uclicense.htm


    
      
          

      

      
          

        
          

        

      

      
          

      

    


    [Use for draft but remove both
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    UC Case
No(s).                                           2008-341 and
others

    Draft
date:                                April 16,
2009

    


    EXCLUSIVE LICENSE AGREEMENT

    for

    PROCESSES FOR MICROFLUIDIC FABRICATION AND OTHER
INVENTIONS

    


    This license agreement
("Agreement") is made effective this ______ day of ______________________, 2009
("Effective Date"), by and between The Regents of the University of California,
a California corporation, having its statewide administrative offices at 1111
Franklin Street, 12th Floor, Oakland, California 94607-5200 ("The Regents") and
Shrink Technologies, Inc., a California corporation, having a principal place of
business at 2038 Corte Del Nogal, suite 110, Carlsbad, California 92011
("Licensee").

    


     

    BACKGROUND

     

    


    A. Certain
inventions, generally characterized as Processes for Microfluidic Fabrication
(collectively "Invention"), were made in the course of research at the
University of California, Merced and for UC Case No. 2008-341
at both the University of California, Merced and University of California,
Berkeley, by Dr. Michelle Khine and others and are claimed in Patent Rights as
defined below.

     

    B. To the
extent of the actual knowledge of the licensing officer responsible for the
administration of this Agreement, as of the Effective Date, no federal funds
were used in the development of the Invention.  In the event that the
development of the Invention was sponsored by the United States Federal
Government, then, as a consequence, this license would be subject to overriding
obligations to the United States Federal Government under 35 U.S.C. §§ 200-212
and applicable regulations including a non-exclusive, non-transferable,
irrevocable, paid-up license to practice or have practiced the Invention for or
on behalf of the United States Government throughout the
world.

     

    C. To the
extent of the actual knowledge of the licensing officer responsible for the
administration of this Agreement, as of the Effective Date, the Invention having
UC Case No. 2009-041,
characterized as " Apparatus and Method for Culturing Stem Cells", and the
Invention having UC Case No. 2009-402, characterized as “Honeycomb Shrink Wells
for Stem Cell Culture”, were sponsored in part by the California
Institute for Regenerative Medicine ("CIRM") and are subject to CIRM Grant
Nos.  RS1-00239-1 and 442120-MK-18213 granted by CIRM to The
Regents.  Under the terms of  CIRM’s Intellectual Property
Requirements for Non-Profit Organizations (17 Cal.Code of Regs. Section 100300),
The Regents agrees i) to make its CIRM-funded patented inventions readily
accessible on reasonable terms, either directly or through a licensee, to other
Grantee Organizations for non-commercial purposes upon request from such Grantee
Organization; ii) if The Regents grants an exclusive license, The Regents is
required to document the development and commercialization capabilities of the
intended licensee and to include terms in the license agreement addressing all
relevant therapeutic and diagnostic uses for which the invention is applicable
and the licensee agrees to diligently develop and to include commercial
development milestones and benchmarks so that development can be assessed and
monitored; iii) if The Regents grants an exclusive license, the licensee must
have a plan in place at the time of commercialization to provide access to
resultant therapies and diagnostics for uninsured California patients and the
exclusive licensee must agree to provide drugs at prices negotiated pursuant to
the California Discount Prescription Drug Program (commencing with California
Health and Safety Code section 130500 et seq.) to eligible Californians under
that program and CIRM may make such plan available for review by the ICOC on an
annual basis; iv) The Regents is required to monitor development activities of
the licensee and to make reports of monitoring activities annually to CIRM; v)
The Regents is required to report to CIRM administrative action to modify or
terminate license rights where necessary; vi) The Regents is required to notify
CIRM prior to any press release that refers to research findings,
collaborations, inventions, patents or licensing activities that arise as a
consequence of CIRM funding and CIRM may decide to participate in a joint press
release; and vii) with regard to CIRM-funded patented inventions, CIRM has
certain March-in Rights.  The CIRM Intellectual Property Requirements
for Non-profit Organizations is attached in Appendix A.  [Need to discuss these
requirements – may need to make modifications to agreement to
accommodate]

     

    D.       The Licensee has evaluated
the Invention under a Secrecy Agreement with The Regents (UC Control No.
2009-20-0554) with an effective date of April 9,
2009.

     

    E.       The Licensee and The
Regents have executed an Option Agreement (UC Control No.
2008-11-0618) with an effective date of June 16,
2008.

     

    F.       The Licensee and The
Regents, acting on behalf of the University of California, Merced, have entered
into a research agreement on June 16, 2008 (“Research
Agreement”).

     

    G.       The Licensee wishes to
obtain certain rights from The Regents for the commercial development of the
Invention, in accordance with the terms and conditions set forth herein and The
Regents is willing to grant those rights so that the Invention may be developed
and the benefits enjoyed by the general public.

     

    H.       The scope of such rights
granted by The Regents is intended to extend to the scope of the patents and
patent applications in Patent Rights, but only to the extent that The Regents
has proprietary rights in and to the Valid Claims of such Patent
Rights.

     

    I.       The Licensee is a "small
business firm" as defined in 15 U.S.C. §632.

     

    J.       Both parties recognize and
agree that Earned Royalties are due under this Agreement with respect to
products, services and methods and that such royalties will be paid with respect
to both pending patent applications and issued patents, in accordance with the
terms and conditions set forth herein.

     

    K.       Both parties recognize and
agree that Earned Royalties due under this Agreement will be based on the
Licensee's or a Sublicensee's last act of infringement of Patent Rights within
the control of the Licensee or a Sublicensee, regardless of whether the Licensee
or a Sublicensee had control over prior infringing acts; the parties intend that
Earned Royalties due under this Agreement will be calculated based on the Net
Sales of the product or service resulting from the last act of infringement by
the Licensee and its Sublicensees.

    


    - - oo 0 oo -
-

    


    The parties agree as
follows:

    


    1. DEFINITIONS

               As
used in this Agreement, the following terms, whether used in the singular or
plural, shall have the following meanings:

     

    1.1 "Affiliate"
of the Licensee means any entity which, directly or indirectly, Controls the
Licensee, is Controlled by the Licensee or is under common Control with the
Licensee.  "Control" means (i) having the actual, present capacity to
elect a majority of the directors of such affiliate; (ii) having the power to
direct at least forty percent (40%) of the voting rights entitled to elect
directors; or (iii) in any country where the local law will not permit foreign
equity participation of a majority, ownership or control, directly or
indirectly, of the maximum percentage of such outstanding stock or voting rights
permitted by local law.

     

    1.2 "Attributed
Income" means the total gross proceeds (exclusive of Earned Royalties of
Sublicensees but including, without limitation, any license fees, maintenance
fees, or milestone payments), whether consisting of cash or any other forms of
consideration and whether any rights other than Patent Rights are granted, which
gross proceeds are received by or payable to the Licensee, any Affiliate and/or
Joint Venture from any Sublicensee in consideration of the grant of a sublicense
under this Agreement. Notwithstanding the foregoing, Attributed Income shall not
include proceeds attributed in such sublicense or such agreement, arrangement or
other relationship to bona fide (i) debt financing; (ii) equity (and conditional
equity, such as warrants, convertible debt and the like) investments in the
Licensee at market value; (iii) reimbursements of Patent Prosecution Costs
actually incurred by the Licensee; and (iv) reimbursement for the actual cost of
documented research and/or development services undertaken by the Licensee prior
to the effective date of the sublicense for the applicable field of use of such
sublicense and reimbursement for the actual cost of research and/or development
services provided after the effective date of the sublicense by Licensee for the
applicable Sublicensee under such sublicense on the basis of full-time
equivalent ("FTE") efforts of personnel at or below commercially reasonable and
standard FTE rates.  For the avoidance of doubt, any gross proceeds
meeting the definition set forth above in this Article 1.2 shall be “Attributed Income”
irrespective of whether such gross proceeds are received under one or more
separate agreements and irrespective of how such gross proceeds are referred to
or characterized by the Licensee or the Sublicensee.  Also for
avoidance of doubt, once a research and development expense is deducted from
Attributed Income for any sublicense it can not be deducted again for that
sublicense or any other sublicense.

     

    1.3 "Combination
Product" means a combined Product that contains or uses a Licensed Product or
Licensed Service and at least one other Product or process (a "Combination
Product Component"), where (i) such Combination Product Component is not a
Licensed Product or Licensed Service, (ii) if such Combination Product Component
were removed from such combined Product or service, the manufacture, use, Sale
or import of the resulting Product or service in or into a particular country
would infringe, but for a license, the same Valid Claim in the country where
such manufacture, use, Sale or import occurs as such combined Product or
service, (iii) such Combination Product Component and such Licensed Product or
Licensed Service are Sold separately from such combined Product or service by
the Licensee or any Affiliate, Joint Venture or Sublicensee, and (iv) the market
price of such combined Product is higher than the market price for such Licensed
Product or Licensed Service as a result of such combined Product or serviced
containing or using such Combination Product Component.

     

    1.4 "Earned
Royalty" means Sublicensee Royalty (as defined in Paragraph 8.2) and Royalty (as defined in Paragraph 9.1)

     

    1.5 "Field of
Use" means all fields unless otherwise amended by the parties to this
Agreement.

     

    1.6 “First
Commercial Sale” means a bona fide good faith Sale of a Licensed Product in
quantities sufficient to meet market demand.

     

    1.7 "Joint
Venture" means any separate entity established pursuant to an agreement between
a third party and the Licensee and/or Sublicensee to constitute a vehicle for a
joint venture, in which the separate entity manufactures, uses, purchases, Sells
or acquires Licensed Products from the Licensee or
Sublicensee.

     

    1.8 "Licensed
Method" means any process, art or method the use or practice of which, but for
the license granted in this Agreement, would infringe, or contribute to, or
induce the infringement of, any Patent Rights in any country were they issued at
the time of the infringing activity in that country.

     

    1.9 "Licensed
Product" means any Product, including, without limitation, a Product for use or
used in practicing a Licensed Method and any Product made by practicing a
Licensed Method, the manufacture, use, Sale, offer for Sale or import of which,
but for the license granted in this Agreement, would infringe, or contribute to,
or induce the infringement of, any Patent Rights in any country were they issued
at the time of the infringing activity in that country.

     

    1.10 "Licensed
Service" means any service provided for consideration (whether in cash or any
other form), when such service (i) involves the use of a Licensed Product; or
(ii) involves the practice of a Licensed Method. 

     

    1.11 "Net
Invoice Price" means:

     

    
      	
              1.11.1  

            	
              For Licensed Products and Licensed Services Sold to public
      companies with a market cap of seventy-five million or less or private
      companies with retained earnings of five million or less: (a) the gross
      invoice price charged and the value of any other consideration owed to the
      Licensee and/or any Sublicensee for such Licensed Product or Licensed
      Service, or (b) for Combination Products, the gross invoice price charged
      and the value of any other consideration owed to the Licensee and/or any
      Sublicensee for such Licensed Product or Licensed Service used in the
      Combination Product when such Licensed Product or Licensed Service is Sold
      separately from such Combination Product, less the following items, but
      only to the extent that they actually pertain to the disposition of such
      Licensed Product or Licensed Service, are included in the gross invoice
      price charged or other consideration owed, and are identified separately
      on a bill or invoice:

            


    

    
      	
              1.11.1.1  

            	
              Allowances actually granted to customers for rejections,
      chargebacks, returns and prompt payment and volume
    discounts;

            


    

    
      	
              1.11.1.2  

            	
              uncollectible debt up to a maximum of two percent (2%) of the
      gross invoice price;

            


    

    
      	
              1.11.1.3  

            	
              Freight, transport packing and insurance charges associated with
      transportation;

            


    

    
      	
              1.11.1.4  

            	
              Taxes, including Deductible Value Added Tax, tariffs or
      import/export duties based on Sales when included in the gross invoice
      price, but excluding value-added taxes other than Deductible Value Added
      Tax or taxes assessed on income derived from Sales.  "Deductible
      Value Added Tax" means only the portion of the value added tax that is
      actually incurred and is not reimbursable, refundable or creditable under
      the tax authority of any country;
and

            


    

    
      	
              1.11.1.5  

            	
              Rebates and discounts paid or credited pursuant to applicable
      law.

            


    

    
      	
              1.11.2  

            	
              For Licensed Products and Licensed Services Sold to public
      companies with a market cap of more than seventy-five million or private
      companies with retained earnings of more than five million: (a) the amount
      of consideration actually received by the Licensee and/or any Sublicensee
      for such Licensed Product or Licensed Service, or (b) for Combination
      Products, the amount of consideration actually received by the Licensee
      and/or any Sublicensee for such Licensed Product or Licensed Service used
      in the Combination Product when such Licensed Product or Licensed Service
      is Sold separately from such Combination Product, less the following
      items, but only to the extent that they actually pertain to the
      disposition of such Licensed Product or Licensed Service, are included in
      the gross invoice price charged or other consideration owed, and are
      identified separately on a bill or
invoice:

            


    

    
      	
              1.11.2.1  

            	
              Allowances actually granted to customers for rejections,
      chargebacks, returns and prompt payment and volume
    discounts;

            


    

    
      	
              1.11.2.2  

            	
              Freight, transport packing and insurance charges associated with
      transportation;

            


    

    
      	
              1.11.2.3  

            	
              Taxes, including Deductible Value Added Tax, tariffs or
      import/export duties based on Sales when included in the gross invoice
      price, but excluding value-added taxes other than Deductible Value Added
      Tax or taxes assessed on income derived from Sales.  "Deductible
      Value Added Tax" means only the portion of the value added tax that is
      actually incurred and is not reimbursable, refundable or creditable under
      the tax authority of any country;
and

            


    

    
      	
              1.11.2.4  

            	
              Rebates and discounts paid or credited pursuant to applicable
      law.

            


    

     

    1.12 "Net
Sale" means:

     

    
      	
              1.12.1  

            	
              except in the instances described in Paragraphs 1.12.2, 1.12.3 and 1.12.4 of this Paragraph, the Net Invoice
  Price;

            


    

    
      	
              1.12.2  

            	
              for any Relationship-Influenced Sale of a Licensed Product or
      Licensed Service, Net Sales shall be based on the Net Invoice Price at
      which the Relationship-Influenced Sale Purchaser re-Sells such Licensed
      Product or Licensed Service;

            


    

    
      	
              1.12.3  

            	
              in those instances where Licensed Product or Licensed Service is
      not Sold, but is otherwise exploited (except with respect to limited
      commercially reasonable quantities of Licensed Product or Licensed Service
      that are provided solely for demonstration, evaluation and feasibility
      purposes for no consideration) , the Net Sales for such Licensed Product
      or Licensed Service shall be the Net Invoice Price of products or services
      of the same or similar kind and quality, Sold in similar quantities,
      currently being offered for Sale by the Licensee and/or any
      Sublicensee.  Where such products or services are not currently
      being offered for Sale by the Licensee and/or any Sublicensee, the Net
      Sales for Licensed Product or Licensed Service otherwise exploited, for
      the purpose of computing royalties, shall be the average Net Invoice Price
      at which products or services of the same or similar kind and quality,
      Sold in similar quantities, are then currently being offered for Sale by
      other manufacturers.  Where such products or services are not
      currently Sold or offered for Sale by the Licensee and/or any Sublicensee
      or others, then the Net Sales shall be the Licensee's and/or any
      Sublicensee's cost of manufacture of Licensed Product or the cost of
      conducting the service, determined according to Generally Accepted
      Accounting Principles (“GAAP”), plus 100 percent (100%);
    and

            


    

    
      	
              1.12.4  

            	
              for a Reacquisition Sale or Exploitation, Net Sales shall mean
      the Net Invoice Price upon the Reacquisition Sale or Exploitation of a
      Licensed Product or Licensed
Service.

            


    

     

    1.13 "New
Developments" means inventions, or claims to inventions, which constitute
advancements, developments or improvements, whether or not patentable and
whether or not the subject of any patent application, which are not sufficiently
supported by the specification of a previously-filed patent or patent
application within the Patent Rights to be entitled to the priority date of the
previously-filed patent or patent application.

     

    1.14 "Patent
Prosecution Costs" is defined in Paragraph 22.3.

     

    1.15 "Patent
Rights" means the Valid Claims of, to the extent assigned to or otherwise
obtained by The Regents, the following United States patents and patent
applications:

    
      	
               

              UC Case
      Number

            	
              United
      States
      Application Number or

              United
      States
      Patent Number

            	
               

              Filing or
      Issue Date

            
	
              2008-341

            	
              PCT/US2008/083283

            	
              11/12/2008

            
	
              2009-041

            	
              61/147,424

            	
              1/26/2009

            
	
              2009-402

            	
              61/161,388

            	
              3/18/2009

            
	
              2009-403

            	
              Not yet
      filed

            	  
	
              2009-404

            	
              61/161,738

            	
              3/19/2009

            
	
              2009-447

            	
              Not yet
      filed

            	  
	
              2009-489

            	
              Not yet
      filed

            	  
	
              2009-563

            	
              61/163,343

            	
              3/25/2009

            
	
              2009-647

            	
              Not yet
      filed

            	  
	
              2009-656

            	
              Not yet
      filed

            	  


    

    


    Patent Rights shall further include the Valid Claims of, to the extent
assigned to or otherwise obtained by The Regents, the corresponding foreign
patents and patent applications (requested under Paragraph 22.4
herein) and any reissues, extensions, substitutions, continuations, divisions,
and continuation-in-part applications (but only those Valid Claims in the
continuation-in-part applications that are entirely supported in the
specification and entitled to the priority date of the parent application) and
any patent that issues on any application included in the
foregoing.  This definition of Patent Rights excludes any rights in
and to New Developments, except to the extent added by amendment pursuant to
Article 11.  By mutual written agreement
the parties to this Agreement may include or exclude patent rights from this
definition including patent rights claiming inventions first conceived and
reduced to practice under the Research Agreement.  For UC Case Nos. 2009-563 and
2009-656, The Regents may owe rights in part to another party who
sponsored research at the University of California, Merced.

     

    1.16 "Product"
means any kit, article of manufacture, composition of matter, material,
compound, component or product.

     

    1.17 “Reacquisition
Sale or Exploitation” means those instances where the Licensee or a Sublicensee
acquires a Licensed Product or Licensed Service and then subsequently Sells or
otherwise exploits such Licensed Product or Licensed
Service.

     

    1.18 "Related
Party" means a corporation, firm or other entity with which, or individual with
whom, the Licensee and/or any Sublicensee (or any of its respective
stockholders, subsidiaries or Affiliates) have any agreement, understanding or
arrangement (for example, but not by way of limitation, an option to purchase
stock or other equity interest, or an arrangement involving a division of
revenue, profits, discounts, rebates or allowances) unrelated to the Sale or
exploitation of the Licensed Products or Licensed Services without which such
other agreement, understanding or arrangement, the amounts, if any, charged by
the Licensee or any Sublicensee  to such entity or individual for the
Licensed Product or Licensed Service, would be higher than the Net Invoice Price
actually received, or if such agreement, understanding or arrangement results in
the Licensee or any Sublicensee extending to such entity or individual lower
prices for such Licensed Product or Licensed Service than those charged to
others without such agreement, understanding or arrangement buying similar
products or services in similar quantities.

     

    1.19 "Relationship-Influenced
Sale" means a Sale of a Licensed Product or Licensed Service, or any
exploitation of the Licensed Product or Licensed Method, between the Licensee
and/or any Sublicensee and (i) an Affiliate; (ii) a Joint Venture; (iii) a
Related Party or (iv) the Licensee or a Sublicensee.

     

    1.20 "Relationship-Influenced
Sale Purchaser" means the purchaser of Licensed Product or Licensed Service in a
Relationship-Influenced Sale.

     

    1.21 "Sale"
means the act of selling, leasing or otherwise transferring, providing, or
furnishing for use for any consideration.  Correspondingly, "Sell"
means to make or cause to be made a Sale and "Sold" means to have made or caused
to be made a Sale.

     

    1.22 "Sublicensee"
means any person or entity (including any Affiliate or Joint Venture) to which
any of the license rights granted to the Licensee hereunder are
sublicensed.

     

    1.23 "Sublicense
Fee" is defined in Paragraph 8.1.

     

    1.24 "Valid
Claim" means a claim of a patent or patent application in any country that (i)
has not expired; (ii) has not been disclaimed; (iii) has not been cancelled or
superseded, or if cancelled or superseded, has been reinstated; and (iv) has not
been revoked, held invalid, or otherwise declared unenforceable or not allowable
by a tribunal or patent authority of competent jurisdiction over such claim in
such country from which no further appeal has or may be
taken.

    


    2. GRANT

     

    2.1 Subject
to the limitations and other terms and conditions set forth in this Agreement
including, if applicable, the license granted to the United States Government
set forth in the Background and in Paragraph 2.3.1, The Regents grants to the Licensee a
license under its rights in and to Patent Rights  to make, use, Sell,
offer for Sale and import Licensed Products and Licensed Services and to
practice Licensed Methods, in the United States and in other countries where The
Regents may lawfully grant such licenses, only in the Field of
Use.

     

    2.2 Except as
otherwise provided for in this Agreement, the license granted under Patent
Rights in Paragraph 2.1 is
exclusive.  

     

    2.3 The
license granted in Paragraphs 2.1 and 2.2 is subject to the
following:

     

    
      	
              2.3.1  

            	
              If applicable, the obligations to the United States Government
      under 35 U.S.C. §§ 200-212 and all applicable governmental implementing
      regulations, as amended from time to time, including the obligation to
      report on the utilization of the Invention as set forth in 37 CFR. §
      401.14(h), and all applicable provisions of any license to the United
      States Government executed by The Regents; and

            


    

    
      	
              2.3.2  

            	
              the National Institutes of Health "Principles and Guidelines for
      Recipients of NIH Research Grants and Contracts on Obtaining and
      Disseminating Biomedical Research Resources," 64 F.R. 72090 (Dec. 23,
      1999), as amended from time to
time.

            


    

     

    2.4 The
license granted in Paragraphs 2.1 and 2.2 is limited to methods and products that
are within the Field of Use.  In the event that the Field of Use is
amended upon mutual written agreement to exclude certain fields, then the
Licensee has no license under this Agreement for such excluded
fields.

     

    2.5 The
Regents reserves and retains the right (and the rights granted to the Licensee
in this Agreement shall be limited accordingly) to make, use and practice the
Invention and any technology relating to the Invention and to make and use any
Products and to practice any process that is the subject of the Patent Rights
(and to grant any of the foregoing rights to other educational and non-profit
institutions) for educational, clinical and research purposes, including without
limitation, any sponsored research performed for or on behalf of commercial
entities and including publication and other communication of any research
results.  For the avoidance of doubt, to the extent the Invention and
any technology relating to the Invention are not the subject of the exclusive
license under the Patent Rights granted to the Licensee hereunder, The Regents
shall be free to make, use, Sell, offer to Sell, import, practice and otherwise
commercialize and exploit (including to transfer, license to, or have exercised
by, third parties) for any purpose whatsoever and in its sole discretion, such
Invention and any Products or processes that are the subject of any of the
foregoing.

     

    2.6 In the
event that the Invention was made under funding provided by the United States
Government, then the Licensed Products, the Invention, and any products
embodying the Invention sold in the United States will be substantially
manufactured in the United States.

     

    2.7 This
Agreement will terminate immediately if a claim which includes, in any way, the
assertion that any portion of Patent Rights is invalid or unenforceable is filed
by the Licensee or an Interested Party.  For the purposes of this
Paragraph 2.7, an Interested Party means
any third party who files such a claim on behalf of the Licensee or at the
written urging of the Licensee, or is a Sublicensee of Licensee. Notwithstanding
the above, if Licensee terminates a Sublicensee who violates this provision
within fifteen (15) days following receipt of written notice from The Regents of
such violation and the Sublicensee did not violate this provision at Licensee’s
urging, then this Agreement will remain in effect.

    


    3. SUBLICENSES

     

    3.1 The
Regents also grants to the Licensee the right to sublicense to third parties
(including to Affiliates and Joint Ventures) the rights granted to the Licensee
hereunder, with no right to further sublicense except as provided for in
Paragraph 3.2 below, as long as the
Licensee has current exclusive rights thereto under this
Agreement.  Each Sublicensee must be subject to a written sublicense
agreement.  All sublicenses will include all of the rights of, and
will require the performance of all the obligations due to, The Regents (and, if
applicable, the United States Government and other sponsors), other than those
rights and obligations specified in Article 6 (License Issue Fee), Article 7 (License Maintenance Fee) and Paragraph 9.5 (Minimum Annual Royalty) and Paragraphs
22.3 and 22.5 (reimbursement of Patent Prosecution
Costs).  For the avoidance of doubt, Affiliates and Joint Ventures
shall have no licenses under this Agreement unless such Affiliates and Joint
Ventures are granted a sublicense. For the purposes of this Agreement, the
operations of all Sublicensees shall be deemed to be the operations of the
Licensee, for which the Licensee shall be responsible.

     

    3.2 Under the
terms of each sublicense, each such Sublicensee shall have the limited right (as
described below) to grant three (3) further sublicenses ("Further Sublicenses")
to the Sublicensee’s affiliated companies and/or other third parties (each, a
“Further Sublicensee”).  Each Further Sublicensee shall also have the
limited right to grant two (2) additional further sublicenses ("Additional
Further Sublicenses") to an affiliated company and/or other third party (each an
"Additional Further Sublicensee").  In each case the term "affiliated
company" shall have the same definition as Affiliate in Section 1.1 of this
Agreement, with the appropriate sublicensee substituted for Licensee in the
definition.  Such Further Sublicenses and Additional Further
Sublicenses may only be granted to the extent that such Sublicensee or Further
Sublicensee deems that they are reasonably needed for the development and
commercialization of Licensed Products and the maximization of sales in
accordance with this Agreement.  Each Sublicensee and each permitted
Further Sublicensee and Additional Further Sublicensee shall be subject to a
written sublicense agreement that shall be consistent with and not in violation
of all of the applicable terms, conditions, obligations, restrictions and other
terms of this Agreement that protect or benefit The Regents’ (and, if
applicable, the U.S. Government’s and other sponsors’) rights and
interests.  Licensee shall attach a copy of this Agreement to each
sublicense issued under this Paragraph 3.2 and shall specify in the sublicense
that the sublicensee must comply with the terms of the
Agreement.  Licensee may redact the following information from the
Agreement, should it wish to do so: License Issue Fee, License Maintenance Fee,
Earned Royalties and Minimum Royalties, Milestone Payments, Fees for Patent
Rights Added After Effective Date and the Patent Rights not included in the
sublicense.  Licensee agrees that it shall require appropriate audited
and auditable reporting from each Sublicensee, its Further Sublicensees and
Additional Further Sublicensees to establish all amounts owed hereunder, and
shall make such reports available to The Regents.  Licensee shall
require each Sublicensee to submit to Licensee progress reports and audited
financial reports consistent with the Agreement, and each Sublicensee shall
require each Further Sublicensee and Additional Further Sublicensee to submit
such progress reports and audited financial reports to Sublicensee which it will
deliver to Licensee.  Licensee shall make these reports available to
The Regents.  Licensee shall require that each Sublicensee agree to
indemnification procedures and insurance coverages consistent with the
obligations imposed on Licensee by Article 25 of the Agreement.  Licensee
shall also require each Sublicensee to obtain comparable indemnification
provisions from each Further Sublicensee and each Additional Further
Sublicensee.  

     

    3.3 In the
event that The Regents and the Licensee each own an undivided interest in any
Patent Rights licensed hereunder, the Licensee will not separately grant a
license to any third party under its rights without concurrently granting a
license under The Regents' rights on the terms and conditions described in this
Article 3
(Sublicenses).

     

    3.4 The
Licensee will notify The Regents of each sublicense granted hereunder and will
provide The Regents with a complete copy of each sublicense (along with a
summary of the material terms of each such sublicense) and each amendment to
such sublicense within thirty (30) days after issuance of such sublicense or
such amendment.  The Licensee will collect from Sublicensees and pay
to The Regents all fees, payments, royalties and the cash equivalent of any
consideration due The Regents.  The Licensee will guarantee all monies
due The Regents from Sublicensees. For clarity, if the Licensee grants a
sublicense that contains a provision for payment of royalties by any Sublicensee
in an amount that is less than the Sublicensee Royalty required to be paid under
Paragraph 8.2 below, then the Licensee
will pay to The Regents a total amount equal to the Sublicensee Royalty based on
the Sublicensees’ Net Sales as provided for in Paragraph 8.2.  The Licensee will require
Sublicensees to provide it with copies of all progress reports and royalty
reports in accordance with the provisions herein and the Licensee will collect
and deliver all such reports due The Regents from
Sublicensees.

     

    3.5 If
Licensee licenses patent rights assigned to or otherwise acquired by it
("Licensee's Patent Rights"), and it believes, in good faith, that the recipient
of such license will infringe Patent Rights in practicing the Licensee's Patent
Rights, then the Licensee will not separately grant a license to such recipient
under Licensee's Patent Rights without concurrently granting a sublicense under
Patent Rights on the terms required under this Agreement.

     

    3.6 Upon any
expiration or termination of this Agreement for any reason, all sublicensed
rights conveyed to any Sublicensee (but not Further Sublicensees or Additional
Further Sublicensees), granted pursuant to Article 3 of this Agreement will remain in effect
and will be assumed by The Regents as binding obligations provided that (a) such
Sublicensee is not in breach of its sublicense at the time of expiration or
termination of this Agreement; (b) all of the terms of this Agreement are agreed
to fully in writing by such Sublicensee; and (c) such Sublicensee acquires no
rights from or obligations on the part of The Regents other than those that are
specifically granted under this Agreement and such
Sublicensee  assumes all liability and obligations to The Regents
required of Licensee by this Agreement with respect to The Regents' sublicensed
rights, including past due obligations existing at the time of assignment of
this Agreement by Licensee. Moreover, The Regents will have the sole right to
modify each such assigned sublicense to include all of the rights of The Regents
(and, if applicable, the United States Government and other sponsors) that are
contained in this Agreement, including the payment of Earned Royalties directly
to The Regents by the Sublicensee as if it were the Licensee at a rate that is
no lower than the rate set forth in Article 9 (Earned Royalties and Minimum Annual
Royalties) in accordance with Article 5
(Payment Terms).   If the Sublicensee fails to meet the above
provisions described in this Paragraph  3.6 (a – c) then The Regents may terminate
its sublicense, in accordance with Article  16 (Termination by The
Regents).  The Regents will not be bound to perform any duties or
obligations set forth in any sublicense that extend beyond the duties and
obligations of The Regents set forth in this Agreement, and the Licensee’s
obligations to The Regents hereunder will be binding upon the
Sublicensee.

     

    3.7 In the
event that the sublicense granted to the Sublicensee under this Agreement
terminates or expires while this Agreement remains in effect, all Further
Sublicenses and Additional Further Sublicenses shall automatically terminate or
expire, as appropriate.

    


    4. MANDATORY
SUBLICENSING

     

    4.1 Commencing
on the date that is eighteen (18) months after the Effective Date, if The
Regents (as represented by the actual knowledge of the licensing professional
responsible for administration of this Agreement) becomes aware of,
or if a third party becomes aware of and notifies such licensing professional
of, an application or use for Products within the licensed Field of Use but for
which Licensed Products have not been developed or are not, at such time, being
developed by Licensee (“New Application”), then The Regents, through the Office
of Technology Transfer, may give written notice to Licensee
thereof.

     

    4.2 Within
ninety (90) days of such notice, Licensee shall give The Regents written notice
stating whether Licensee agrees to develop and commercialize Licensed Products
for such New Application ("New Licensed Products").  Such notice shall
be accompanied by (i) a detailed development schedule, including specific
diligence requirements and development milestones, for the development of New
Licensed Products; and (ii) a detailed business plan for the development,
marketing and commercialization of New Licensed Products (collectively, the
"Development Plan").  If Licensee has not notified The Regents within
such ninety (90) day period, in accordance with the foregoing, that Licensee
agrees to develop and commercialize such New Licensed Products, or if the
Development Plan is not reasonably acceptable to The Regents, then Licensee
shall be deemed to not so agree.

     

    4.3 If
Licensee agrees, as set forth in Paragraph 4.2, to develop and commercialize such New
Licensed Products, then Licensee shall in accordance with the Development Plan
(i) diligently proceed with the development, manufacture and commercialization
of such New Licensed Products and (ii) after such New Licensed Product has been
developed, earnestly and diligently endeavor to market the same in quantities
sufficient to meet market demand.  Licensee shall submit a written
progress report setting forth in detail the status of such development,
manufacture and commercialization every six (6) months to The
Regents.

     

    4.4 If
Licensee does not agree, as set forth in Paragraph 4.2 to develop and commercialize such New
Licensed Products, or if Licensee fails to diligently pursue the development and
commercialization thereof in accordance with the Development Plan, then The
Regents shall have the right to seek one or more third parties for the
development and commercialization of such New Licensed Products and refer such
third party to Licensee so that such third party may request a sublicense
allowing for development and commercialization of such New Licensed
Products.  If the third party requests a sublicense, then Licensee
shall report such request, together with the terms and conditions thereof, to
The Regents within thirty (30) days from the date of such
request.

     

    4.5 If
Licensee does not grant a sublicense to the third party for the New Application
within a reasonable time after such request (and, in any event, within one
hundred (100) days after such request), or refuses to grant such sublicense,
then Licensee shall promptly, or, in the event of such refusal, within thirty
(30) days after such refusal, submit to The Regents a written
report.  Such report will include a written justification for the
Licensee's refusal or failure to grant such sublicense and the license terms
proposed by the third party, if any.  The Regents, at its sole
discretion, shall have the right to grant to the third party (and the rights
granted to Licensee in this Agreement shall be limited accordingly) a license to
make, have made, use, sell, offer for sale and import Licensed Products, to
provide Licensed Services and to practice the Licensed Methods within the New
Application under terms that The Regents determines to be
reasonable.  All amounts received by The Regents pursuant to such
license, after recovery by The Regents of its expenses in obtaining the license,
shall be divided between The Regents and the Licensee as
follows:  sixty percent (60%) to The Regents and forty percent (40%)
to the Licensee.  The Regents shall deliver to Licensee its portion
thereof.

    


    5. PAYMENT
TERMS

     

    5.1 Paragraphs
1.8, 1.9, 1.10 and 1.15 define Licensed Method, Licensed
Product, Licensed Service and Patent Rights, so that Earned Royalties are
payable on products and methods covered by both pending patent applications and
issued patents.  Earned Royalties will accrue in each country for the
duration of Patent Rights in that country and will be payable to The Regents
when Licensed Products or Licensed Services are invoiced, or if not invoiced,
when delivered or otherwise exploited by the Licensee or Sublicensee in a manner
constituting a Net Sale as defined in Paragraph 1.12.  Sublicense Fees with
respect to any Attributed Income shall accrue to The Regents within thirty (30)
days of the date that such Attributed Income is due to the
Licensee.

     

    5.2 The
Licensee will pay to The Regents all Earned Royalties, Sublicense Fees and other
consideration payable to The Regents quarterly on or before February 28 (for the
calendar quarter ending December 31), May 31 (for the calendar quarter ending
March 31), August 31 (for the calendar quarter ending June 30) and November 30
(for the calendar quarter ending September 30) of each calendar
year.  Each payment will be for Earned Royalties, Sublicense Fees and
other consideration which has accrued within the Licensee's most recently
completed calendar quarter.

     

    5.3 All
consideration due The Regents will be payable and will be made in United States
dollars by check payable to "The Regents of the University of California" or by
wire transfer to an account designated by The Regents.  The Licensee
is responsible for all bank or other transfer charges.  When Licensed
Products or Licensed Services are Sold for monies other than United States
dollars, the Earned Royalties and other consideration will first be determined
in the foreign currency of the country in which such Licensed Products or
Licensed Services were Sold and then converted into equivalent United States
dollars.  The exchange rate will be the average exchange rate quoted
in the The Wall Street
Journal during the last thirty (30) days of the reporting
period.

     

    5.4 Sublicense
Fees and Earned Royalties on Net Sales of Licensed Products or Licensed Services
and other consideration accrued in, any country outside the United States may
not be reduced by any taxes, fees or other charges imposed by the government of
such country, except those taxes, fees and charges allowed under the provisions
of Paragraph 1.12 (Net
Sales).

     

    5.5 Notwithstanding
the provisions of Article 29 (Force
Majeure) if at any time legal restrictions prevent the prompt remittance of
Earned Royalties or other consideration owed to The Regents by the Licensee with
respect to any country where a sublicense is issued or a Licensed Product or
Licensed Service is Sold or otherwise exploited, then the Licensee shall convert
the amount owed to The Regents into United States dollars and will pay The
Regents directly from another source of funds in order to remit the entire
amount owed to The Regents.

     

    5.6 In the
event that any patent or claim thereof included within the Patent Rights is held
invalid in a final decision by a court of competent jurisdiction and last resort
and from which no appeal has or can be taken, then all obligation to pay
royalties based on that patent or claim or any claim patentably indistinct
therefrom will cease as of the date of final decision.  The Licensee
will not, however, be relieved from paying any royalties that accrued before
such final decision and the Licensee shall be obligated to pay the full amount
of royalties due hereunder to the extent that The Regents licenses one or more
Valid Claims within the Patent Rights to the Licensee with respect to Licensed
Products or Licensed Services.

     

    5.7 If
applicable, no Earned Royalties will be collected or paid hereunder to The
Regents on Licensed Products or Licensed Services Sold to, or otherwise
exploited for, the account of the United States Government as provided for in
the license to the United States Government.  The Licensee and its
Sublicensees will reduce the amount charged for Licensed Products or Licensed
Services Sold to, or otherwise exploited by, the United States Government by an
amount equal to the Earned Royalty for such Licensed Products or Licensed
Services otherwise due The Regents.  Such reduction in Earned
Royalties will be in addition to any other reductions in price required by the
United States Government.

     

    5.8 In the
event that royalties, fees, reimbursements for Patent Prosecution Costs or other
monies owed to The Regents are not received by The Regents when due, the
Licensee will pay to The Regents interest at a rate of ten percent (10%) simple
interest per annum.  Such interest will be calculated from the date
payment was due until actually received by The Regents.  Such accrual
of interest will be in addition to and not in lieu of, enforcement of any other
rights of The Regents due to such late payment.

    


    6. LICENSE
ISSUE FEE

     

    6.1 The Licensee will pay to The Regents a
license issue fee by
issuing shares of stock as provided for in Paragraph 6.2 below.  This fee is
non-refundable, non-cancelable and is not an advance or otherwise creditable
against any royalties or other payments required to be paid under the terms of
this Agreement.

     

    6.2 Subject
to The Regents' Final Approval, as defined below, Licensee shall issue to The
Regents ________ (_____) shares of its common stock or equivalent securities
having a market value of one hundred thousand United States dollars (US
$100,000) as of the Effective Date ("Shares") and deliver to The
Regents a stock certificate therefor.  The Shares shall be issued and
the certificate therefor shall be delivered to The Regents in the name of
"Shellwater and Company" within thirty (30) days from the Effective Date or upon
the Final Approval, whichever is later.  As of the Effective Date, and
at all times thereafter, The Regents shall be entitled to all rights,
preferences and privileges of a holder of Licensee's common stock or equivalent
securities.  

     

    6.3 The
issuance of Shares as described in Paragraph 6.2 shall be subject to The Regents'
approval as set forth herein (the "Final
Approval").  Final Approval shall be granted or withheld in The
Regents' sole discretion, and shall be specifically be subject
to:  (i) Licensee delivering to The Regents, promptly after the
Effective Date, all relevant information that The Regents deems necessary in
order to make a properly informed decision in accordance with The Regents'
applicable policy guidelines on accepting equity in technology licensing
transactions, which information shall include, without limitation, a full
statement of all of the rights, preferences, privileges and restrictions granted
or imposed upon shares of Licensee’s common stock or equivalent securities and
the holders thereof; (ii) acceptance by The Regents of Licensee's shareholder
agreement or execution by the parties of a stock issuance agreement acceptable
to The Regents; and (iii) approval by the Office of the President of the
University of California.

     

    6.4 In the
event that Final Approval is not granted this Agreement shall remain in effect
and Licensee shall pay to The Regents a license issue fee of one hundred
thousand dollars ($100,000) on the one-year anniversary of the Effective Date.


     

    6.5 In the
event that Shares have been issued to The Regents pursuant to Paragraph 6.2, The Regents shall not sell such Shares
for twelve (12) months after the Effective Date (“Lockup
Period”).  During the Lockup Period, Licensee warrants that it will
maintain its public reporting obligations under the security
laws.  Licensee may elect, at any time within such Lockup Period to
repurchase all of the Shares for a cash payment of one hundred thousand dollars
($100,000).

     

    6.6 At the
end of the Lockup Period, The Regents shall have the right, in its sole
discretion, to transfer the Shares or any portion thereof directly to certain
individuals, including, without limitation, inventors of Patent Rights licensed
hereunder. Without limiting any other rights The Regents may have and
notwithstanding any provision of any investor agreement, any shareholder
agreement or any similar agreement to the contrary, at the end of the Lockup
Period, The Regents shall have the right to transfer the Shares or any portion
thereof to certain individuals, including, without limitation, inventors of
Patent Rights licensed hereunder, pursuant to The Regents applicable practices
and policies.

    


    7. LICENSE
MAINTENANCE FEE

     

    7.1 Provided
that Licensee maintains the Sponsored Research Agreement or another sponsored
research agreement at the University of California, Merced the scope of work of
which is directed toward the development of Licensed Products, the Licensee will
not be required to pay the license maintenance fee provided for in Paragraph 7.2 below.

     

    7.2 The
Licensee will also pay to The Regents a license maintenance fee of
twenty-five  thousand dollars ($25,000) beginning on the one-year
anniversary of the Effective Date and continuing annually on each anniversary of
the Effective Date.  The license maintenance fee is not due on any
anniversary of the Effective Date if on that date, the Licensee is Selling or
otherwise exploiting Licensed Products or Licensed Services and is paying an
Earned Royalty to The Regents on the Net Sales of such Licensed Product or
Licensed Services.  The license maintenance fee is non-refundable and
is not an advance or otherwise creditable against any royalties or other
payments required to be paid under the terms of this
Agreement.

    


    8. PAYMENTS
ON SUBLICENSES

     

    8.1 The
Licensee will pay to The Regents the following non-refundable and non-creditable
sublicense fees ("Sublicense Fees"):

     

    
      	
              8.1.1  

            	
              thirty percent (30%) of all Attributed
  Income.

            


    

     

    8.2 The
Licensee will also pay to The Regents, with respect to each Sublicensee, an
earned royalty on the
Net Sales of each Licensed Product, Licensed Method or Licensed Service as
provided for in Paragraphs 8.3 and 8.4 below ("Sublicensee
Royalty").

     

    8.3 For each
Licensed Product covered by a patent application or patent included in Patent
Rights as of the Effective Date of the Agreement, the royalty rate for that
Licensed Product shall be as follows:

     

    
      	
              8.3.1  

            	
              For a Licensed Product where a First Commercial Sale occurs
      within three (3) years after the Effective Date, two and one-half percent
      (2.5%) of Net Sales;

            


    

    
      	
              8.3.2  

            	
              For a Licensed Product where a First Commercial Sale occurs
      between three (3) and six (6) years after the Effective Date, four percent
      (4%) of Net Sales; or

            


    

    
      	
              8.3.3  

            	
              For a Licensed Product where a First Commercial Sale occurs
      beyond six (6) years after the Effective Date, five percent (5%) of Net
      Sales.

            


    

    8.4 For
Licensed Products covered by a patent application or patent included in Patent
Rights by amendment after the Effective Date of the Agreement, the royalty rate
shall be as follows:

    
      	
              8.4.1  

            	
              For a Licensed Product where a First Commercial Sale occurs
      within three (3) years after the effective date of the amendment under
      which the patent application or patent is included in Patent Rights, two
      and one-half percent (2.5%) of Net
Sales;

            


    

    
      	
              8.4.2  

            	
              For a Licensed Product where a First Commercial Sale occurs
      between three (3) and six (6) years after the effective date of the
      amendment under which the patent application or patent is included in
      Patent Rights, four percent (4%) of Net Sales;
  or

            


    

    
      	
              8.4.3  

            	
              For a Licensed Product where a First Commercial Sale occurs
      beyond six (6) years after the effective date of the amendment under which
      the patent application or patent is included in Patent Rights, five
      percent (5%) of Net Sales.

            


    

     

    8.5 In the
event that the Sublicensee (other than an Affiliate or Joint Venture) uses the
Licensed Products or practices the Licensed Method internally as a research
tool, then the Licensee will also pay to The Regents, with respect to each
Sublicensee (other than an Affiliate or Joint Venture), an Earned Royalty at a
rate to be agreed upon between the parties, but which in no event will be at a
rate lower  than the rate charged for similar research tools licensed
from The Regents by others.

    


    9. EARNED
ROYALTIES AND MINIMUM ANNUAL ROYALTIES

     

    9.1 The
Licensee will also pay to The Regents an earned royalty on the Net
Sales of each Licensed Product, Licensed Method or Licensed Service by the
Licensee or any Affiliate or Joint Venture as provided for in Paragraphs 9.2 and 9.3 below (“Royalty").

     

    9.2 For each
Licensed Product covered by a patent application or patent included in Patent
Rights as of the Effective Date of the Agreement, the royalty rate for that
Licensed Product shall be as follows:

     

    
      	
              9.2.1  

            	
              For a Licensed Product where a First Commercial Sale occurs
      within three (3) years after the Effective Date, two and one-half percent
      (2.5%) of Net Sales;

            


    

    
      	
              9.2.2  

            	
              For a Licensed Product where a First Commercial Sale occurs
      between three (3) and six (6) years after the Effective Date, four percent
      (4%) of Net Sales; or

            


    

    
      	
              9.2.3  

            	
              For a Licensed Product where a First Commercial Sale occurs
      beyond six (6) years after the Effective Date, five percent (5%) of Net
      Sales.

            


    

     

    9.3 For
Licensed Products covered by a patent application or patent included in Patent
Rights by amendment after the Effective Date of the Agreement, the royalty rate
shall be as follows:

     

    
      	
              9.3.1  

            	
              For a Licensed Product where a First Commercial Sale occurs
      within three (3) years after the effective date of the amendment under
      which the patent application or patent is included in Patent Rights, two
      and one-half percent (2.5%) of Net
Sales;

            


    

    
      	
              9.3.2  

            	
              For a Licensed Product where a First Commercial Sale occurs
      between three (3) and six (6) years after the effective date of the
      amendment under which the patent application or patent is included in
      Patent Rights, four percent (4%) of Net Sales;
  or

            


    

    
      	
              9.3.3  

            	
              For a Licensed Product where a First Commercial Sale occurs
      beyond six (6) years after the effective date of the amendment under which
      the patent application or patent is included in Patent Rights, five
      percent (5%) of Net Sales.

            


    

     

    9.4 In the
event that the Licensee, an Affiliate or Joint Venture uses the Licensed
Products or practices the Licensed Method internally as a research tool (but
excluding Licensee’s research and development efforts to develop Licensed
Products, Licensed Methods and Licensed Services), then the Licensee will also
pay to The Regents, with respect to each Sublicensee (other than an Affiliate or
Joint Venture), an Earned Royalty at a rate to be agreed upon between the
parties, but which in no event will be at a rate lower  than the rate
charged for similar research tools licensed from The Regents by
others.

     

    9.5 The
Licensee will also pay to The Regents a minimum annual royalty for the
life of Patent Rights. Beginning with the year of the First Commercial Sale of a
Licensed Product or Licensed Service, the Licensee will pay a minimum annual
royalty of fifteen thousand dollars ($15,000).  Beginning on the date
of the First Commercial Sale of the fourth Licensed Product, the Licensee will
pay a minimum annual royalty of twenty thousand dollars
($20,000).  For each First Commercial Sale of a Licensed Product after
the fourth Licensed Product, the minimum annual royalty due to The Regents will
increase by five thousand dollars ($5,000).  For example, upon the
First Commercial Sale of the fifth Licensed Product or Licensed Service, the
Licensee will pay a minimum annual royalty of twenty-five thousand dollars
($25,000).  A Licensed Product that is repackaged or has minor
improvements shall not be considered a “new” Licensed Product for the purposes
of this Paragraph.  However, for avoidance of doubt, if both the old
product and “new” repackaged or modified product are being Sold, then such
repackaged or modified product shall be considered a “new” Licensed
Product.

     

    9.6  The
minimum annual royalty will be paid to The Regents by February 28 of each year
and will be credited against the Earned Royalty due for the calendar year in
which the minimum payment was made.  

    


    10. MILESTONE
PAYMENTS

     

    10.1 The
Licensee will pay to The Regents the following non-refundable, non-creditable
amounts based on total accumulated Net Sales:

     

    
      	
              10.1.1  

            	
              For total accumulated Net Sales of fifty million dollars
      ($50,000,000), the Licensee will pay to The Regents a milestone payment of
      one hundred thousand dollars
($100,000);

            


    

    
      	
              10.1.2  

            	
              For total accumulated Net Sales of one hundred and fifty million
      dollars ($150,000,000) the Licensee will pay to The Regents a milestone
      payment of,  five hundred thousand dollars ($500,000);
      and

            


    

    
      	
              10.1.3  

            	
              For total accumulated Net Sales of five hundred million dollars
      ($500,000,000),  the Licensee will pay to The Regents a
      milestone payment of two million dollars
  ($2,000,000).

            


    

     

    10.2 For the
avoidance of doubt, each milestone payment will be payable regardless of whether
the applicable milestone event has been achieved by the Licensee or any
Affiliate, Joint Venture, or Sublicensee.

     

    10.3 All
milestone payments are due to The Regents within thirty (30) days of the
occurrence of the applicable milestone event.

    


    11. FEES FOR
PATENT RIGHTS ADDED AFTER EFFECTIVE DATE

     

    11.1 The
Licensee will pay a fee of five thousand dollars ($5,000) per Base Case added to
the Agreement after the Effective Date.  Base Case means rights in the
Valid Claims of any patent or patent application being added to Patent Rights
after the Effective Date, which patent or patent application was not included
within the scope of claims of Patent Rights prior to the date of such addition,
to the extent assigned to or otherwise obtained by The Regents, any
corresponding foreign patents and patent applications, and any reissues,
extensions, substitutions, continuations, divisions, and continuation-in-part
applications (but only those Valid Claims in the continuation-in-part
applications that are entirely supported in the specification and entitled to
the priority date of the parent application added).

     

    11.2 For any
Licensed Product covered by patents or patent applications not included in the
Agreement as of the Effective Date, in the event that the earned royalty for
Licensed Products provided for in Articles 8 and 9 above is not in compliance with legal
requirements, the Licensee and The Regents agree to negotiate in good faith an
earned royalty for such Licensed Products which is legally
compliant.

    


    12. DUE
DILIGENCE

     

    12.1 The
Licensee, upon execution of this Agreement, will diligently proceed with the
development and manufacture and after a Licensed Product or Licensed Service has
been developed,  will earnestly and diligently Sell and market the
same after execution of this Agreement and in quantities sufficient to meet the
market demands therefor.

     

    12.2 The
Licensee will obtain all necessary governmental approvals in each country where
Licensed Products and Licensed Services are manufactured, used, Sold, offered
for Sale or imported.

     

    12.3 The
Licensee will:

     

    
      	
              12.3.1  

            	
              no later than three (3) years after the Effective Date, either
      (a) produce a good faith working prototype of a first Licensed Product or
      (b) have a minimum market capitalization of thirty million dollars
      ($30,000,00) at some time within the first three (3) years of the
      Effective Date;

            


    

    
      	
              12.3.2  

            	
              within five (5) years after the Effective Date, have a First
      Commercial Sale of a Licensed Product or have executed a sublicense
      agreement;

            


    

    
      	
              12.3.3  

            	
               within seven (7) years after the Effective Date, have a
      First Commercial Sale of a second Licensed Product or have a second
      executed sublicense agreement; and

            


    

    
      	
              12.3.4  

            	
              fill the market demand for Licensed Products and Licensed
      Services following commencement of marketing at any time during the
      exclusive period of this Agreement.

            


    

     

    12.4 If the
Licensee is unable to perform any of the above provisions, then The Regents has
the right and option to either terminate this Agreement or reduce the exclusive
license granted to the Licensee to a nonexclusive license in accordance with
Paragraph 12.7 below.  This
right, if exercised by The Regents, supersedes the rights granted in Article 2 (Grant).

     

    12.5 Notwithstanding
the provisions of Paragraph 12.4, The
Regents recognizes that, taking into account the need for further research and
development of the technology before it will be possible for Licensee to
commercialize a Licensed Product, it may be necessary from time to time to amend
the milestones of Paragraphs 12.3.2 and 12.3.3.  Accordingly, The Regents
hereby agrees to consider in good faith reasonable proposals from Licensee to
amend the milestones of these two Paragraphs in light of Licensee's
experience in implementing its development plan for Licensed Products under this
Agreement, and The Regents and Licensee agree to discuss and negotiate in good
faith the diligence requirements of Paragraphs 12.3.2 and 12.3.3 for a period of ninety (90) days if
despite diligent effort by Licensee, Licensee is unable to meet the specified
milestone.

     

    12.6 If,
however, notwithstanding good faith negotiation, the parties are unable to agree
upon any modification to Paragraph 12.3.2 and 12.3.3, then the parties will be under no
further obligation to negotiate, and the Agreement's terms shall
govern.  No amendment or modification of this Agreement is valid or
binding on the parties unless made in writing and signed on behalf of each
party.

     

    12.7 To
exercise either the right to terminate this Agreement or to reduce the exclusive
license granted to the Licensee to a non-exclusive license for lack of diligence
required in this Article 12 (Due
Diligence), The Regents will give the Licensee written notice of the
deficiency.  The Licensee thereafter has sixty (60) days to cure the
deficiency.  If The Regents has not received written tangible evidence
satisfactory to The Regents that the deficiency has been cured by the end of the
sixty (60)-day period, then The Regents may, at its option, terminate this
Agreement immediately without the obligation to provide sixty (60) days' notice
as set forth in Article 16 (Termination
by The Regents) or reduce the exclusive license granted to the Licensee to a
non-exclusive license by giving written notice to the
Licensee.

     

    12.8 Notwithstanding
Paragraphs 12.4 and 12.7, if Licensee is Selling a Licensed
Product at the time of termination, then the Licensee will have the right to a
limited exclusive license under the Patent Rights but only to the extent
required to continue Selling such Licensed Product provided that such Sales are
subject to the terms of this Agreement, including but not limited to the
rendering of reports and payment of earned royalties as required under this
Agreement.  If Licensee ceases Selling such existing Licensed Product
then its continuing rights under this Paragraph 12.8 terminate.

    


    13. PROGRESS
AND ROYALTY REPORTS

     

    13.1 Beginning
on June 30, 2010, and semi-annually thereafter, the Licensee will submit to The
Regents a written progress report as described in Paragraph 13.2 below covering the Licensee's (and any
Affiliates', Joint Ventures', or Sublicensee's)  activities related to
the development and testing of all Licensed Products and Licensed Services and
related to the obtaining of the governmental approvals necessary for marketing
and the activities required and undertaken in order to meet the diligence
requirements set forth in Article 12 (Due
Diligence).  Progress reports are required for each Licensed Product
and Licensed Service until the first Sale or other exploitation of that Licensed
Product or Licensed Service occurs in the United States and shall be again
required if Sales of such Licensed Product or Licensed Service are suspended or
discontinued.

     

    13.2 Progress
reports submitted under Paragraph 13.1
shall include, but are not limited to, a detailed summary of the following
topics so that The Regents will be able to determine the progress of the
development of Licensed Products and Licensed Services and will also be able to
determine whether or not the Licensee has met its diligence obligations set
forth in Article 12 (Due Diligence)
above:

     

    
      	
              13.2.1  

            	
              summary of work completed as of the submission date of the
      progress report;

            


    

    
      	
              13.2.2  

            	
              key scientific discoveries as of the submission date of the
      progress report;

            


    

    
      	
              13.2.3  

            	
              summary of work in progress as of the submission date of the
      progress report;

            


    

    
      	
              13.2.4  

            	
              current schedule of anticipated events and milestones, including
      those event and milestones specified in Article 12 (Due Diligence);

            


    

    
      	
              13.2.5  

            	
              market plans for introduction of Licensed Products and Licensed
      Services including the anticipated and actual market introduction dates of
      each Licensed Product or Licensed
Service;

            


    

    
      	
              13.2.6  

            	
              Sublicensees’ activities relating to the above items, if there
      are any Sublicensees;

            


    

    
      	
              13.2.7  

            	
              a summary of resources (dollar value) spent in the reporting
      period; and

            


    

    
      	
              13.2.8  

            	
              Licensee's progress in developing any New Licensed Products
      elected for commercial development by Licensee pursuant to Paragraph
      4.3 of this
      Agreement.

            


    

     

    13.3 If the
Licensee fails to submit a timely progress report to The Regents, then The
Regents will be entitled to terminate this Agreement under the provisions of
Paragraph 16.  If either party
terminates this Agreement before any Licensed Products or Licensed Services are
Sold or before this Agreement's expiration, then a final progress report
covering the period prior to termination must be submitted within thirty (30)
days of termination or expiration.

     

    13.4 The
Licensee has a continuing responsibility to keep The Regents informed of the
business entity status (small business entity status or large business entity
status as defined by the United States Patent and Trademark Office) of itself,
any Affiliates, Joint Ventures, or Sublicensees.  The Licensee will
notify The Regents of any change of its status or that of any Affiliate, Joint
Venture, or Sublicensee within thirty (30) days of the change in
status.

     

    13.5 The
Licensee will report to The Regents the date of first Sale or other exploitation
of a Licensed Product or Licensed Service in each country in its first progress
and royalty reports following such first Sale of a Licensed Product or Licensed
Service.

     

    13.6 Beginning
with the earlier of (i) the first Sale or other exploitation of a Licensed
Product or Licensed Service or (ii) the first transaction that results in
Sublicense Fees accruing to The Regents, the Licensee will make quarterly
royalty and Sublicensee Fee reports to The Regents on or before each February 28
(for the quarter ending December 31), May 31 (for the quarter ending March 31),
August 31 (for the quarter ending June 30) and November 30 (for the quarter
ending September 30) of each year.  Each royalty and Sublicensee Fee
report will cover Licensee's most recently completed calendar quarter and will,
at a minimum, show:

     

    
      	
              13.6.1  

            	
              the gross invoice prices and Net Sales of Licensed Products or
      Licensed Services Sold or otherwise exploited (itemizing the applicable
      gross proceeds and any deductions therefrom), any Attributed Income
      (itemizing the applicable gross proceeds and any deductions therefrom) due
      to the Licensee;

            


    

    
      	
              13.6.2  

            	
              the quantity of each type of Licensed Product and/or Licensed
      Service Sold or otherwise
exploited;

            


    

    
      	
              13.6.3  

            	
              the country in which each Licensed Product and Licensed Service
      was made, used or Sold or otherwise
exploited;

            


    

    
      	
              13.6.4  

            	
              the Earned Royalties, in United States dollars, payable with
      respect to Net Sales;

            


    

    
      	
              13.6.5  

            	
              the Sublicense Fees, in United States dollars, payable with
      respect to Attributed Income;

            


    

    
      	
              13.6.6  

            	
              the method used to calculate the Earned Royalty, specifying all
      deductions taken and the dollar amount of each such
    deduction;

            


    

    
      	
              13.6.7  

            	
              the exchange rates used, if
any;

            


    

    
      	
              13.6.8  

            	
              the amount of the cash and the amount of the cash equivalent of
      any non-cash consideration including the method used to calculate the
      non-cash consideration;

            


    

    
      	
              13.6.9  

            	
              for each Licensed Product and each Licensed Service, the
      specific Patent Rights identified by UC Case Number exercised by the
      Licensee or any Affiliate, Joint Venture, or Sublicensee in the course of
      making, using, selling, offering for Sale or importing such Licensed
      Product and/or using, selling or offering for Sale such Licensed Service;
      and

            


    

    
      	
              13.6.10  

            	
              any other information reasonably necessary to confirm Licensee's
      calculation of its financial obligations
  hereunder.

            


    

     

    13.7 If no
Sales of Licensed Products and Licensed Services have been made and no Licensed
Products and Licensed Services have been otherwise exploited and no Attributed
Income is due to the Licensee during any reporting period, then a statement to
this effect must be provided by the Licensee in the immediately subsequent
royalty and Sublicense Fee report.

    


    14. BOOKS AND
RECORDS

     

    14.1 The
Licensee will keep accurate books and records showing all Licensed Product under
development, manufactured, used, offered for Sale, imported, Sold and or
otherwise exploited; all Licensed Service Sold or otherwise provided; all Net
Sales, all Attributed Income, and other amounts payable hereunder; and all
sublicenses granted under the terms of this Agreement. Such books and records
will be preserved for at least five (5) years after the date of the payment to
which they pertain and will be open to examination by representatives or agents
of The Regents at reasonable times to determine their accuracy and assess the
Licensee's compliance with the terms of this Agreement.

     

    14.2 The
Regents shall pay the fees and expenses of such examination.  If,
however, an error in royalties of more than five percent (5%) of the total
royalties due for any year is discovered in any examination, then the Licensee
shall bear the fees and expenses of such examination and shall remit such
underpayment to The Regents within thirty (30) days of the examination
results.

    


    15. LIFE OF
THE AGREEMENT

     

    15.1 Unless
otherwise terminated by operation of law, Paragraph 15.2, or by acts of the parties in
accordance with the terms of this Agreement, this Agreement will remain in
effect from the Effective Date until the expiration or abandonment of the last
of the Patent Rights licensed hereunder.

     

    15.2 This
Agreement will automatically terminate without the obligation to provide 60
days' notice as set forth in Article 16
(Termination By The Regents) upon the filing of a petition for relief under the
United States Bankruptcy Code by or against the Licensee as a debtor or alleged
debtor.

     

    15.3 Any
termination or expiration of this Agreement will not affect the rights and
obligations set forth in the following Articles:

     

    Article 1                                                               
 Definitions

    Paragraph 5.8                                 Late
Payments

    Article 6                                          License
Issue Fee

    Article 8                                          Payments
on Sublicenses

    Paragraphs 9.1,
9.2 & 9.5              Earned
Royalties and Minimum Annual Royalties

    Article 14                                        Books
and Records

    Article 15                                         Life
of the Agreement

    
      	
              Article 18

            	
              Disposition of Licensed Products and Licensed Services on Hand
      Upon Termination or Expiration

            


    

    
      	
              Article 19

            	
              Use of Names and
Trademarks

            


    

    
      	
              Article 20

            	
              Limited Warranty

            


    

    
      	
              Article 21

            	
              Limitation of Liability

            


    

    
      	
              Paragraphs 22.3 & 22.5

            	
              Patent Prosecution and
Maintenance

            


    

    
      	
              Article 25

            	
              Indemnification

            


    

    
      	
              Article 26

            	
              Notices

            


    

    
      	
              Article 30

            	
              Governing Laws; Venue; Attorneys
Fees

            


    

    
      	
              Article 33

            	
              Confidentiality

            


    

    


    15.4 The
termination or expiration of this Agreement will not relieve the Licensee of its
obligation to pay any fees, royalties or other payments owed to The Regents at
the time of such termination or expiration and will not impair any accrued right
of The Regents, including the right to receive Earned Royalties in accordance
with Articles 8 (Payments on
Sublicenses), 9 (Earned Royalties and
Minimum Annual Royalties) and 18
(Disposition of Licensed Products and Licensed Services Upon Termination or
Expiration).

    


    16. TERMINATION
BY THE REGENTS

     

    If the Licensee fails to perform or violates any term of this
Agreement, then The Regents may give written notice of such default ("Notice of
Default") to the Licensee.  If the Licensee fails to repair such
default within sixty (60) days after the effective date of such notice, then The
Regents will have the right to immediately terminate this Agreement and its
licenses by providing a written notice of termination ("Notice of Termination")
to the Licensee.

    


    17. TERMINATION
BY LICENSEE

     

    The Licensee has the right at any time to terminate this Agreement by
providing a Notice of Termination to The Regents.  Moreover, the
Licensee will be entitled to terminate the rights under Patent Rights on a
country-by-country basis by giving notice in writing to The Regents. Termination
of this Agreement (but not termination of any patents or patent applications
under Patent Rights, which termination is subject to Paragraph 22.5)
will be effective sixty (60) days from the effective date of such
notice.

    


    18. DISPOSITION
OF LICENSED PRODUCT AND LICENSED SERVICES UPON TERMINATION OR
EXPIRATION

     

    18.1 Upon
termination (but not expiration) of this Agreement, within a period of one
hundred and twenty (120) days after the date of termination, the Licensee is
entitled to (i) dispose of all previously made or partially made Licensed
Product, but no more and (ii) provide previously contracted-for Licensed
Services, provided that the Sale or use of such Licensed Product and the
provision of such Licensed Services are subject to the terms of this Agreement,
including, but not limited to, the rendering of reports and payment of Earned
Royalties, Sublicense Fees and any other payments therefor required under this
Agreement.  The Licensee will not otherwise make, use, Sell, offer for
Sale or import Licensed Products or Licensed Services, or practice the Licensed
Method after the date of termination.

     

    18.2 If
applicable Patent Rights exist at the time of any making, Sale, offer for Sale,
or import of a Licensed Product or the time of any Sale, offer for Sale, or
rendering of a Licensed Service, then Earned Royalties shall be paid at the
times provided herein and royalty reports shall be rendered in connection
therewith, notwithstanding the absence of applicable Patent Rights with respect
to such Licensed Product or Licensed Service at any later
time.  Otherwise, no Earned Royalties shall be paid on the Sales of
such product or service.  Any fees or other payments owed to The
Regents at the time of expiration not based on the Sales of a Licensed Product
or Licensed Service will be paid to The Regents at the time such fee or other
payment would have been due had this Agreement not expired.

    


    19. USE OF
NAMES AND TRADEMARKS

     

    Nothing contained in this Agreement will be construed as conferring
any right to either party to use in advertising, publicity or other promotional
activities any name, trade name, trademark or other designation of the other
party (including a contraction, abbreviation or simulation of any of the
foregoing).  Without the Licensee's consent case-by-case, The Regents
may list Licensee's name as a licensee of technology from The Regents without
further identifying the technology.  Unless required by law or unless
consented to in writing by Executive Director, Office of Technology Transfer of
The Regents, the use by the Licensee of the name "The Regents of the University
of California" or the name of any campus of the University of California in
advertising, publicity or other promotional activities is expressly
prohibited.

    


    20. LIMITED
WARRANTY

     

    20.1 The
Regents warrants to the Licensee that it has the lawful right to grant this
license.

     

    20.2 Except as
expressly set forth in this Agreement, this license and the associated
Invention, Patent Rights, Licensed Products, Licensed Services, and Licensed
Methods  are provided by The Regents WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY OF ANY
KIND, EXPRESS OR IMPLIED.  THE REGENTS MAKES NO EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY THAT THE INVENTION, PATENT RIGHTS, LICENSED PRODUCTS,
LICENSED SERVICES, OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK OR OTHER RIGHTS.

     

    20.3 This
Agreement does not:

    
      	
              20.3.1  

            	
              express or imply a warranty or representation as to the
      validity, enforceability, or scope of any Patent Rights;
  or

            


    

    
      	
              20.3.2  

            	
              express or imply a warranty or representation that anything
      made, used, Sold, offered for Sale or imported or otherwise exploited
      under any license granted in this Agreement is or will be free from
      infringement of patents, copyrights, or other rights of third parties;
      or

            


    

    
      	
              20.3.3  

            	
              obligate The Regents to bring or prosecute actions or suits
      against third parties for patent infringement except as provided in
      Article 24 (Patent Infringement);
      or

            


    

    
      	
              20.3.4  

            	
              confer by implication, estoppel or otherwise any license or
      rights under any patents or other rights of The Regents other than Patent
      Rights, regardless of whether such patents are dominant or subordinate to
      Patent Rights; or

            


    

    
      	
              20.3.5  

            	
              obligate The Regents to furnish any New Developments, know-how,
      technology or information not provided in Patent
  Rights.

            


    

    


    21. LIMITATION
OF LIABILITY

     

    EXCEPT FOR LICENSEE’S INDEMNIFICATION OBLIGATIONS FOR CLAIMS OF THIRD
PARTIES UNDER ARTICLE 25 NEITHER PARTY WILL BE LIABLE FOR ANY
LOST PROFITS, COSTS OF PROCURING SUBSTITUTE GOODS OR SERVICES, LOST BUSINESS,
ENHANCED DAMAGES FOR INTELLECTUAL PROPERTY INFRINGEMENT OR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER SPECIAL DAMAGES SUFFERED BY THE
REGENTS, LICENSEE, SUBLICENSEES, JOINT VENTURES, OR AFFILIATES ARISING OUT OF OR
RELATED TO THIS AGREEMENT FOR ALL CAUSES OF ACTION OF ANY KIND (INCLUDING TORT,
CONTRACT, NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY) EVEN IF THE
REGENTS OR THE LICENSEE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

    


    22. PATENT
PROSECUTION AND MAINTENANCE

     

    22.1 As long
as the Licensee has paid Patent Prosecution Costs as provided for in this
Article 22 (Patent Prosecution and
Maintenance), The Regents will diligently prosecute and maintain the United
States and foreign patents comprising the Patent Rights using counsel of its
choice.  The Regents' counsel will take instructions only from The
Regents.  The Regents will provide the Licensee with copies of all
relevant documentation so that the Licensee will be informed of the continuing
prosecution and may comment upon such documentation sufficiently in advance of
any initial deadline for filing a response, provided, however, that if the
Licensee has not commented upon such documentation in a reasonable time for The
Regents to sufficiently consider the Licensee’s comments prior to a deadline
with the relevant government patent office, or The Regents must act to preserve
the Patent Rights, The Regents will be free to respond without consideration of
the Licensee’s comments, if any.  The Licensee agrees to keep this
documentation confidential as provided for in Article 33 (Confidentiality).

     

    22.2 The
Regents shall use reasonable efforts to amend any patent application to include
claims reasonably requested by the Licensee to protect the products and services
contemplated to be Sold, or the Licensed Method to be practiced, under this
Agreement.

     

    22.3 The
Licensee will bear the costs of preparing, filing, prosecuting and maintaining
all United States and foreign patent applications contemplated by this Agreement
("Patent Prosecution Costs").  Patent Prosecution Costs billed by The
Regents' counsel will be rebilled to the Licensee and are due within thirty (30)
days of rebilling by The Regents.  These Patent Prosecution Costs will
include, without limitation, patent prosecution costs for the Invention incurred
by The Regents prior to the execution of this Agreement and any patent
prosecution costs that may be incurred for patentability opinions,
re-examination, re-issue, interferences, oppositions or inventorship
determinations. Prior Patent Prosecution Costs will be due upon execution of
this Agreement and billing by The Regents and are at least thirty thousand
dollars ($30,000).

     

    22.4 The
Licensee may request that The Regents obtain patent protection on the Invention
in foreign countries, if available and if it so desires.  The Licensee
will notify The Regents of its decision to obtain or maintain foreign patents
not less than ninety (90) days prior to the deadline for any payment, filing or
action to be taken in connection therewith.  This notice concerning
foreign filing must be in writing, must identify the countries desired and must
reaffirm the Licensee's obligation to pay the Patent Prosecution Costs
thereof.  The absence of such a notice from the Licensee to The
Regents will be considered an election not to obtain or maintain foreign Patent
Rights.

     

    22.5 The
Licensee will be obligated to pay any Patent Prosecution Costs incurred during
the three (3)-month period after receipt by either party of a Notice of
Termination, even if the invoices for such Patent Prosecution Costs are received
by the Licensee after the end of the three (3)-month period following receipt of
a Notice of Termination.  The Licensee may terminate its obligation to
pay Patent Prosecution Costs with respect to any given patent application or
patent under Patent Rights in any or all designated countries upon three
(3)-months' written notice to The Regents. The Regents may continue prosecution
and/or maintenance of such application(s) or patent(s) at its sole discretion
and expense, provided, however, that the Licensee will have no further right or
licenses thereunder.  Non-payment of Patent Prosecution Costs may be
deemed by The Regents as an election by the Licensee not to maintain such
application(s) or patent(s).

     

    22.6 The
Regents may file, prosecute or maintain patent applications or patents at its
own expense in any country in which the Licensee has not elected to file,
prosecute or maintain patent applications or patents in accordance with this
Article 22 (Patent Prosecution and
Maintenance) and those applications, resultant patents and patents will not be
subject to this Agreement.

    


    23. PATENT
MARKING

    The Licensee will mark all Licensed Products made, used or Sold under
the terms of this Agreement or their containers in accordance with the
applicable patent marking laws.

    


    24. PATENT
INFRINGEMENT

     

    24.1 In the
event that The Regents (to the extent of the actual knowledge of the licensing
professional responsible for the administration of this Agreement) or the
Licensee learns of infringement of potential commercial significance of any
patent licensed under this Agreement, the knowledgeable party will provide the
other (i) with written notice of such infringement and (ii) with any evidence of
such infringement available to it (the "Infringement Notice").  During
the period in which, and in the jurisdiction where, the Licensee has exclusive
rights under this Agreement, neither The Regents nor the Licensee will notify a
possible infringer of infringement or put such infringer on notice of the
existence of any Patent Rights without first obtaining consent of the
other.  If the Licensee puts such infringer on notice of the existence
of any Patent Rights with respect to such infringement without first obtaining
the written consent of The Regents and if a declaratory judgment action is filed
by such infringer against The Regents, then Licensee’s right to initiate a suit
against such infringer for infringement under Paragraph 24.2 below will terminate immediately
without the obligation of The Regents to provide notice to the
Licensee.   Both The Regents and the Licensee will use their
diligent efforts to cooperate with each other to terminate such infringement
without litigation.

     

    24.2 If
infringing activity of potential commercial significance by the infringer has
not been abated within ninety (90) days following the date the Infringement
Notice takes effect, then the Licensee may institute suit for patent
infringement against the infringer.  The Regents may voluntarily join
such suit at its own expense, but may not otherwise commence suit against the
infringer for the acts of infringement that are the subject of the Licensee's
suit or any judgment rendered in that suit.  The Licensee may not join
The Regents as a party in a suit initiated by the Licensee without The Regents'
prior written consent.  If, in a suit initiated by the Licensee, The
Regents is involuntarily joined other than by the Licensee, then the Licensee
will pay any costs incurred by The Regents arising out of such suit, including
but not limited to, any legal fees of counsel that The Regents selects and
retains to represent it in the suit.

     

    24.3 If,
within a hundred and twenty (120) days following the date the Infringement
Notice takes effect, infringing activity of potential commercial significance by
the infringer has not been abated and if the Licensee has not brought suit
against the infringer, then The Regents may institute suit for patent
infringement against the infringer.  If The Regents institutes such
suit, then the Licensee may not join such suit without The Regents' consent and
may not thereafter commence suit against the infringer for the acts of
infringement that are the subject of The Regents' suit or any judgment rendered
in that suit.

     

    24.4 Any
recovery or settlement received in connection with any suit will first be shared
by The Regents and the Licensee equally to cover any litigation costs each
incurred and next shall be paid to The Regents or the Licensee to cover any
litigation costs it incurred in excess of the litigation costs of the
other.  In any suit initiated by the Licensee, any recovery in excess
of litigation costs will be shared between Licensee and The Regents as
follows:  (a) for any recovery other than amounts paid for willful
infringement: (i) The Regents will receive fifteen percent (15%) of the recovery
if The Regents was not a party in the litigation and did not incur any
litigation costs, (ii) The Regents will receive twenty-five percent (25%) of the
recovery if The Regents was a party in the litigation whether joined as a party
under the provisions of Paragraph 24.2 or
otherwise, but The Regents did not incur any litigation costs, and (iii) The
Regents will receive fifty percent (50%) of the recovery if The Regents incurred
any litigation costs in connection with the litigation; and (b) for any recovery
for willful infringement, The Regents will receive  fifty percent
(50%) of the recovery.  In any suit initiated by The Regents, any
recovery in excess of litigation costs will belong to The
Regents.  The Regents and the Licensee agree to be bound by all
determinations of patent infringement, validity and enforceability (but no other
issue) resolved by any adjudicated judgment in a suit brought in compliance with
this Article 24 (Patent
Infringement).

     

    24.5 Any
agreement made by the Licensee for purposes of settling litigation or other
dispute shall comply with the requirements of Article 3 (Sublicenses) of this
Agreement.

     

    24.6 Each
party will cooperate with the other in litigation proceedings instituted
hereunder but at the expense of the party who initiated the suit (unless such
suit is being jointly prosecuted by the parties).

     

    24.7 Any
litigation proceedings will be controlled by the party bringing the suit, except
that The Regents may be represented by counsel of its choice in any suit brought
by the Licensee.

     

    5. INDEMNIFICATION

     

    25.1 The
Licensee will, and will require its Sublicensees to, indemnify, hold harmless
and defend The Regents, the sponsors of the research that led to the
Invention  any invention claimed in patents or patent applications
under Patent Rights (including the Licensed Products, Licensed Services and
Licensed Methods contemplated thereunder) and their employers, and the officers,
employees and agents of any of the foregoing, against any and all claims, suits,
losses, damage, costs, fees and expenses resulting from, or arising out of, the
exercise of this license or any sublicense.  This indemnification will
include, but not be limited to, any product liability.   If The
Regents, in its sole discretion, believes that there will be a conflict of
interest or it will not otherwise be adequately represented by counsel chosen by
the Licensee to defend The Regents in accordance with this Paragraph 25.1, then The Regents may retain counsel of
its choice to represent it and the Licensee will pay all expenses for such
representation.

    25.2 The
Licensee, at its sole cost and expense, will insure its activities in connection
with any work performed hereunder and will obtain and maintain the following
insurance:

    


    
      	
              25.2.1  

            	
              Commercial Form General Liability Insurance (contractual
      liability included) with limits as
follows:

            


    

    


    
      	
              Each Occurrence

            	
              $   500,000

            


    

    
      	
              Products/Completed Operations Aggregate

            	
              $

            	
                  0

            


    

    
      	
              Personal and Advertising Injury

            	
              $   500,000

            


    

    
      	
              General Aggregate (commercial form only)

            	
              $1,000,000

            


    

    


    If the above insurance is written on a claims-made form, it shall
continue for three (3) years following termination or expiration of this
Agreement.  The insurance shall have a retroactive date of placement
prior to or coinciding with the Effective Date of this Agreement;

     

    
      	
              25.2.2  

            	
              and Worker's Compensation as legally required in the
      jurisdiction in which the Licensee is doing
  business.

            


    

    


    25.3    Notwithstanding
the provisions of Paragraph 25.2 above
and except for the provisions of Paragraph  25.4 below, no later than sixty (60) days
before the anticipated date of market introduction of any Licensed Product or
Licensed Service under this Agreement where such Licensed Product or Licensed
Service is not used or Sold for human use, the Licensee, at its sole cost and
expense, shall insure its activities in connection with any work performed under
this Agreement and obtain, keep in force and maintain the following
insurance:

     

    
      	
              25.3.1  

            	
              Commercial Form General Liability Insurance (contractual
      liability included) with limits as
follows:

            


    

    Each
Occurrence                                                                $2,000,000

    Products/Completed
Operations
Aggregate                                                                                                $5,000,000

    Personal and
Advertising
Injury                                                                                     $2,000,000

    General Aggregate
(commercial form
only)                                                                                                $5,000,000

    If the above insurance is written on a claims-made form, it shall
continue for three (3) years following termination or expiration of this
Agreement.  The insurance shall have a retroactive date of placement
prior to or coinciding with the Effective Date of this Agreement;

     

    
      	
              25.3.2  

            	
              and Worker's Compensation as legally required in the
      jurisdiction in which the Licensee is doing
  business.

            


    

     

    25.4 Notwithstanding
the provisions of Paragraphs 25.2 and 25.3 above, no later than sixty (60) days
before the anticipated date of market introduction of any Licensed Product or
Licensed Service under this Agreement where such Licensed Product or Licensed
Service is used or Sold for human use, the Licensee, at its sole cost and
expense, shall insure its activities in connection with any work performed under
this Agreement and obtain, keep in force and maintain the following
insurance:

     

    
      	
              25.4.1  

            	
              Commercial Form General Liability Insurance (contractual
      liability included) with limits as
follows:

            


    

    Each
Occurrence                                                                $5,000,000

    Products/Completed
Operations
Aggregate                                                                                                $10,000,000

    Personal and
Advertising
Injury                                                                                     $5,000,000

    General Aggregate
(commercial form
only)                                                                                                $10,000,000

    If the above insurance is written on a claims-made form, it shall
continue for three (3) years following termination or expiration of this
Agreement.  The insurance shall have a retroactive date of placement
prior to or coinciding with the Effective Date of this Agreement;

     

    
      	
              25.4.2  

            	
              To the extent Licensee conducts clinical trials under this
      Agreement, Licensee, at its sole cost and expense, will obtain, keep in
      force, and maintain insurance coverage for each clinical trial in an
      amount that is customary for such trial in the industry;
    and

            


    

    
      	
              25.4.3  

            	
              Worker's Compensation as legally required in the jurisdiction in
      which the Licensee is doing
business.

            


    

    


    25.5 The
coverage and limits referred to in Paragraphs 25.2.1, 25.3.1, 25.4.1, and 25.4.2 above will not in any way limit the
liability of the Licensee under this Article 25 (Indemnification).  Upon the
execution of this Agreement, the Licensee will furnish The Regents with
certificates of insurance evidencing compliance with all
requirements.  Such certificates will:

     

    
      	
                

            	
              -

            	
              Provide for thirty (30) days' (ten (10) days for non-payment of
      premium) advance written notice to The Regents of any cancellation of
      insurance coverage;  the Licensee will promptly notify The
      Regents of any material modification of the insurance
      coverage;

            


    

    
      	
                

            	
              -

            	
              Indicate that The Regents has been endorsed as an additional
      insured under the coverage described above in Paragraphs 25.2.1, 25.3.1, and 25.4.1; and

            


    

    
      	
                

            	
              -

            	
              Include a provision that the coverage will be primary and will
      not participate with, nor will be excess over, any valid and collectable
      insurance or program of self-insurance maintained by The
      Regents.

            


    

    


    25.6 The
Regents will promptly notify the Licensee in writing of any claim or suit
brought against The Regents for which The Regents intends to invoke the
provisions of this Article 25
(Indemnification).  The Licensee will keep The Regents informed of its
defense of any claims pursuant to this Article 25 (Indemnification).

    


    26. NOTICES

    26.1 Any
notice or payment required to be given to either party under this Agreement will
be in writing and will be deemed to have been properly given and to be effective
as of the date specified below if delivered to the respective address given
below or to another address as designated by written notice given to the other
party:

    
      	
              26.1.1  

            	
              on the date of delivery if delivered in
  person;

            


    

    
      	
              26.1.2  

            	
              on the date of mailing if mailed by first-class certified mail,
      postage paid; or

            


    

    
      	
              26.1.3  

            	
              on the date of mailing if mailed by any global express carrier
      service that requires the recipient to sign the documents demonstrating
      the delivery of such notice or
payment.

            


    

    


    In the case of
Licensee:                                     SHRINK
TECHNOLOGIES, INC.

    2038 Corte Del
Nogal, Suite 110

    Carlsbad, CA
92011

    Attention: Mark
Baum

    


    In the case of The
Regents:                                The
Regents of the University

    of
California

    Office of Technology
Transfer

    1111 Franklin
Street, 5th Floor

    Oakland, CA
94607-5200

    Attention:         Executive
Director

    Research
Administration and

        Technology Transfer

    RE:                 UC
Case No. 2008-341 and other cases

    


    27. ASSIGNABILITY

     

    This Agreement is personal to the Licensee.  The Licensee
may not assign or transfer this Agreement, including by merger, operation of
law, or otherwise, without The Regents' prior written consent, except that such
consent will not be required in the case of assignment or transfer to a party
that succeeds to all or substantially all of Licensee's business or assets
relating to this Agreement, whether by sale, merger, operation of law or
otherwise, provided that such assignee or transferee promptly agrees to be bound
by the terms and conditions of this Agreement and Licensee and such assignee or
transferee signs The Regents' standard substitution of party letter (the form of
which is attached hereto as Appendix B).  Any attempted assignment by
Licensee without the written consent of The Regents will be null and
void.  This Agreement is binding upon and will inure to the benefit of
The Regents, its successors and assigns.

    


    28. WAIVER

     

    No waiver by either party of any breach or default of any of the
agreements contained herein will be deemed a waiver as to any subsequent and/or
similar breach or default.  No waiver will be valid or binding upon
the parties unless made in writing and signed by a duly authorized officer of
each party.

    


    29. FORCE
MAJEURE

     

    29.1 Except
for the Licensee's obligation to make any payments to The Regents hereunder, the
parties shall not be responsible for any failure to perform due to the
occurrence of any events beyond their reasonable control which render their
performance impossible or onerous, including, but not limited
to:  accidents (environmental, toxic spill, etc.); acts of God;
biological or nuclear incidents; casualties; earthquakes; fires; floods;
governmental acts; orders or restrictions; inability to obtain suitable and
sufficient labor, transportation, fuel and materials; local, national or state
emergency; power failure and power outages; acts of terrorism; strike; and
war.

     

    29.2 Either
party to this Agreement, however, will have the right to terminate this
Agreement upon thirty (30) days’ prior written notice if either party is unable
to fulfill its obligations under this Agreement due to any of the causes
specified in Paragraph 29.1 for a period
of one (1) year.

    


    30. GOVERNING
LAWS; VENUE; ATTORNEYS’ FEES

     

    30.1 THIS
AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, excluding any choice of law rules that would direct the
application of the laws of another jurisdiction and without regard to which
party drafted particular provisions of this Agreement, but the scope and
validity of any patent or patent application will be governed by the applicable
laws of the country of such patent or patent application.

     

    30.2 Any legal
action brought by the parties hereto relating to this Agreement will be
conducted in San Francisco, California.

     

    30.3 The
prevailing party in any suit related to this Agreement will be entitled to
recover its reasonable attorneys' fees in addition to its costs and necessary
disbursements.

    


    31. GOVERNMENT
APPROVAL OR REGISTRATION

     

    If this Agreement or any associated transaction is required by the law
of any nation to be either approved or registered with any governmental agency,
the Licensee will assume all legal obligations to do so.  The Licensee
will notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement. The
Licensee will make all necessary filings and pay all costs including fees,
penalties and all other out-of-pocket costs associated with such reporting or
approval process.

    


    32. COMPLIANCE
WITH LAWS

     

    The Licensee shall comply with all applicable international, national,
state, regional and local laws and regulations in performing its obligations
hereunder and in its use, manufacture, Sale or import of the Licensed Products,
Licensed Services or practice of the Licensed Method.  The Licensee
will observe all applicable United States and foreign laws with respect to the
transfer of Licensed Products and related technical data and the provision of
Licensed Services to foreign countries, including, without limitation, the
International Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations.  The Licensee shall manufacture Licensed Products and
practice the Licensed Method in compliance with applicable government
importation laws and regulations of a particular country for Licensed Products
made outside the particular country in which such Licensed Products are used,
Sold or otherwise exploited.

    


    33. CONFIDENTIALITY

     

    33.1 The
Licensee and The Regents will treat and maintain the other party’s proprietary
business, patent prosecution, software, engineering drawings, process and
technical information and other proprietary information, including the
negotiated terms of this Agreement and any progress reports and royalty reports
and any sublicense agreement issued pursuant to this Agreement ("Proprietary
Information") in confidence using at least the same degree of care as the
receiving party uses to protect its own proprietary information of a like nature
from the date of disclosure until five (5) years after the termination or
expiration of this Agreement. This confidentiality obligation will apply to the
information defined as "Data" under the Secrecy Agreement and such Data will be
treated as Proprietary Information hereunder.

     

    33.2 The
Licensee and The Regents may use and disclose Proprietary Information to their
employees, agents, consultants, contractors and, in the case of the Licensee,
its Sublicensees, provided that such parties are bound by a like duty of
confidentiality as that found in this Article 33
(Confidentiality).  Notwithstanding anything to the contrary contained
in this Agreement, The Regents may release this Agreement or any sublicense,
including any terms thereof, and information regarding royalty payments or other
income received in connection with this Agreement to the inventors, senior
administrative officials employed by The Regents and individual Regents upon
their request.  If such release is made, The Regents will request that
such terms be kept in confidence in accordance with the provisions of this
Article 33
(Confidentiality).  In addition, notwithstanding anything to the
contrary in this Agreement, if a third party inquires whether a license to
Patent Rights is available, then The Regents may disclose the existence of this
Agreement and the extent of the grant in Articles 2 (Grant) and 3 (Sublicenses) and related definitions to
such third party, but will not disclose the name of the Licensee unless Licensee
has already made such disclosure publicly and will not disclose the financial
terms contained in this Agreement.

     

    33.3 All
written Proprietary Information will be labeled or marked confidential or
proprietary.  If the Proprietary Information is orally disclosed, it
will be reduced to writing or some other physically tangible form, marked and
labeled as confidential or proprietary by the disclosing party and delivered to
the receiving party within thirty (30) days after the oral
disclosure.

     

    33.4 Nothing
contained herein will restrict or impair, in any way, the right of the Licensee
or The Regents to use or disclose any Proprietary
Information:

     

    
      	
              33.4.1  

            	
              that recipient can demonstrate by written records was previously
      known to it prior to its disclosure by the disclosing
    party;

            


    

    
      	
              33.4.2  

            	
              that recipient can demonstrate by written records is now, or
      becomes in the future, public knowledge other than through acts or
      omissions of recipient;

            


    

    
      	
              33.4.3  

            	
              that recipient can demonstrate by written records was obtained
      lawfully and without restrictions on the recipient from sources
      independent of the disclosing party;
and

            


    

    
      	
              33.4.4  

            	
              that The Regents is required to disclose pursuant to the
      California Public Records Act or other applicable
  law.

            


    

    The Licensee or The Regents also may disclose Proprietary Information
that is required to be disclosed (i) to a governmental entity or agency in
connection with seeking any governmental or regulatory approval, governmental
audit, or other governmental contractual requirement or (ii) by law, provided
that the recipient uses reasonable efforts to give the party owning the
Proprietary Information sufficient notice of such required disclosure to allow
the party owning the Proprietary Information reasonable opportunity to object
to, and to take legal action to prevent, such disclosure.

     

    33.5 Upon
termination of this Agreement, the Licensee and The Regents will destroy or
return any of the disclosing party’s Proprietary Information in its possession
within fifteen (15) days following the termination of this
Agreement.  The Licensee and The Regents will provide each other,
within thirty (30) days following termination, with written notice that such
Proprietary Information has been returned or destroyed.  Each party
may, however, retain one copy of such Proprietary Information for archival
purposes in non-working files.

    34. MISCELLANEOUS

     

    34.1 The
headings of the several sections are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.

     

    34.2 This
Agreement is not binding on the parties until it has been signed below on behalf
of each party.  It is then effective as of the Effective
Date.

     

    34.3 No
amendment or modification of this Agreement is valid or binding on the parties
unless made in writing and signed on behalf of each party.

     

    34.4 This
Agreement embodies the entire understanding of the parties and supersedes all
previous communications, representations or understandings, either oral or
written, between the parties relating to the subject matter
hereof.  The Secrecy Agreement (UC Control No.
2009-20-0554) dated April 9, 2009 is hereby
superseded.  The Option Agreement remains in
effect.

     

    34.5 In case
any of the provisions contained in this Agreement is held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provisions of this Agreement and this Agreement will
be construed as if such invalid, illegal or unenforceable provisions had never
been contained in it.

     

    34.6 This
Agreement includes the attached Appendix(es) A and B.

     

    34.7 No
provisions of this Agreement are intended or shall be construed to confer upon
or give to any person or entity other than The Regents and the Licensee any
rights, remedies or other benefits under, or by reason of, this
Agreement.

     

    34.8 In
performing their respective duties under this Agreement, each of the parties
will be operating as an independent contractor.  Nothing contained
herein will in any way constitute any association, partnership, or joint venture
between the parties hereto, or be construed to evidence the intention of the
parties to establish any such relationship.  Neither party will have
the power to bind the other party or incur obligations on the other party's
behalf without the other party's prior written consent.

    


    IN WITNESS WHEREOF, both The Regents and the Licensee have executed
this Agreement, in duplicate originals, by their respective and duly authorized
officers on the day and year written.

    


    SHRINK TECHNOLOGIES,
INC.                                                       THE REGENTS OF THE UNIVERSITY

    OF
CALIFORNIA

    


    By:           __________________________                                   By:           ___________________________

    (Signature)                                                                           (Signature)

    


    Name:                      __________________________                    Name:                      William
T. Tucker

    (Please
Print)

    


    Title:                      __________________________                     Title:                      Executive
Director

    Research
Administration and   Technology Transfer

    


    Date:                      __________________________                       Date:                      __________________________


    
      
          

      

      
          

        
          

        

      

      
          

      

    


    APPENDIX A

    CIRM

    Intellectual Property Requirements for Non-Profit
Organizations


    
      
          

      

      
          

        
          

        

      

      
          

      

    


    APPENDIX B

    UC Case No. XX-XXX

    


    CONSENT TO SUBSTITUTION OF PARTY

    


    This substitution of
parties ("Agreement") is effective this  day of  , 200_, among
The Regents of the University of California ("The Regents), a California
corporation, having its statewide administrative offices at 1111 Franklin
Street, 12th Floor, Oakland, California 94607-5200; [original Licensee name]
[("XXX")], a [insert state] corporation, having a principal place of business
at  ________________________________; and [new licensee name]
[("YYY")] a ______________________ corporation, having a principal place of
business at _________________________________.

    


    BACKGROUND

    


    A.           The
Regents and [XXX] entered into a or License Agreement effective ________________
(UC Control No. __-__-____), entitled _________________ ("[type] Agreement"),
wherein [XXX]  was granted certain rights. [include amendments, if
any]

    B.           [XXX]
desires that  [YYY] be substituted as [Licensee] (defined in the
[type] Agreement) in place of [XXX], and The Regents is agreeable to such
substitution.

    
      	
              C.  

            	
              [YYY] has read the [type] Agreement and agrees to abide by its
      terms and conditions.

            


    

    


     

    The parties agree as
follows:

    1. [YYY]
assumes all liability and obligations under the [type] Agreement and is bound by
all its terms in all respects as if it were the original [Licensee] of the
[type] Agreement in place of [XXX].

    2. [YYY] is
substituted for [XXX], provided that [YYY] assumes all liability and obligations
under the [type] Agreement as if [YYY] were the original party named as
[Licensee] as of the effective date of the [type] Agreement, for all liability
and obligations under the [type] Agreement arising before or after the effective
date of this Agreement.

    3. The
Regents releases [XXX] from all liability and obligations under the [type]
Agreement arising before or after the effective date of this
Agreement.

    The parties have
executed this Agreement in triplicate originals by their respective authorized
officers on the following day and year.

    


    [XXX]
COMPANY                                                                                     THE
REGENTS OF THE

    UNIVERSITY OF
CALIFORNIA

    


    
      	
                

            	
              By:

            	
              ______________________________

            	
              By:

            	
              _____________________________

            


    

    (Signature)

    Name:                      ______________________________                                                                                                Name:                      [Licensing
Officer Name]

    (Please
print)

    Title:                      ______________________________                                                                                                Title:                      [Licensing
Officer]

    Office of Technology
Transfer

    Date:                      ______________________________                                                                                                Date:                      _____________________________

    


    [YYY] COMPANY

    By:           ___________________________

    (Signature)

    Name:                      ___________________________

    (Please
print)

    Title:                      ___________________________

    Date:                      ___________________________