Document:

Exhibit 10.13

 

COLLABORATION
AGREEMENT

 

THIS COLLABORATION AGREEMENT (this “Agreement”) dated
as of May 17, 2005 (the “Effective Date”), is entered into between BIOSITE
INCORPORATED, a Delaware corporation (“Biosite”), having a place of business at
11030 Roselle Street, San Diego, California 92121, and POWER3 MEDICAL
PRODUCTS, INC, a New York corporation (“Power3”), having a place of business at
3400 Research Forest Drive, Suite B2-3, The Woodlands, Texas 77381.

 

WHEREAS, Biosite owns or has rights in certain
expertise, technology and intellectual property rights regarding the
development of antibodies.

 

WHEREAS, Power3 owns or has rights in certain
expertise, technology and intellectual property rights regarding certain target
biomolecules for antibody development.

 

WHEREAS, Biosite and Power3 desire to engage in a
collaborative research program to attempt to develop antibodies to certain
target biomolecules selected by Power3, and to use such antibodies to conduct
research to evaluate the diagnostic and therapeutic potential of such target
biomolecules, on the terms and subject to the conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants set forth below, the parties hereby agree as
follows:

 

1.                                       DEFINITIONS

 

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

 

1.1                                 “Affiliate”
shall mean, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.  A Person shall be regarded as in
control of another Person if it owns, or directly or indirectly controls, at
least fifty percent (50%) of the voting stock or other ownership interest
of the other Person, or if it directly or indirectly possesses the power to
direct or cause the direction of the management and policies of the other
Person by any means whatsoever.

 

1.2                                 “Biosite
Improvement” shall mean any Program Invention that constitutes an
improvement or enhancement to (a) the antibody development technology of
Biosite or (b) the bodily fluid in vitro diagnostic assay technology of
Biosite.

 

1.3                                 “Biosite
Inventions” shall mean all Program Inventions that are solely owned by
Biosite.

 

1.4                                 “Biosite
Product” shall mean any product for use in the Exclusive Field,
Semi-Exclusive Field or Non-Exclusive Field that assays a Program Target and
that if made, used, sold, offered for sale or imported absent the licenses
granted hereunder would infringe at least one Valid Claim, or that otherwise
uses or incorporates the Power3 Know-How Rights.

 

 

1.5                                 “Confidential
Information” shall mean, with respect to a party, all information (and all
tangible and intangible embodiments thereof) that is disclosed by such party to
the other party and is marked, identified as or otherwise acknowledged to be
confidential at the time of disclosure to the other party.  Notwithstanding the foregoing, Confidential
Information of a party shall not include information that the other party can
establish by written documentation (a) to have been publicly known prior
to disclosure of such information by the disclosing party to the receiving
party; (b) to have become publicly known, without the fault of the
receiving party, subsequent to disclosure of such information by the disclosing
party to the receiving party; (c) to have been received by the receiving
party at any time from a source, other than the disclosing party, rightfully
having possession of and the right to disclose such information; (d) to
have been otherwise known by the receiving party prior to disclosure of such
information by the disclosing party to the receiving party; or (e) to have
been independently developed by employees or agents on behalf of the receiving
party without access to or use of such information disclosed by the disclosing
party to the receiving party (each, a “Confidentiality Exception”).

 

1.6                                 “Exclusive
Field” shall mean the in vitro detection or measurement of one or more
analytes, by means of a diagnostic device(s), instrument(s) or combination
thereof, with a stated average throughput equal to or less than one hundred
(100) patient samples per hour, for use in the detection, prognosis, diagnosis
or monitoring of any breast cancer-related disease, state or condition in
humans or animals.

 

1.7                                 “First
Commercial Sale” shall mean, with respect to any Biosite Product and any
country, the first bona fide transaction for which consideration is received
for the sale, use, lease, transfer or similar disposition of such Biosite
Product by a party, its Affiliate or (sub)licensee to customers who are not
Affiliates in such country after all applicable marketing and pricing approvals
(if any) have been granted by the applicable governing health authority of such
country.

 

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

 

1.9                                 “Joint
Inventions” shall mean all Program Inventions that are jointly owned by
Biosite and Power3.

 

1.10                           “Monoclonal
Preparation” shall mean a preparation containing a Fab or Fab fragment with
a specific affinity to a Program Target.

 

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

 

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

 

1.12                           “Net
Sublicensing Revenues” shall mean, with respect to any Biosite Product, the
aggregate cash consideration received by Biosite or its Affiliates in
consideration for the sublicense under the Power3 Patent Rights or Power3
Know-How Rights by Biosite or its Affiliates to a Third Party sublicensee with
respect to such Biosite Product (excluding (i) royalties received by
Biosite or its Affiliates based on Net Sales of such Biosite Product by such
sublicensee, and (ii) amounts received to reimburse Biosite or its
Affiliates’ cost to perform research, development or similar services conducted
for such Biosite Product after signing the agreement with the Third Party, in
reimbursement of patent or other out-of-pocket expenses on such Biosite
Product, or in consideration for the purchase of any securities of Biosite or
its Affiliates at a price up to one hundred percent (100%) of the then
fair market value of such securities).

 

1.13                           “Non-Exclusive
Field” shall mean the in vitro detection or measurement of one or more
analytes, by means of a diagnostic device(s), instrument(s) or combination
thereof, for use in the detection, diagnosis and monitoring of any
neurological-related disease, state or condition in humans and animals.

 

1.14                           “Omniclonal
Preparation” shall mean a mixture containing a variety of Fab or Fab
fragments with varying affinity to a Program Target.

 

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

 

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

 

1.17                           “Power3
Inventions” shall mean all Program Inventions that are solely owned by
Power3.

 

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1.18                           “Power3
Know-How Rights” shall mean all trade secret and other know how rights in
all inventions, discoveries, compositions, technology, data and information of
any type whatsoever, (a) that relates to a Program Antibody, Program
Target or fragment thereof (or any nucleotide sequence that encodes, or amino
acid sequences of the foregoing); (b) that are reasonably necessary or
useful for Biosite to conduct its obligations or exercise its rights under this
Agreement; (c) that are either (i) disclosed by Power3 to Biosite and
do not fall within the scope of a Confidentiality Exception, or (ii) developed
or generated by Power3 in the course of conducting its obligations under the
Program; and (d) in which Power3 has an ownership or other licensable
interest during the term of the Agreement.

 

1.19                           “Power3
Patent Rights” shall mean (a) all patent applications heretofore or
hereafter filed or having legal force in any country that claim (i) a
Program Antibody, Program Target or fragment thereof (or any nucleotide
sequence that encodes, or amino acid sequences of the foregoing), or (ii) any
process of manufacture or use of a Program Antibody, Program Target or fragment
thereof (or any nucleotide sequence that encodes, or amino acid sequences of
the foregoing) made or conceived prior to the Effective Date or in the
performance of the Program; (b) all patents that have issued or in the
future issue therefrom, including without limitation utility, model and design
patents and certificates of invention; and (c) all divisionals,
continuations, continuations-in-part, reissues, reexaminations, renewals,
extensions or additions to any such patent applications and patents; in each
case in which Power3 has an ownership or other licensable interest during the
term of the Agreement.

 

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

 

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

 

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

 

1.23                           “Program
Target” shall mean a target biomolecule that is selected by Power3 pursuant
to Section 3.1.1(a), designated by the parties pursuant to Section 3.1.1(b),
and for which the parties reach agreement regarding the mutually acceptable
specificity, affinity and other specifications (if any) desired for the antibody
thereto pursuant to Section 3.1.1(c), together with (a) any
derivatives, parts or polymorphisms (including without limitation splice
variants) of such target biomolecule, (b) any nucleotide sequences with
homology to such target biomolecule

 

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(together with any derivatives, parts or splice variants of such
nucleotide sequences) and (c) amino acid sequences and proteins encoded by
each such nucleotide sequences (together with any derivatives or parts of such
amino acid sequences and proteins).

 

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

 

1.25                           “Semi-Exclusive
Field” shall mean, collectively, (a) research use for any diagnostic
purpose, and (b) the in vitro detection or measurement of one or more
analytes, by means of a diagnostic device(s), instrument(s) or combination
thereof, with a stated average throughput greater than one hundred (100)
patient samples per hour, for use in the detection, prognosis, diagnosis or
monitoring of any breast cancer-related disease, state or condition in humans
or animals.

 

1.26                           “Third
Party” shall mean any Person other than Biosite, Power3 and their
respective Affiliates.

 

1.27                           “Third
Party License Agreement” shall mean a license agreement between Power3 and
a Third Party in effect at the time that Power3 designates the applicable
proposed target biomolecule under Section 3.1.1(a), or thereafter, which
license agreement grants to Power3 a license (with the right to grant
sublicenses) under any patent rights or know-how rights that would constitute
Power3 Patent Rights or Power3 Know-How Rights relating to such proposed target
biomolecule.

 

1.28                           “Valid
Claim” shall mean (a) a claim of an issued and unexpired patent
included within the Power3 Patent Rights that has not been held permanently
unpatentable, revoked, unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and that has not been admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise, and (b) a
claim of a pending patent application included within the Power3 Patent Rights,
which claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of such application.

 

2.                                       REPRESENTATIONS
AND WARRANTIES

 

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

 

2.1                                 Corporate
Existence.  Such party is a
corporation duly organized, validly existing and in good standing under the
laws of the state in which it is incorporated.

 

2.2                                 Authorization
and Enforcement of Obligations.  Such
party (a) has the corporate power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder, and (b) has
taken all necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations
hereunder.  This Agreement has been duly
executed and delivered on behalf of such party, and constitutes a legal, valid,
binding obligation, enforceable against such party in accordance with its
terms.

 

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

 

2.4                                 No
Conflict.  The execution and delivery
of this Agreement and the performance of such party’s obligations hereunder (a) do
not conflict with or violate any requirement of applicable laws or regulations
and (b) do not conflict with, or constitute a default under, any
contractual obligation of such party.

 

2.5                                 DISCLAIMER
OF WARRANTIES.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROGRAM
ANTIBODIES OR PROGRAM TARGETS, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT OF THE
PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY OTHER PERSON.

 

3.             THE
PROGRAM

 

3.1                                 Responsibilities.

 

3.1.1        Target
Designation.

 

(a)                                  Each
calendar quarter during the term of the Program, Power3 shall select up to ten (10) target
biomolecules from that Power3 desires to use in the Program, provided that at
least one half (1/2) of the target biomolecules proposed by Power3 in any such
calendar quarter shall be target biomolecules with application in the Exclusive
Field and/or Semi-Exclusive Field.  With
respect to each such target biomolecule with which Power3 desires to conduct
immunizations hereunder, Power3 shall provide to Biosite in writing the
following information:  (i) the
common name of such target biomolecule, if any; (ii) other publicly known
names of such target biomolecule and any fragment thereof; (iii) the
nucleic acid sequence of the gene or cDNA encoding such target biomolecule, or
sufficient information to enable access to such sequence from public databases;
(iv) identification of the source of biological materials that resulted in
the identification of such target biomolecule by Power3 in sufficient detail to
allow Biosite to determine the potential disease specificity of such target
biomolecule and whether, to the best of Power3’s knowledge, such target
biomolecule is difficult to express or to generate antibodies thereto; (v) whether
or not Power3 owns or has a licensable interest in any patent or other
intellectual property rights in such target biomolecule, antibodies to such
target biomolecule or the use thereof, which would be licensed to Biosite as
set forth in Section 4.2; (vi) whether or not there exist any Third
Party License Agreements relating to such proposed target biomolecule or antibodies
thereto, and thereafter during the term of this Agreement Power3 shall notify
Biosite of any additional Third Party License Agreements relating to a Program
Target or antibodies thereto and provide a description of the applicable
financial terms; (vii) whether or not such proposed target biomolecule or
antibodies thereto are the subject of a collaboration, research, development,
commercialization, out-license or similar agreement between Power3 and any
Third Party; and (viii) copies of all patents and patent applications
covering such target biomolecule, an antibody thereto, or any use of the
foregoing.

 

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(b)                                 Within
thirty (30) days after Biosite receives from Power3 all the information
required under Section 3.1.1(a) for a proposed target biomolecule,
the parties shall attempt to reach mutual agreement on designating such
proposed target biomolecule as a Program Target.

 

(c)                                  With
respect to each proposed target biomolecule that the parties mutually agree to
designate as a Program Target, Biosite and Power3 shall discuss in good faith
and attempt to reach mutually acceptable agreement regarding the specificity,
affinity and other specifications (if any) desired for the antibody to such
proposed target biomolecule to be developed under the Program.  A proposed target biomolecule that the
parties mutually agree to designate as a Program Target shall be designated a
Program Target upon the agreement by the parties on the mutually acceptable
specificity, affinity and other specifications desired for the antibody
thereto.

 

(d)                                 With
respect to each Program Target with which Biosite is to conduct immunizations
hereunder, within thirty (30) days after designation of such Program
Target, Power3 shall provide Biosite with (i) at least two (2) milligrams
of purified protein of such Program Target or a reasonably sufficient quantity
of a cell line producing or cDNA clone of such Program Target or cDNA sequence
encoding such Program Target; provided that immunizations and antibody
development will be delayed by at least three (3) months if a cDNA clone
is provided, and an additional period equal to the time reasonably required by
Biosite to express the target biomolecule if just the cDNA sequence is
provided, and (ii) such information and data regarding such Program Target
(including without limitation the nucleotide sequence encoding and the amino
acid sequence of such Program Target), as reasonably necessary for Biosite to
conduct its obligations under the Program.

 

3.1.2                        Antibody Development and
Delivery.  With respect to each
Program Target, Biosite shall use commercially reasonable efforts (a) to
develop antibodies to the Program Target provided by Power3 under Section 3.1.1(d) with
the specificity, affinity and such other specifications as mutually agreed by
the parties, and (b) to deliver such antibodies within nine (9) months
following the date Biosite first conducts immunizations with such Program
Target.  Biosite shall: (i) make a
library of antibodies for each Program Target, (ii) screen the antibodies
in such library with the specified antigen or antigen mixture, and (iii) determine
which such antibodies satisfy the specificity, affinity and other
specifications mutually agreed by the parties. 
After consultation with Power3, Biosite shall select one Omniclonal
Preparation that meets such specifications for each Program Target, and Biosite
shall sell and deliver to Power3 a minimum of one milligram (1mg) of such
Omniclonal Preparation, and at least twenty (20) Monoclonal Preparations
selected from such Omniclonal Preparation.

 

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

 

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3.1.4                        Target Validation and
Evaluation.  Power3 shall conduct
such tests (if any) as Power3 determines reasonably necessary to validate each
Program Target, to evaluate the potential diagnostic and therapeutic utility of
each Program Target, and to otherwise evaluate each Program Antibody.

 

3.1.5                        Sample Analysis.

 

(a)                                  Upon
Biosite’s written request, Power3 shall provide to Biosite, prior to one (1) month
following the first delivery of Program Antibodies, non-degraded, intact,
properly shipped, blood-based clinical samples (each sample being approximately
2ml, but not less than 1.5ml, in volume) previously obtained by Power3 from its
clinical trials being conducted at New York University, Mercy Hospital and OGA
(the “Samples”).  With respect to each
Sample, Power3 shall (i) provide Biosite with such information, that is
not subject to confidentiality obligations pursuant to the Health Insurance
Portability and Accountability Act (“HIPPA”) and the clinical trial and
material transfer agreements under which the Samples and clinical data were
collected, regarding such Sample as Power3 has in its possession and control; (ii) have
obtained the requisite patient consent forms to permit the use contemplated
hereunder of all such Samples and associated clinical data, together with all
progeny, products and information derived therefrom, for research and
development without compensation to the donor; (iii) prepare and maintain complete
and accurate records of Sample sources, donor medical history, Sample
procurement and any infectious disease screening, together with any other
records regarding the Samples required by applicable laws and regulations; (iv) provide
Biosite with copies of all such patient consent forms and records upon request,
provided that Power3 shall redact patient names and other patient identifying
information for confidentiality purposes; and (v) advise Biosite of any
Third Party restrictions applicable to the use of such Samples at the time of,
or prior to, providing such Samples to Biosite.

 

(b)                                 Biosite
shall treat all Samples and clinical data as Confidential Information and shall
not publish, sell, lease, or otherwise transfer or disclose such Samples and clinical
data to any other party without the express consent of Power3; provided,
however, that Biosite shall have the right to publish and include in its
marketing brochures summaries of the clinical data.  Notwithstanding the foregoing, Biosite shall
have the right to use all Samples and associated clinical data, together with
all progeny, products and information derived therefrom, for research and
development purposes, as long as Biosite use complies with HIPPA, Third Party
restrictions provided to Biosite under Section 3.1.5(a) above, and
any other current or future government regulations governing the transfer and
use of such Samples and clinical data.

 

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

 

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

 

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3.1.6                        Conduct of Program.  Each party shall conduct the Program in good
scientific manner, and in compliance in all material respects with all
requirements of applicable laws and regulations to attempt to achieve its
objectives efficiently and expeditiously. 
Each party shall proceed diligently with its responsibilities under the
Program, and shall allocate such personnel, equipment, facilities and other
resources as reasonably necessary to conduct its obligations under the Program
and to accomplish the objectives thereof.

 

3.2                                 Results.

 

3.2.1                        Reports.  Within thirty (30) days following the
end of each calendar year during the term of the Program and within
thirty (30) days following the expiration or termination of the Program,
each party shall prepare, and provide to the other party, a reasonably detailed
written report that shall describe the work performed by such party, and the
results achieved, to date under the Program, together with copies of all data
resulting from the tests and evaluation performed by such party to date under
the Program.

 

3.2.2                        Records.  Each party shall maintain records, in
sufficient detail and in good scientific manner appropriate for patent
purposes, which shall be complete and accurate and shall fully and properly
reflect all work done and results achieved in the performance of the Program.

 

3.2.3                        Inspection of Records.  Each party shall have the right, during
normal business hours and on reasonable notice, to inspect and copy such
records of the other party regarding the work done and results achieved in the
performance of the Program, to the extent reasonably necessary to enable such
party to conduct its obligations under the Program or to exercise its rights
hereunder.  Each party shall maintain such
records of the other party (together with the information contained therein) in
confidence in accordance with Section 7 below and shall not use such
records (or information) except to the extent otherwise permitted by this
Agreement.

 

3.3                                 Program
Leaders.  Each party shall appoint a
person (a “Program Leader”) to coordinate its part of the Program.  The Program Leaders shall be the primary
contacts between the parties with respect to the Program.  Each party shall notify the other within
thirty (30) days after the date of this Agreement of the appointment of
its Program Leader and shall notify the other party as soon as practicable upon
changing this appointment.

 

3.4                                 Subcontracts.  Either party may subcontract portions of the
Program to be performed by it in the normal course of its business without the
prior consent of the other party; provided, however, that (a) such
subcontracting shall not involve the transfer of Confidential Information of
the other party to any Third Party unless the subcontracted party shall enter
into a confidentiality agreement with the subcontracting party in accordance
with Section 7 below; (b) the subcontracting party shall supervise
such subcontract work; and (c) the subcontracted party shall be in
compliance in all material respects with all requirements of applicable laws
and regulations.

 

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3.5                                 Term
of Program.  Unless this Agreement is
terminated earlier under Section 10 below, the term of the Program shall
commence on the Effective Date of this Agreement and shall continue for a
period of three (3) years thereafter.

 

3.6                                 Ownership
of Inventions.

 

3.6.1                        As between Biosite and Power3,
all right, title and interest in (a) all Program Targets, (b) all
nucleotide sequences encoding Program Targets and (c) all amino acid
sequences of Program Targets, in each case that are patented, patentable or
Confidential Information of Power3, together with all patent rights and other
intellectual property rights therein, shall be owned by Power3.

 

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

 

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

 

3.6.4                        All right, title and interest
in all Biosite Improvements, together with all patent rights and other
intellectual property rights therein, shall be owned by Biosite.  Power3 hereby sells, assigns and transfers to
Biosite all of Power3’s right, title and interest therein and thereto.

 

3.6.5                        All right, title and interest
in all Program Inventions constituting or pertaining to phage display libraries
and cells containing any plasmid that encodes or secretes Program Antibodies
and with all cell lines therefor, together with all patent rights and other
intellectual property rights therein, shall be owned by Biosite.  Power3 hereby sells, assigns and transfers to
Biosite all of Power3’s right, title and interest therein and thereto.
Notwithstanding anything to the contrary in this Agreement, Biosite shall have
no obligation to sell, assign or transfer to Power3 any phage display libraries
or cells containing any plasmid that encodes or secretes Program Antibodies, or
any cell lines therefor  Notwithstanding
the foregoing, if Biosite does not pursue the commercialization of a Program Antibody
used to designate a Reduced Royalty Rate Target within 6 months following the
date of such designation, then Biosite shall negotiate in good faith with
Power3 mutually acceptable and commercially reasonable terms and conditions for
a supply agreement with Power3 for providing reasonable quantities of that
Program Antibody to Power3, or a third party licensee, for research and
diagnostic purposes within the neurological field.

 

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

 

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testing of the Program Targets or Program Antibodies by employees or
others on behalf of Biosite and Power3 or in the performance and during the
term of the Program.

 

3.6.7                        Except as otherwise set forth
in Sections 3.6.1 through 3.6.5 above, all right, title and interest in
all Program Inventions, together with all patent rights and other intellectual
property rights therein, (a) made or conceived solely by employees or
others acting on behalf of Biosite shall be owned solely by Biosite, (b) made
or conceived solely by employees or others acting on behalf of Power3 shall be
owned solely by Power3, and (c) made or conceived jointly by employees or
others acting on behalf of Biosite and by employees or others acting on behalf
of Power3 shall be owned jointly by Biosite and Power3.

 

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

 

3.6.9                        Each party shall cause all
employees and other Persons acting on its behalf in performing its obligations
under the Program to be obligated under a binding written agreement to assign
to it, or as it shall direct, all Program Inventions made or conceived by such
employees or other Persons.

 

4.                                       LICENSE
GRANTS

 

4.1                                 Program
License.  On the terms and subject to
the conditions of this Agreement, Power3 hereby grants to Biosite a
non-exclusive, worldwide, royalty-free license (without the right to grant
sublicenses) under the Power3 Patent Rights and Power3 Know-How Rights during
the term of the Program to conduct Biosite’s obligations under the Program.

 

4.2                                 Commercialization
Licenses.

 

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

 

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

 

11

 

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

 

4.2.4                        Biosite shall have the right to
develop such assays, and conduct such tests as Biosite determines reasonably
necessary to evaluate the potential diagnostic utility of such Program Target
and to otherwise evaluate each Program Antibody.

 

4.2.5                        Any data generated by Biosite
in the development of such assays and such tests to determine the potential
diagnostic utility of such Program Target shall be owned by Biosite.  Biosite shall promptly provide such data to
Power3.  Any data provided to Power3
under this Section 4.2.5 shall be treated as Confidential Information of
Biosite subject to the provisions of Section 7.  Any data generated by Power3 in the testing
of the Program Antibodies, including any data generated to determine the
potential therapeutic or diagnostic utility of the Program Antibodies or
Program Target shall be owned by Power3. 
Power3 shall promptly provide such data to Biosite.  Any data provided to Biosite under this Section 4.2.5
shall be treated as Confidential Information of Power3 subject to the
provisions of Section 7.

 

4.3                                 Option.  If Biosite reasonably believes that, with
respect to a Program Target, there is a diagnostic application or field of use
that is outside of the Exclusive Field, Semi-Exclusive Field and Non-Exclusive
Field, then, if such application or field of use has not then been exclusively
licensed to a Third Party by Power3, Biosite shall have the right upon written
notice to Power3 to designate such diagnostic application or field of use as
within either (a) the Exclusive Field and Semi-Exclusive Field, or (b) the
Non-Exclusive Field of this Agreement. 
Following the date of such written notice and provided that Power3 on
such date has the right to grant the inclusion of the designated diagnostic
application or field of use within this Agreement and that such a grant would
not result in a breach of the terms of a written agreement that Power3
previously entered into with a Third Party, the parties shall amend this
Agreement to include such diagnostic application or field of use within the
applicable Field(s) subject to the royalties and milestones owing on Biosite
Products sold within such Field(s).

 

4.4                                 Sublicenses.  Biosite’s right to sublicense under this
Agreement is subject to the following conditions: (a) in each such
sublicense, the sublicensee shall be prohibited from granting further sublicenses
and shall be subject to the applicable terms and conditions of the license
granted to Biosite under this Agreement; (b) Biosite shall forward to
Power3, within thirty (30) days following execution, a complete and
accurate copy written in the English language of each sublicense granted
hereunder; (c) notwithstanding any such sublicense, Biosite shall remain
primarily liable to Power3 for all of Biosite’s duties and obligations
contained in this Agreement, and any act or omission of a sublicensee which
would be a breach of this Agreement if performed by Biosite shall be deemed to
be a breach by Biosite of this Agreement; provided, however, that if any
sublicensee breaches any duty or obligation under its agreement with Biosite

 

12

 

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

 

5.                                       FINANCIAL
TERMS

 

5.1                                 Antibody
Fees Payable by Power3.  In
consideration for the sale of the Program Antibodies to Power3, Power3 shall
pay to Biosite one thousand dollars ($1,000) for the approximately one
milligram (1mg) quantity of Omniclonal Preparation, and the panel of
twenty (20) Monoclonal Preparations selected from the Omniclonal
Preparation, generated for each Program Target under the Program that is sold
and delivered to Power3 under Section 3.1.2 above.  Biosite shall invoice Power3 for such amount
at the time of delivery of such Omniclonal Preparation and twenty (20)
Monoclonal Preparations, and Power3 shall pay to Biosite such amount within
thirty (30) days after receipt by Power3 of such invoice.  Power3 shall pay all federal, state, county
or municipal sales or use tax, excise or similar charge, or other tax
assessment (other than that assessed against income), assessed or charged on
the sale of the Omniclonal Preparations and Monoclonal Preparations sold and
delivered to Power3 pursuant to this Agreement.

 

5.2                                 Annual
Maintenance Fee.  Commencing with the
third (3rd) anniversary of the date Biosite makes a milestone payment to Power3
pursuant to Section 5.4 below following demonstration of a panel of
antibodies is suitable for development of a commercial product for use in the
Exclusive Field and/or Semi-Exclusive Field, and on each subsequent anniversary
of such date until the date of submission by Biosite of the first 510k or PMA
to the FDA for the first Biosite Product for use in the Exclusive Field and/or
Semi-Exclusive Field, Biosite shall pay to Power3 an annual maintenance fee of
one hundred thousand dollars ($100,000).

 

5.3                                 Blood
Sample Collection Fees.  In consideration
for the collection and transfer of Samples requested by Biosite in writing,
Biosite shall pay to Power3 (a) if Power3 collects and transfers to
Biosite at least four hundred (400) approximately 2ml volume, but not less than
1.5ml volume, Samples, together with the associated clinical data and
information (as the parties mutually determine as requested by Biosite and
consistent with Section 3.1.5), three hundred and fifty thousand dollars
($350,000), and (b) for each approximately 2ml volume, but not less than
1.5ml volume, Sample in excess of four hundred (400) that is collected and
transferred by Power3 together with the associated clinical data and
information (as the parties mutually determine), four hundred and seventeen
dollars ($417); provided, however, that in no event shall Biosite be obligated
to pay more than six hundred thousand dollars ($600,000) in the aggregate for a
total of 1000 Samples under this Section 5.3.  However, if Biosite requests in writing
Samples in addition to the first 1000 Samples, Biosite will continue to pay
$417 per Sample supplied by Power3.

 

5.4                                 Milestones
Payable by Biosite.  Biosite shall
pay to Power3 the following milestone payments within thirty (30) days
following the applicable event:

 

	
  $

  	
  150,000

  	
   

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

  

 

13

 

	
   

  	
   

  	
  effective date of the first written agreement
  between Biosite and a Third Party sublicensee for a sublicense under the
  rights in the Semi-Exclusive Field granted to Biosite under Section 4.2.2;

  
	
   

  	
   

  	
   

  
	
  $

  	
  250,000

  	
   

  	
  upon demonstration, as determined in Biosite’s sole
  and reasonable discretion, that a panel of antibodies (including one or more
  antibodies to a Program Target) is suitable for development of a commercial
  product for use in the Exclusive Field and/or Semi-Exclusive Field;

  
	
   

  	
   

  	
   

  
	
  $

  	
  500,000

  	
   

  	
  upon the first submission by Biosite of the first
  510k or PMA to the FDA for the first Biosite Product for use in the Exclusive
  Field and/or Semi-Exclusive Field;

  
	
   

  	
   

  	
   

  
	
  $

  	
  300,000

  	
   

  	
  upon the first
  submission by Biosite of the first 510k or PMA to the FDA for the first
  Biosite Product for use in the Non-Exclusive Field;

  
	
   

  	
   

  	
   

  
	
  $

  	
  1,000,000

  	
   

  	
  upon the first FDA
  approval of the first 510k or PMA submitted by Biosite for the first Biosite
  Product for use in the Exclusive Field and/or Semi-Exclusive Field; and

  
	
   

  	
   

  	
   

  
	
  $

  	
  300,000

  	
   

  	
  upon the first FDA approval of the first 510k or PMA
  submitted by Biosite for the first Biosite Product for use in the
  Non-Exclusive Field.

  

 

5.5                                 Royalties
Payable by Biosite.

 

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

 

5.5.2                        Running Royalties.

 

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

 

14

 

to Power3 to designate one (1) Program Target with application in
the Exclusive Field and/or Semi-Exclusive Field as a “Reduced Royalty Rate
Target.”  Once a Program Target with
application in the Exclusive Field and/or Semi-Exclusive Field is designated as
a Reduced Royalty Rate Target, Biosite shall not have the right to transfer the
designation to another Program Target even if Biosite discontinues development
of Biosite Products that assay the first such designated Program Target.  Notwithstanding the foregoing, if any Biosite
Product contains antibodies that are not Program Antibodies or control
antibodies, and are included in order to get FDA approval and/or to
commercialize such Biosite Product, then the Net Sales of, and milestones owing
for, such Biosite Product under this Section 5.5.2(a) shall be
multiplied by the quotient of (i) the total number of different Program
Antibodies (for detecting analytes) contained in such Biosite Product, divided
by (ii) the total number of different antibody types contained in such
Biosite Product that specifically bind known, non-antibody target biomolecules
and do not represent experimental controls; provided, however, that if such
Biosite Product is covered by intellectual property rights granted to Power3
under a Third Party License Agreement, then in no event shall the applicable
royalty rate set forth in this Section 5.5.2(a) be reduced by reason
of this sentence to a percentage rate less than one and one-half (1 1/2) times
the applicable percentage rate owing by Power3 under such Third Party License
Agreement.

 

(b)                                 During
the applicable Issued Royalty Term for a Biosite Product for use in the
Non-Exclusive Field, on a country-by-country basis, Biosite shall pay to Power3
royalties, with respect to each Biosite Product, equal to three and one-half
percent (3.5%) of Net Sales of such Biosite Product in such country.  Notwithstanding the foregoing, if any Biosite
Product contains antibodies that are not Program Antibodies or control
antibodies, and are included in order to get FDA approval and/or to commercialize
such Biosite Product, then the Net Sales of, and milestones owing for, such
Biosite Product under this Section 5.5.2(b) shall be multiplied by
the quotient of (i) the total number of different Program Antibodies (for
detecting analytes) contained in such Biosite Product, divided by (ii) the
total number of different antibody types contained in such Biosite Product that
specifically bind known, non-antibody target biomolecules and do not represent
experimental controls; provided, however, that if such Biosite Product is
covered by intellectual property rights granted to Power3 under a Third Party
License Agreement, then in no event shall the applicable royalty rate set forth
in this Section 5.5.2(b) be reduced by reason of this sentence to a
percentage rate less than two (2) times the applicable percentage rate
owing by Power3 under such Third Party License Agreement.

 

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

 

(d)                                 During
the applicable Pending Royalty Term for a Biosite Product covered by
intellectual property rights granted to Power3 under a Third Party License
Agreement, on a country-by-country basis, Biosite shall pay to Power3
royalties, with respect to each such Biosite Product, equal to the royalties
owing by Power3 under such Third Party License Agreement for Net Sales of such
Biosite Product in such country.

 

15

 

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

 

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

 

6.                                       PAYMENT
REPORTS AND PAYMENT TERMS

 

6.1                                 Payment
Reports.

 

6.1.1                        Within sixty (60) days
after the end of each calendar quarter during the term of this Agreement
following the First Commercial Sale of a Biosite Product by Biosite or its
Affiliate or the first grant of a sublicense hereunder, and within
sixty (60) days following the expiration or termination of this Agreement,
Biosite shall furnish to Power3 a written report showing in reasonably specific
detail, on a Biosite Product-by-Biosite Product and country-by-country basis, (a) the
gross sales of all Biosite Products sold by Biosite or its Affiliates during
such calendar quarter and the calculation of Net Sales from such gross sales; (b) all
cash consideration received by Biosite from such sublicensees during such
calendar quarter, the reason for each such payment, and the calculation of Net
Sublicensing Revenues for such quarter; (c) the calculation of the
royalties, if any, that shall have accrued based upon such Net Sales; (d) the
withholding taxes, if any, required by law to be deducted with respect to such
sales; and (e) the exchange rates, if any, used in determining the amount
of United States dollars.

 

16

 

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

 

6.1.3                        Biosite shall keep complete and
accurate records in sufficient detail to enable the amounts payable hereunder
to be determined.

 

6.2                                 Audits.

 

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

 

6.2.2                        If such accounting firm
concludes that additional amounts were owed during the audited period, Biosite
shall pay such additional amounts within thirty (30) days of the date
Power3 delivers to Biosite such accounting firm’s written report so
concluding.  The fees charged by such
accounting firm shall be paid by Power3; provided, however, if the audit
discloses that the royalties payable by Biosite for such period are more than
one hundred ten percent (110%) of the royalties actually paid for such
period, then Biosite shall pay the reasonable fees and expenses charged by such
accounting firm.

 

6.2.3                        Power3 shall cause its
accounting firm to retain all financial information subject to review under
this Section 6.2 in strict confidence; provided, however, that Biosite shall
have the right to require that such accounting firm, prior to conducting such
audit, enter into an appropriate non-disclosure agreement with Biosite
regarding such financial information. 
The accounting firm shall disclose to Power3 only whether the reports
are correct or not and the amount of any discrepancy.  No other information shall be shared.  Power3 shall treat all such financial
information as Biosite’s Confidential Information.

 

6.3                                 Payment
Terms.  All amounts shown to have
accrued by each payment report provided for under Section 6.1 above shall
be payable on the date such payment report is due.  Payment of amounts in whole or in part may be
made in advance of such due date.

 

6.4                                 Payment
Method.  All payments by a party to
the other party under this Agreement shall be paid in United States dollars and
all such payments shall be originated from a

 

17

 

United States bank located in the United States and made by bank wire
transfer in immediately available funds to such account as the payee shall
designate before such payment is due.

 

6.5                                 Exchange
Control.  If at any time legal
restrictions prevent the prompt remittance of part or all royalties with
respect to any country where a Biosite Product is sold by Biosite or its
Affiliate, Biosite shall have the right, at its option, to make such payments
by depositing the amount thereof in local currency to Power3’s account in a
bank or other depository in such country. 
If the royalty rate specified in this Agreement should exceed the
permissible rate established in any country, the royalty rate for sales in such
country shall be adjusted to the highest legally permissible or
government-approved rate.

 

6.6                                 Withholding
Taxes.  Biosite shall be entitled to
deduct the amount of any withholding taxes, value-added taxes or other taxes,
levies or charges with respect to such amounts, other than United States taxes,
payable by Biosite, or any taxes required to be withheld by Biosite, to the
extent Biosite pays to the appropriate governmental authority on behalf of
Power3 such taxes, levies or charges. 
Biosite shall use reasonable efforts to minimize any such taxes, levies
or charges required to be withheld on behalf of Power3 by Biosite.  Biosite promptly shall deliver to Power3
proof of payment of all such taxes, levies and other charges, together with
copies of all communications from or with such governmental authority with
respect thereto.

 

7.                                       CONFIDENTIALITY

 

7.1                                 Confidential
Information.  During the term of this
Agreement, and for a period of five (5) years following the
expiration or earlier termination hereof, each party shall maintain in
confidence all Confidential Information disclosed by the other party (including
all Confidential Information disclosed prior to the term of this Agreement
pursuant to a written confidentiality agreement between the parties), and shall
not use, grant the use of or disclose to any third party the Confidential
Information of the other party other than as expressly permitted hereby.  Each party shall notify the other promptly
upon discovery of any unauthorized use or disclosure of the other party’s
Confidential Information.

 

7.2                                 Terms
of this Agreement.  Except as
otherwise provided herein, during the term of this Agreement and for a period
of five (5) years thereafter, neither party shall disclose any terms
or conditions of this Agreement to any Third Party without the prior consent of
the other party.  Notwithstanding the
foregoing, prior to execution of this Agreement, the parties have agreed in
writing upon the substance of information that can be used to describe the
terms of this transaction, and each party may disclose such information, as
modified by mutual agreement from time to time, without the other party’s
consent.

 

7.3                                 Limitations
on Disclosure.  Each party shall
limit the disclosure of the Confidential Information of the other party and the
terms of this Agreement on a need-to-know basis to those directors, officers,
employees, consultants, licensors, legal and financial advisors, clinical
investigators, contractors, (sub)licensees, distributors or permitted
assignees, to the extent such disclosure is reasonably necessary in connection
with such party’s activities as expressly authorized by this Agreement.  To the extent that disclosure is authorized
by this Agreement, prior to disclosure, each party hereto shall obtain
agreement of any such Person to

 

18

 

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

 

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

 

8.                                       PUBLICATIONS.  Neither party shall publish or present (other
than to applicable regulatory agencies for approval of a product) any data or
information resulting from the Program unless such party has first submitted to
the other party for its review, a copy of any such proposed publication or
other presentation at least sixty (60) days prior to the date of submission for
publication or other presentation.  If no
response is received within sixty (60) days after the date such materials are
submitted to the other party, the submitting party may proceed with the publication
or presentation without delay.  If the
other party, in good faith and for reasonable business purposes, notifies the
submitting party that it does not want the publication or presentation
disclosed, the submitting party shall not disclose the publication or
presentation.

 

9.                                       PATENT
RIGHTS

 

9.1                                 Program
Inventions.

 

9.1.1                        Except as otherwise set forth
in Section 9.2 below, Biosite shall have the right at its sole expense and
in its sole discretion to control the preparation, filing, prosecution, maintenance
and enforcement of all patent applications and patents that claim Biosite
Improvements and Biosite Inventions.

 

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

 

9.1.3                        Except as otherwise set forth
in Section 9.2 below, the parties shall determine by mutual consent which
party shall control the preparation, filing, prosecution, maintenance and
enforcement of the patent applications and patents that claim Joint Inventions.

 

19

 

9.2                                 Power3
Patent Rights.

 

9.2.1                        Power3 (or its licensor, as
applicable) shall have the right and obligation at its sole expense to control
the preparation, filing, prosecution and maintenance of the Power3 Patent
Rights.  If Power3 and its licensor elect
not to file such a patent application in any country, or decides to abandon
such a pending application or issued patent in any country, Power3 shall
provide written notice to Biosite, and Biosite shall have the right at its sole
expense to assume control of the preparation, filing, prosecution, maintenance
and enforcement of such patent application or patent at its own expense;
provided, however, that except for the right to prepare, file, prosecute and
maintain such patent rights, the rights of each party to such patent rights
shall not be affected by reason of this Section 9.2.1.

 

9.2.2                        Power3 shall have the right at
its sole expense and in its sole discretion to control the enforcement of the
Power3 Patent Rights against infringers. 
If (a) within three (3) months of receipt of written
notice from Biosite that a Third Party is marketing in the Exclusive Field
and/or Semi-Exclusive Field a diagnostic product that infringes the Power3
Patent Rights and that assays a Program Target, Power3 fails to abate the
infringement or file suit to enforce such Power3 Patent Rights against the
infringing party in the Exclusive Field and/or Semi-Exclusive Field, or (b) Power3
fails to, or notifies Biosite that it does not desire to, defend a declaratory
judgment action brought by a Third Party against Power3 alleging that one or
more of the Power3 Patent Rights are invalid or otherwise unenforceable, then
Biosite shall have the right to take whatever action it deems appropriate in
its own name or, if required for purposes of standing, in the name of Power3 to
enforce or defend such Power3 Patent Rights in the Exclusive Field and/or
Semi-Exclusive Field, and Power3 shall reasonably cooperate with Biosite in the
planning and execution of any such action to enforce or defend the Power3
Patent Rights in the Exclusive Field and/or Semi-Exclusive Field.  The party controlling any such enforcement
action may not settle, or otherwise consent to an adverse judgment in, such
action that diminishes the rights or interests of the non-controlling party
without the prior express written consent of the non-controlling party.  All monies recovered upon the final judgment
or settlement of such action shall be shared, after reimbursement of expenses,
seventy five percent (75%) by the controlling party and twenty five
percent (25%) by the non-controlling party.

 

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

 

9.4                                 No
Other Technology Rights.  Except as
specifically provided in this Agreement, no other rights or licenses to any of
Power3’s or Biosite’s technology are implied or granted hereunder.

 

9.5                                 Third
Party License Agreements.  Power3
shall use its best efforts to comply with all the applicable terms and
conditions of each Third Party License Agreement and shall maintain in full
force and effect each Third Party License Agreement.  Power3 shall promptly notify Biosite if it
receives any notices regarding, or otherwise obtains any information that
would, or has the potential to, result in, termination of a Third Party License
Agreement, or any reduction or limitation of rights under a Third Party License
Agreement.

 

20

 

10.                                 TERM
AND TERMINATION

 

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

 

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

 

10.3                           Termination
by Either Party.  At any time
following twenty-four (24) months of the Effective Date of this Agreement,
either party may terminate this Agreement upon ninety (90) days prior
express written notice to the other party. 
The provisions of Sections 4.2, 4.3, 4.4, 5 and 6 shall survive any
such termination of this Agreement.

 

10.4                           Termination
by Biosite.  Biosite may terminate
this Agreement with respect to any Program Target at any time by
thirty (30) days prior written notice to Power3 if, despite its
commercially reasonable efforts, Biosite is unable to develop and deliver
Program Antibodies to such Program Target pursuant to Section 3.1.  Upon any such termination, this Agreement
shall remain in full force and effect with respect to any unaffected Program
Target.

 

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

 

11.                                 INDEMNITY

 

11.1                           Indemnity.

 

11.1.1                  By Biosite.  Biosite shall indemnify and hold harmless,
and hereby forever releases and discharges Power3 and its Affiliates and their
respective officers, directors, employees and agents, from and against all
losses, liabilities, damages and expenses (including reasonable attorneys’ fees
and costs) resulting from all claims, demands, actions and other proceedings by
any Third Party to the extent arising from (a) the breach of any
representation, warranty or covenant of Biosite under this Agreement, (b) the
use of the Program Antibodies by Biosite, its Affiliates or sublicensees,
(other than under the Program), (c) the making, using or selling of Biosite
Products (without regard to culpable conduct), or (d) the gross negligence
or willful misconduct of Biosite, its Affiliates or sublicensees in the
performance of its obligations, and its permitted activities, under this
Agreement.

 

11.1.2                  By Power3.  Power3 shall indemnify and hold harmless, and
hereby forever releases and discharges Biosite and its Affiliates and their
respective officers, directors, employees and agents, from and against all
losses, liabilities, damages and expenses (including

 

21

 

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

 

11.2                           Procedure.  A party (the “Indemnitee”) that intends to
claim indemnification under this Section 11 shall promptly notify the
other party (the “Indemnitor”) of any claim, demand, action or other proceeding
for which the Indemnitee intends to claim such indemnification.  The Indemnitor shall have the right to
participate in, and to the extent the Indemnitor so desires jointly with any
other indemnitor similarly noticed, to assume the defense thereof with counsel
selected by the Indemnitor; provided, however, that the Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of the Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between the Indemnitee and any other party represented by such
counsel in such proceedings.  The
indemnity obligations under this Section 11 shall not apply to amounts
paid in settlement of any claim, demand, action or other proceeding if such
settlement is effected without the prior express written consent of the
Indemnitor, which consent shall not be unreasonably withheld or delayed.  The failure to deliver notice to the
Indemnitor within a reasonable time after notice of any such claim or demand,
or the commencement of any such action or other proceeding, if prejudicial to
its ability to defend such claim, demand, action or other proceeding, shall
relieve such Indemnitor of any liability to the Indemnitee under this Section 11
with respect thereto, but the omission so to deliver notice to the Indemnitor
shall not relieve it of any liability that it may have to the Indemnitee
otherwise than under this Section 11. 
The Indemnitor may not settle or otherwise consent to an adverse
judgment in any such claim, demand, action or other proceeding that diminishes
the rights or interests of the Indemnitee without the prior express written
consent of the Indemnitee, which consent shall not be unreasonably withheld or
delayed.  The Indemnitee, its employees
and agents, shall reasonably cooperate with the Indemnitor and its legal
representatives in the investigation of any claim, demand, action or other
proceeding covered by this Section 11.

 

11.3                           Insurance.  Each party shall maintain such insurance with
respect to the development, manufacture and sales of Biosite Products or Power3
products developed or derived through the use of the Program Antibodies, as
applicable, by such party, its Affiliates, licensees, or (sub)licensees in such
amounts as such party customarily maintains with respect to the development,
manufacture and sales of its other products. 
Each party shall maintain such insurance for so long as it continues to
develop, manufacture or sell Biosite Products or Power3 products developed or
derived through the use of the Program Antibodies, as applicable, and
thereafter for so long as it customarily maintains insurance for itself
covering the development, manufacture and sales of its other products.

 

22

 

12.                                 MISCELLANEOUS

 

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

 

	
  If to Biosite:

  	
   

  	
  Biosite
  Incorporated

  
	
   

  	
   

  	
  11030 Roselle
  Street

  
	
   

  	
   

  	
  San Diego,
  California 92121

  
	
   

  	
   

  	
  Attention: Chief
  Executive Officer

  
	
   

  	
   

  	
  With a copy to:
  Legal Dept.

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Morrison & Foerster LLP

  
	
   

  	
   

  	
  3811 Valley
  Centre Drive, Site 500

  
	
   

  	
   

  	
  San Diego,
  California 92130

  
	
   

  	
   

  	
  Attention: Mark
  R. Wicker

  
	
   

  	
   

  	
   

  
	
  If to Power3:

  	
   

  	
  Power3 Medical
  Products, Inc

  
	
   

  	
   

  	
  3400 Research
  Forest Drive

  
	
   

  	
   

  	
  Suite B2-3

  
	
   

  	
   

  	
  The Woodlands,
  Texas 77381

  
	
   

  	
   

  	
  Attention: CEO

  

 

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

 

12.3                           Resolution
of Disputes.  In the event of any
dispute or disagreement between the parties either in interpreting any
provision of this Agreement or about the performance of either party and upon
the written request of either party, each of the parties will appoint a
designated representative to attempt to resolve such dispute or
disagreement.  The designated
representatives will discuss the problem and negotiate in good faith in an
effort to resolve the dispute without any formal proceedings.  The specific format of such discussion shall
be left to the discretion of the designated representatives.  No litigation for the resolution of such
dispute may be commenced until the designated representatives have met and either
party has concluded in good faith that amicable resolution through continued
negotiation does not appear likely (unless either party fails or refuses to
appoint a designated representative and schedule a meeting of such
representatives within thirty (30) days after a request to do so by the other
party).  Notwithstanding the foregoing,
either party shall have the right, without waiving any right or remedy
available to such party under this Agreement or otherwise, to seek and obtain
from any

 

23

 

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

 

12.4                           Applicable
Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, without
regard to the conflicts of law principles thereof.

 

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

 

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

 

12.7                           Independent
Contractors.  Each party hereby
acknowledges that the parties shall be independent contractors and that the
relationship between the parties shall not constitute a partnership, joint
venture or agency.  Neither party shall
have the authority to make any statements, representations or commitments of
any kind, or to take any action that shall be binding on the other party,
without the prior consent of the other party to do so.

 

12.8                           Waiver.  The waiver by a party of any right hereunder,
or of any failure to perform or breach by the other party hereunder, shall not
be deemed a waiver of any other right hereunder or of any other breach or
failure by the other party hereunder whether of a similar nature or otherwise.

 

12.9                           Force
Majeure.  A party shall neither be
held liable or responsible to the other party, nor be deemed to have defaulted
under or breached this Agreement, for failure or delay in fulfilling or
performing any obligation under this Agreement (other than an obligation for
the payment of money) to the extent, and for so long as, such failure or delay
is caused by or results from causes beyond the reasonable control of such party
including but not limited to fire, floods, embargoes, war, acts of war (whether
war be declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or delays
in acting by any governmental authority or the other party.

 

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

 

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

 

24

 

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

 

	
   

  	
  BIOSITE
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
        /s/ Chris
  Hibberd

  	
   

  
	
   

  	
  Name

  	
  Chris Hibberd

  
	
   

  	
  Title

  	
  SVP, Corporate
  Development

  
	
   

  	
   

  
	
   

  	
  POWER3 MEDICAL
  PRODUCTS, INC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
         /s/
  Steven B. Rash

  	
   

  
	
   

  	
  Name

  	
   Steven B.
  Rash

  	
   

  
	
   

  	
  Title

  	
   Chairman/CEO

  	
   

  
							

 

25Exhibit 10.97

 

SEPARATION AGREEMENT AND
RELEASE

 

RECITALS

 

This Separation Agreement and Release (“Agreement”) is
made by and between Barry Wiley (“Employee”) and Catalyst Semiconductor, Inc.
(“Company”) (collectively referred to as the “Parties”):

 

WHEREAS, Employee was employed by the Company;

 

WHEREAS, the Company and Employee entered into a proprietary information agreement dated October 7,
1999 (the “Confidentiality Agreement”);

 

WHEREAS, the Company and Employee entered into stock option agreements SP212 effective October 25,
1999, SP1167 effective February 15, 2001, SP1173 effective September 27,
2001, SP1362 effective April 28, 2003, SP1491 effective November 19,
2003 and SP1686 effective April 1, 2005 (the “Stock Agreements”);

 

WHEREAS, Employee’s employment with the Company will
terminate on July 20, 2005 (the “Termination Date”); and

 

WHEREAS, the Parties wish to resolve any and all
disputes, claims, complaints, grievances, charges, actions, petitions and
demands that the Employee may have against the Company as defined herein,
including, but not limited to, any and all claims arising out of, or related
to, Employee’s employment with, or separation from, the Company;

 

NOW THEREFORE, in consideration of the promises made
herein, the Parties hereby agree as follows:

 

COVENANTS

 

1.                                       Consideration.

 

(a)                                  The
Company agrees to pay Employee a lump sum of $82,500, less applicable
withholdings.  This payment will be made
to Employee within ten (10) business days after the Effective Date of this
Agreement.

 

(b)                                 Stock.  The Parties agree that for purposes of
determining the number of shares of the Company’s common stock which Employee
is entitled to purchase from the Company, pursuant to the exercise of
outstanding options, the Employee will be considered to have vested only up to
the Termination Date.  Employee
acknowledges that as of the Termination Date, he will have vested in 218,039
options and no more.  In accordance with
the terms of the Stock Agreements, these vested options are subject to
cancellation 30 days after the Termination Date and therefore, the Employee
must exercise by August 19, 2005 when the remaining vested options will
expire.  The exercise of any stock
options shall continue to be subject to the terms and conditions of the Stock
Agreements.

 

 

(c)                                  Benefits.  Employee’s health insurance benefits will
cease on July 31, 2005,
subject to Employee’s right to continue his health insurance under COBRA.  The
Company shall reimburse Employee for the payments he makes for COBRA coverage
for a period of six (6) months beginning August 1, 2005 and
concluding on January 31, 2006 (the “Benefits Period”).  The Company shall make these COBRA
reimbursement payments to Employee within ten (10) days following Employee’s
provision to the Company of documentation substantiating his payments for COBRA
coverage.  Employee’s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) ceased on the Termination Date; provided, however, that that if during the Benefits Period Employee
engages in Competition or breaches the covenants in this Agreement, all
payments pursuant to this subsection will immediately cease.  For purposes of this Agreement, “Competition” will mean Employee’s
direct or indirect engagement in
(whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), or ownership interest
in or participation in the financing, operation, management or control of, any
person, firm, corporation or business that competes with Company or is a
customer of the Company.

 

2.                                       Confidential Information.  Employee
shall continue to comply with the terms and conditions of the Confidentiality
Agreement, and maintain the confidentiality of all of the Company’s
confidential and proprietary information. 
Employee shall also return to the Company all of the Company’s property,
including all confidential and proprietary information, and all documents and information
that Employee obtained in connection with his employment with the Company, on
or before the Effective Date of this Agreement.

 

3.                                       Payment of Salary.  Employee
acknowledges and represents that the Company has paid all salary, wages,
bonuses, accrued vacation, housing allowances, relocation costs, interest,
severance, stock, stock options, outplacement costs, fees, commissions and any
and all other benefits and compensation due to Employee.

 

4.                                       Release of Claims.  Employee
agrees that the foregoing consideration represents settlement in full of all
outstanding obligations owed to Employee by the Company and its current and
former officers, directors, employees, agents, investors, attorneys,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations and assigns (the “Releasees”).  Employee, on his own behalf, and on behalf of
his respective heirs, family members, executors, agents, and assigns, hereby
fully and forever releases the Company and the other Releasees from, and agrees
not to sue concerning, any claim, duty, obligation or cause of action relating
to any matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee may possess arising from any omissions, acts or
facts that have occurred up until and including the Effective Date of this
Agreement including, without limitation:

 

(a)                                  any
and all claims relating to or arising from Employee’s employment with the
Company, or the termination of that employment;

 

(b)                                 any
and all claims relating to, or arising from, Employee’s right to purchase, or
actual purchase of, shares of Company stock, including, but not limited to, any
claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty
under applicable state corporate law, and securities fraud under any state or
federal law;

 

2

 

(c)                                  any
and all claims under the law of any jurisdiction, including, but not limited
to, wrongful discharge of employment; constructive discharge from employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

 

(d)                                 any
and all claims for violation of any federal, state or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964; the
Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967; the
Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the
Employee Retirement Income Security Act of 1974; the Worker Adjustment and
Retraining Notification Act; the Older Workers Benefit Protection Act; the
Family and Medical Leave Act; the Fair Credit Reporting Act; the California
Family Rights Act; the California Fair Employment and Housing Act; and the
California Labor Code;

 

(e)                                  any
and all claims for violation of the federal, or any state, constitution;

 

(f)                                    any
and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;

 

(g)                                 any
claim for any loss, cost, damage, or expense arising out of any dispute over
the non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Agreement; and

 

(h)                                 any
and all claims for attorney fees and costs.

 

The
Company and Employee agree that the release set forth in this section shall
be and remain in effect in all respects as a complete general release as to the
matters released.  This release does not
extend to any obligations incurred under this Agreement.

 

5.                                       Acknowledgement of Waiver of Claims Under ADEA.  Employee
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. 
Employee and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under the ADEA after the Effective
Date of this Agreement.  Employee
acknowledges that the consideration given for this waiver and release Agreement
is in addition to anything of value to which Employee was already
entitled.  Employee further acknowledges
that he has been advised by this writing that:

 

(a)                                  he
should consult with an attorney prior to executing this Agreement;

 

(b)                                 he
has up to twenty-one (21) days within which to consider this Agreement;

 

(c)                                  he
has seven (7) days following his execution of this Agreement to revoke
this Agreement;

 

3

 

(d)                                 this
ADEA waiver shall not be effective until the revocation period has expired;
and,

 

(e)                                  nothing
in this Agreement prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs for doing so, unless
specifically authorized by federal law.

 

6.                                       Civil Code Section 1542.  Employee
represents that he is not aware of any claims against any of the
Releasees.  Employee acknowledges that he
has been advised to consult with legal counsel and is familiar with the
provisions of California Civil Code Section 1542, which provide as
follows:

 

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.

 

Employee,
being aware of this code section, agrees to expressly waive any rights he may
have thereunder, as well as under any other statute or common law principles of
similar effect.

 

7.                                       No Pending or Future Lawsuits.  Employee
represents that he has no lawsuits, claims, or actions pending in his name, or
on behalf of any other person or entity, against the Company or any of the
other Releasees.  Employee also
represents that he does not intend to bring any claims on his own behalf or on
behalf of any other person or entity against the Company or any of the other
Releasees.

 

8.                                       Application for Employment.  Employee
understands and agrees that, as a condition of this Agreement, he shall not be
entitled to any employment with the Company, its subsidiaries, or any
successor, and he hereby waives any alleged right of employment or re-employment
with the Company, its subsidiaries or related companies, or any successor.

 

9.                                       Confidentiality.  The Parties acknowledge that
Employee’s agreement to keep the terms and conditions of this Agreement
confidential was a material factor on which the Company relied in entering into
this Agreement.  Employee agrees to use his
best efforts to maintain in confidence the contents and terms of this
Agreement, including the consideration for this Agreement (hereinafter
collectively referred to as “Settlement Information”).  Employee agrees to take every reasonable
precaution to prevent disclosure of any Settlement Information to third
parties, and agrees that there will be no publicity, directly or indirectly,
concerning any Settlement Information. 
Employee is permitted to take every precaution to disclose Settlement
Information only to those attorneys, accountants, governmental entities, and
family members who have a reasonable need to know of such Settlement
Information.  The Parties agree that if
the Company proves that Employee breached this Confidentiality provision, the
Company shall be entitled to an award of its costs spent enforcing this
provision, including all reasonable attorney fees associated with the
enforcement

 

4

 

action,
without regard to whether the Company can establish actual damages from
Employee’s breach.

 

10.                                 No Cooperation.  Employee agrees that he will not
act in any manner that might damage the business of the Company.  The Parties acknowledge that Employee’s
employment with any of the Company’s competitors shall not, in and of itself,
constitute a breach of this provision. 
Employee further agrees that he will not knowingly counsel or assist any
attorneys or their clients in the presentation or prosecution of any disputes,
differences, grievances, claims, charges, or complaints by any third party
against any of the Releasees, unless under a subpoena or other court order to
do so.  Employee agrees both to
immediately notify the Company upon receipt of any such subpoena or court
order, and to furnish, within three (3) business days of its receipt, a
copy of such subpoena or court order to the Company.  If approached by anyone for counsel or
assistance in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints against any of the Releasees,
Employee shall state no more than that he cannot provide counsel or assistance.

 

11.                                 Breach.  Employee acknowledges and agrees
that any breach of any provision of this agreement shall constitute a material
breach of the Agreement and shall entitle the Company immediately to recover
the consideration provided in Section 1 hereof.

 

12.                                 Non-Disparagement.  Employee
agrees to refrain from any defamation, libel or slander of the Company, or
tortious interference with the contracts and relationships of the Company.  All
inquiries by potential future employers of Employee will be directed to Joan
Vargas.  Upon inquiry, the Company will
only state the following: Employee’s last position and dates of Employment, and
any other information and/or documentation legally required to be disclosed.

 

13.                                 Non-Solicitation.  Employee agrees that for a period
of six (6) months immediately following the Effective Date of this
Agreement, Employee, directly or indirectly, whether as employee, owner, sole
proprietor, partner, director, member, consultant, agent, founder, co-venturer
or otherwise, will not: (i) solicit, induce or influence any person to
leave employment with the Company; or (ii) directly or indirectly solicit
business from any of the Company’s customers and users on behalf of any
business that directly competes with the principal business of the Company

 

14.                                 No Admission of Liability.  The
Parties understand and acknowledge that this Agreement constitutes a compromise
and settlement of disputed claims.  No
action taken by the Parties, previously or in connection with this Agreement,
shall be construed to be: (a) an admission of the truth or falsity of any
claims made, or (b) an admission by either party of any fault or liability
whatsoever to the other party or to any third party.

 

15.                                 Costs.  The Parties shall each bear their
own costs, expert fees, attorney fees and other fees incurred in connection
with the preparation of this Agreement.

 

16.                                 Arbitration.  The Parties agree that any and
all disputes arising out of, or relating to, the terms of this Agreement, their
interpretation, and any of the matters herein released, shall be subject to
binding arbitration in Santa Clara County before the American Arbitration
Association under its National Rules for the Resolution of Employment
Disputes.  The Parties agree that the 

 

5

 

prevailing
party in any arbitration shall be entitled to injunctive relief in any court of
competent jurisdiction to enforce the arbitration award.  The Parties agree that the prevailing party
in any arbitration shall be awarded its reasonable attorney fees and
costs.  The
Parties hereby agree to waive their right to have any dispute between them
resolved in a court of law by a judge or jury.  This section will not prevent either
party from seeking injunctive relief (or any other provisional remedy) from any
court having jurisdiction over the Parties and the subject matter of their
dispute relating to Employee’s obligations under this Agreement and the
agreements incorporated herein by reference.

 

17.                                 No Representations.  Each
party represents that it has had the opportunity to consult with an attorney,
and has carefully read and understands the scope and effect of the provisions
of this Agreement.  Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

 

18.                                 Severability.  In the event that any provision
in this Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable, or void, this Agreement shall continue in full
force and effect without said provision so long as the remaining provisions
remain intelligible and continue to reflect the original intent of the Parties.

 

19.                                 Entire Agreement.  This Agreement, the Confidentiality Agreement, and the Stock
Agreements represent the entire agreement and understanding between the
Company and Employee concerning the subject matter of this Agreement and
Employee’s relationship with the Company, and supersede and replace any and all
prior agreements and understandings between the Parties concerning the subject
matter of this Agreement and Employee’s relationship with the Company.

 

20.                                 No Oral Modification.  Any
modification or amendment of this Agreement, or additional obligation assumed
by either party in connection with this Agreement, shall be effective only if
placed in writing and signed by both Parties or their authorized
representatives.

 

21.                                 Attorney Fees.  In the event that either Party
brings an action to enforce or effect its rights under this Agreement, the
prevailing party shall be entitled to recover its costs and expenses, including
the costs of mediation, arbitration, litigation, court fees, plus reasonable
attorney fees incurred in connection with such an action.

 

22.                                 Governing Law.  This Agreement shall be governed
by the laws of the State of California, without regard for choice of law
provisions.

 

23.                                 Effective Date.  This Agreement is effective after
it has been signed by both parties and after eight (8) days have passed
following the date Employee signed the Agreement (the “Effective Date”).

 

24.                                 Counterparts.  This Agreement may be executed in
counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.

 

6

 

25.                                 Voluntary Execution of Agreement.  This
Agreement is executed voluntarily and with the full intent of releasing all
claims, and without any duress or undue influence by any of the Parties.  The Parties acknowledge that:

 

(a)                                  They
have read this Agreement;

 

(b)                                 They
have been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of their own choice or that they have voluntarily
declined to seek such counsel;

 

(c)                                  They
understand the terms and consequences of this Agreement and of the releases it
contains; and

 

(d)                                 They
are fully aware of the legal and binding effect of this Agreement.

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement on the dates set
forth below.

 

 

	
  Dated:

  	
   July 21, 2005

  	
   

  	
  By:

  	
  /s/ Gelu Voicu

  
	
   

  	
   

  	
   

  	
   

  	
  Gelu Voicu

  
	
   

  	
   

  	
   

  	
   

  	
  Catalyst Semiconductor, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   July 21, 2005

  	
   

  	
  By:

  	
  /s/ Barry Wiley

  
	
   

  	
   

  	
   

  	
  Barry Wiley, an individual

  

 

7

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