Project to a Third Party laboratory or other partner; provided however
that prior to execution of any agreement with a Third Party, SPM permits QUEST
to review the terms and conditions of such agreement and to step into the shoes
of such Third Party on the same terms and conditions negotiated with such Third
Party.

     

    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    5.6           
Right
of First Refusal on Future Project Plans. QUEST shall have a right of
first refusal on all future Project Plans, on the terms set forth in Section 5.5
above. QUEST has the right to have access through SPM to additional tissue
biopsies and to invest in additional; research over the course of the Sponsored
Research Agreement. In the event that QUEST materially changes the scope of the
Projects beyond the intended breast cancer recurrence/chemoprediction focus of
the Projects as initially attached hereto and it requires additional samples not
included in the Sponsored Research Agreement, then the parties will negotiate in
good faith to secure additional samples from MD Anderson or another Third Party.
SPM , HDC and QUEST shall each have the right to propose additional markers,
platforms, or other work for inclusion in a Project or as an additional Project,
subject to a Development Fee, as appropriate, to be negotiated in good faith for
services to be performed or costs to be expended in conjunction with such
modification or new Project Plan.

     

    5.7           
Right
of First Refusal on Other MD Anderson-developed Tests. To the extent
permitted under the Sponsored Research Agreement, SPM hereby grants QUEST a
right of first refusal on any applications in the Field using the Database
developed by MD Anderson (ND Anderson-Developed Test”), subject to Section 6.4
of the Quest License Agreement.

     

    ARTICLE
6

     

    TERMINATION

     

    6.1            Expiration.
Subject to the provisions of Sections 6.2 and 6.3 below, this Agreement shall
expire on the expiration of the Project Period for all Projects hereunder, or
any New SPM Projects (as defined in the License Agreement).

     

    6.2            Termination
by QUEST. After QUEST has performed its obligations pursuant to Section
3.2, QUEST may terminate this Agreement, in its sole discretion, upon ninety
(90) days prior written notice to SPM.

     

    6.3            Termination
for Cause. Any Party may terminate this Agreement upon or after the
breach of any material provision of this Agreement by any other Party if the
alleged breaching Party has not cured such breach within sixty (60) days after
notice thereof by the non-breaching Party. For purposes of clarification, in the
event of termination for cause by QUEST before all installments of the
Development Fee shall have been paid, no further installments shall be due
following the date of notice of such termination.

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    6.4            Effect
of Expiration or Termination. Upon the expiration or termination of this
Agreement (for any reason), (i) QUEST shall immediately transfer and deliver to
SPM and, as appropriate, HDC, all documents, whether in paper or electronic
form, data, Database Samples and other tissue biopsies, and all information and
data for each Project, regarding work performed hereunder including, without
limitation, all information relating to the Database Samples and other tissue
biopsies, development of the Database and the Product(s), (ii) QUEST shall have
no further rights to Commercialize a Product, and (iii) the Quest License
Agreement shall terminate. Expiration or termination of this Agreement shall not
relieve any of the Parties of any obligation accruing prior to such expiration
or termination, and the provisions of Articles 4, 7 and 9, and Sections 3.5 and
3.10.2 and this Section 6.5 shall survive the expiration or termination of this
Agreement.

     

    ARTICLE
7

     

    INDEMNIFICATION

     

    7.1            Indemnification.
Each Party (an “Indemnifying Party”) shall defend, indemnify and hold each other
Party (an “Indemnified Party”) harmless from all losses, liabilities, damages
and expenses (including reasonable attorneys’ fees and costs) incurred as a
result of any claim, demand, action or proceeding by any Third Party to the
extent resulting from (a) the performance of (or failure to perform) by the
Indemnifying Party of its obligations under this Agreement or the
representations and warranties contained herein; or (b) the use by the
Indemnifying Party of the Background IP or Confidential Information provided by
the Indemnified Party, or the Program Inventions; except in each case to the
extent resulting from the gross negligence or willful misconduct of the
Indemnified Party.

     

    7.2            Procedure.
If Indemnified Parties seeks indemnification under this Article 7, the
Indemnified Parties promptly shall notify the Indemnifying Parties of any claim,
demand, action or other proceeding for which the Indemnified Parties intends to
claim such indemnification. The Indemnifying Parties shall have the right to
participate in, and, to the extent the Indemnifying Parties so desires, jointly
with any other Indemnifying Party similarly noticed, to assume the defense
thereof with counsel selected by the Indemnifying Parties; provided,
however, that the Indemnified Parties shall have the right to retain their own
counsel; at their sole expense, if representation of the Indemnified Parties by
the counsel retained by the Indemnifying Parties would be inappropriate due to
actual or potential differing interests between the Indemnified Parties and any
other Person represented by such counsel in such proceedings. The indemnity
agreement in this Article 7 shall not apply to amounts paid in settlement of any
loss, liability, damage or expense if such settlement is effected without the
consent of the Indemnifying Parties, which consent shall not be unreasonably
withheld or delayed. The failure to deliver notice to the Indemnifying Parties
within a reasonable time after the notice of any such claim or demand or
commencement of any such action or other proceeding, if prejudicial to its
ability to defend, shall relieve the Indemnifying Parties of any liability to
the Indemnified Parties under this Article 7 with respect thereto, but the
omission so to deliver notice to the Indemnifying Parties will not relieve it of
any liability that it may have to the Indemnified Parties otherwise than under
this Article 7. The Indemnified Parties, its employees and agents, shall
reasonably cooperate with the Indemnifying Parties and their legal
representatives in the investigation and defense of any claim, demand, action or
other proceeding covered by this Article 7.

     

    7.3            Insurance.
Each Party shall maintain insurance or the self-insured equivalent with respect
to its activities under the Project in such amount as such Party customarily
maintains with respect to its similar research and development activities. Each
Party shall maintain such insurance or self-insured equivalent for so long as it
continues to conduct activities under the Project, and thereafter for so long as
such Party customarily maintains insurance or self-insured equivalent covering
its similar research and development activities.

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    ARTICLE
8

     

    FORCE
MAJEURE

     

    No Party
shall be held liable or responsible to the other Parties nor be deemed to have
defaulted under or breached this Agreement for failure or delay in fulfilling or
performing any term of this Agreement to the extent, and for so long as, such
failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party including but not limited to fire, floods,
embargoes, war, acts of terror, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or any other Party.

     

    ARTICLE
9

     

    MISCELLANEOUS

     

    9.1           
Notices.
Any consent, notice or report required or permitted to be given or made under
this Agreement by one of the Parties hereto to the other Parties shall be in
writing, delivered by any lawful means to such other Parties at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise provided in this
Agreement) shall be effective upon receipt by the addressee.

     

    
      	
               
      

            	
              If
      to SPM:

            	
              203
      NE Front Street

            


    

    
      	
               
      

            	
              Suite
      201

            


    

    
      	
               
      

            	
              Milford,
      Kent County, DE 1996

            


    

     

    
      	
               
      

            	
              With
      a copy to:

            	
              Richard
      Caruso

            


    

    
      	
               
      

            	
              795
      East Lancaster Ave.

            


    

    
      	
               
      

            	
              Suite
      200

            


    

    
      	
               
      

            	
              Villanova,
      PA 19085

            


    

    
      	
               
      

            	
              Attention:
      Richard Caruso

            


    

     

    
      	
               
      

            	
              If
      to HDC:

            	
              Health
      Discovery Corporation

            


    

    
      	
               
      

            	
              2
      East Bryan Street, Suite 601

            


    

    
      	
               
      

            	
              Savannah,
      GA 31401

            


    

    
      	
               
      

            	
              Attn:
      R. Scott Tobin, President and General
Counsel

            


    

     

    
      	
               
      

            	
              With
      a copy to:

            	
              Procopio,
      Cory, Hargreaves & Savitch LLP

            


    

    
      	
               
      

            	
              530
      B Street, Suite 2100

            


    

    
      	
               
      

            	
              San
      Diego, CA 92101

            


    

    
      	
               
      

            	
              Attn:
      Eleanor M. Musick, Esq.

            


    

     

    
      
         


      

      
        16

        
          

        

      

      
         


      

    

     

    
      	
               
      

            	
              If
      to QUEST:

            	
              Quest
      Diagnostics Incorporated

            


    

    
      	
               
      

            	
              1290
      Wall Street West

            


    

    
      	
               
      

            	
              Lyndhurst,
      NJ 07071

            


    

    
      	
               
      

            	
              Attn:
      General Counsel

            


    

     

    
      	
               
      

            	
              With
      a copy to:

            	
              Quest
      Diagnostics Incorporated

            


    

    
      	
               
      

            	
              33608
      Ortega Highway

            


    

    
      	
               
      

            	
              San
      Juan Capistrano, CA 92675

            


    

    
      	
               
      

            	
              Attn:
      Chief Intellectual Property Counsel

            


    

     

    9.2           
Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflicts of law
principles thereof. The patent laws of the United States shall be applied to any
issue arising under this Agreement concerning the status, validity,
construction, interpretation, or inventorship of any intellectual
property.

     

    9.3           
Assignment.
No Party may assign or otherwise transfer (whether voluntarily, by operation of
law or otherwise) its rights or obligations under this Agreement without the
prior written consent of the other Parties; provided, however, that each Party
may, without such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all of
its business, or in the event of its merger, consolidation, change in control or
similar transaction. Any permitted assignee shall assume all obligations of its
assignor under this Agreement. Any purported assignment in violation of this
Section 9.3 shall be void.

     

    9.4           
Waivers
and Amendments. No change, modification, extension, termination or waiver
of this Agreement, or any of the provisions herein contained, shall be valid
unless made in writing and signed by duly authorized representatives of the
Parties hereto.

     

    9.5          
Entire
Agreement. This Agreement, together with its exhibits embody the entire
agreement between the Parties and supersede any prior representations,
understandings and regarding the subject matter hereof that are not fully
expressed herein.

     

    9.6           
Severability.
Any of the provisions of this Agreement which are determined to be invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability in such jurisdiction, without rendering invalid
or unenforceable the remaining provisions hereof and without affecting the
validity or enforceability of any of the terms of this Agreement in any other
jurisdiction.

     

    9.7           
Waiver.
The waiver by either Party hereto of any right hereunder or the failure to
perform or of a breach by the other Party shall not be deemed a waiver of any
oilier right hereunder or of any other breach or failure by said other Party
whether of a similar nature or otherwise.

     

    9.8           
Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

     

    
      
         


      

      
        17

        
          

        

      

      
         


      

    

     

    9.9           
Mediation.
In the event that a dispute arises between any of the Parties hereto, the
affected Parties shall first discuss and negotiate any dispute that arises under
this Agreement with a view toward settlement and disposition thereof.
Contractual disputes that cannot be resolved by the Parties shall be submitted
to mediation in Wilmington, Delaware. In the event that the Parties to the
dispute are not able to resolve their dispute within ninety (90) days after the
submission of such dispute to mediation, such Parties hereby consent to the
exclusive jurisdiction of the courts of the State of Delaware for the
enforcement of these provisions and the entry of judgment on any award rendered
hereunder. Should the chosen court of the State of Delaware for any reason lack
jurisdiction, any court with jurisdiction shall enforce this provision and enter
judgment on any award. The mediation proceedings, together with all discoveries
made pursuant thereto and statements or documents exchanged by the Parties to
the dispute in connection therewith, shall be kept confidential and shall only
be used by such Parties in connection with the mediation proceedings. All costs
of mediation shall be evenly divided between the Parties to the mediation,
exclusive of each Party’s legal fees, each of which shall be borne by the party
that incurs them.

     

    9.10          No
Third Party Beneficiaries. No provisions of the Agreement, express or
implied, create, and shall not be construed as creating, any rights enforceable
by any person or entity not a party to the Agreement.

     

    [Remainder
of page intentionally left blank.]

     

    
      
         


      

      
        18

        
          

        

      

      
         


      

    

     

    IN
WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
Effective Date.

     

    
      	 
      	
              SMART
      PERSONALIZED MEDICINE, LLC

            
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Richard E. Caruso Ph.D.

            
	 
      	 
      	
              Name:

            	
              Richard
      E. Caruso Ph.D.

            
	 
      	 
      	
              Title:

            	
              Chief
      Executive Officer

            
	 
      	 
      	 
      	 
      
	 
      	
              QUEST
      DIAGNOSTICS INCORPORATED

            
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Nick Conti

            
	 
      	 
      	
              Name:

            	
              Nick
      Conti

            
	 
      	 
      	
              Title:

            	
              Vice
      President

            
	 
      	 
      	 
      	
              Licensing
      & Strategic Alliances Quest
      Diagnostics Incorporated

            
	 
      	 
      	 
      	
               

            
	 
      	 
      	 
      	 
      
	 
      	
              HEALTH
      DISCOVERY CORPORATION

            
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Stephen D. Barnhill, M.D.

            
	 
      	 
      	
              Name:

            	
              Stephen
      D. Barnhill, MD

            
	 
      	 
      	
              Title:

            	
              Chief
      Executive Officer

            


    

     

     

    19