Document:

fs12012ex10iii_caldera.htm

Exhibit 10.3

 

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.  THE NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE COMMISSION.

 

LANL License Agreement No. 04-COI572

 

 

 

 

 

EXCLUSIVE PATENT LICENSE AGREEMENT

BETWEEN

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

AND

 

CALDERA PHARMACEUTICALS, INC.

 

 

 

 

 

OFFICIAL USE ONLY

May be exempt from public release under the Freedom of Information Act

(5 U.S.C. 552), exemption number and category:

[Exemption 5, Privileged Information]

 Department of Energy review required before public release

Name/Org: (Laura Barber, TT Division), Date: September 23, 2004

Guidance (if applicable) [DOE M 471.3-1]

 

  

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TABLE OF CONTENTS

 

	I. DEFINITIONS	 3
	2. GRANT 	 5
	3. SUBLICENSES	 5
	4. FEES AND ROYALTIES	 6
	5. DILIGENCE	 7
	6. PROGRESS REPORTS	 8
	7. BOOKS AND RECORDS	 8
	8. TERM OF THE LICENSE AGREEMENT	 9
	9. TERMINATION BY THE UNNERSITY	 9
	10. TERMINATION BY THE LICENSEE	 10
	11. PATENT PROSECUTION, MAINTENANCE AND DISCLAIMER	 10
	12. USE OF NAMES, TRADENAMES AND TRADEMARKS	 11
	13. WARRANTY AND DISCLAIMER   	 12
	14. INFRINGEMENT 	 13
	15. WAIVER	 14
	16. ASSIGNABILITY	 14
	17. INDEMNIFICATION	 14
	18. LATE PAYMENTS	 15
	19. NOTICES	 16
	20. FORCE MAJEURE	 16
	21. EXPORT CONTROL LAWS	 17
	22. PREFERENCE FOR UNITED STATES INDUSTRY	 17
	23. DISPUTE RESOLUTION  	 17
	24. PATENT MARKING	 17
	25. GOVERNING LAW 	 17
	26. SURVIVAL	 17
	27. GOVERNMENT APPROVAL OR REGISTRATION	 18
	28. DISPOSITION OF LICENSED PRODUCTS AND LICENSED SERVICES	 18
	29. MISCELLANEOUS  	 18
	APPENDIX A -PATENT RIGHTS  	 21
	APPENDIX B -FEES AND ROYALTIES  	 23
	FEES AND ROYALTIES    	 23
	APPENDIX C -MILESTONES	 26
	APPENDIX D -REPORT FORMAT	 27
	APPENDIX E -ROYALTY REPORT FORMAT 	 28

 

  

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EXCLUSIVE PATENT LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT is entered into by and between THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, a nonprofit educational institution and a public corporation of the State of California having its principal office at 1111 Franklin Street, Oakland, CA 94607, hereinafter referred to as the "University," and CALDERA PHARMACEUTICALS, INC., located at 903 Tewa Loop, Los Alamos, NM 87544 and incorporated in the State of Delaware, hereinafter referred to as the "Licensee," the parties to this License Agreement being referred to individually as a "Party," and collectively as "Parties."

 

The University conducts research and development at Los Alamos National Laboratory for the U.S. Government under Contract No. W-7405-ENG-36, hereinafter referred to as the "Contract," with the U.S. Department of Energy, hereinafter referred to as the "DOE."

Rights in inventions and technical data made in the course of the University's research and development at Los Alamos National Laboratory are governed by the terms and conditions of the Contract.

 

Certain TECHNOLOGY related to a Method for Detecting Binding Constants Using Micro X-Ray Fluorescence (MXRF) has been developed in the course of the University's research and development at Los Alamos National Laboratory.

 

The University desires that such TECHNOLOGY be developed and utilized to the fullest extent possible so as to enhance the accrual of economic and technological benefits to the U.S. domestic economy, and is therefore willing to grant an exclusive license to the Licensee in PATENT RIGHTS that protect the TECHNOLOGY.

 

The Licensee desires to obtain from the University certain exclusive rights for the commercial development, manufacture, use, and sale of the TECHINOLOGY.

 

Now, therefore, the Parties agree as follows:

 

1. DEFINITIONS

 

1.1 "TECHNOLOGY" means technical information, know-how, data and PATENT RIGHTS owned or controlled by the University and relating to a Method for Detecting Binding Constants Using Micro X-Ray Fluorescence (MXRF).

 

1.2 "PATENT RIGHTS" means the University’s rights arising from the U.S. and international patents or applications, including any continuing applications, divisionals, and reissues thereof(but not including continuations-in-part), and the patents issuing on applications, identified in Appendix A, incorporated herein by reference.

 

1.3 "LICENSED METHOD(S)" means any method, procedure or process whose use, but for the license granted to the Licensee herein, would constitute an infringement of a subsisting claim of a patent or patent application identified in Appendix A.

 

  

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1.4 "LICENSED PRODUCT(S)" means any article of manufacture, machine or composition of matter whose manufacture, importation, use, sale, or offer for sale, but for the license granted to Licensee herein, would constitute an infringement of a subsisting claim of a patent or patent application identified in Appendix A. LICENSED PRODUCTS do not include materials or chemicals developed by use of the method or apparatus claims in the PATENT RIGHTS.

 

1.5 "LICENSED INVENTION(S)" means any LICENSED PRODUCT or LICENSED METHOD.

 

1.6 "LICENSED SERVICE(S)" means services performed for third-party customers on a fee-for-services basis, where the data resulting from such services is provided to the customer for its use, and where the performance of such services would, but for the license rights granted, constitute an infringement of a subsisting claim of a patent or patent application identified in Appendix A herein. To the extent LICENSED SERVICES are performed in combination with other services, earned royalties shall only be based on net sales to the extent attributable to the LICENSED SERVICES, and only if such LICENSED SERVICES are separately invoiced.

 

1.7 "SALES" means disposing of a LICENSED PRODUCT by sale, lease, or other transaction for consideration or practicing LICENSED METHOD or providing a LICENSED SERVICE for consideration. SALES occur when consideration is received for disposition of LICENSED PRODUCT or practice of LICENSED METHOD or LICENSED SERVICE or when LICENSED PRODUCT is invoiced or delivered to a third person, whichever occurs first.

 

1.8 "SALES PRICE" means the cost of LICENSED SERVICE provided, or the invoice prices for SALES or, if LICENSED INVENTIONS are not sold but otherwise disposed of, the selling price at which products of similar kind and quality, sold in similar quantities as LICENSED INVENTIONS, are being offered for sale by the Licensee. Where such LICENSED PRODUCTS or LICENSED SERVICES are not currently being offered for sale by the Licensee, the SALES PRICE for purposes of computing royalties is the average selling price at which products of similar kind and quality, sold in similar quantities, are then currently being offered for sale by other companies. If such products are not currently sold or offered for sale by others, then the SALES PRICE, for purposes of computing royalties, is the Licensee's cost of manufacture determined by the Licensee's customary accounting procedures, plus the Licensee's standard mark-up.

 

1.9 "NET SALES" means the gross amounts for SALES at SALES PRICE by the Licensee and its sublicensee(s), less the following deductions where applicable: (a) SALES returns; (b) normal and customary allowances; (c) trade discounts; (d) SALES to the U.S. Government pursuant to Paragraph 4.2 (e) transportation charges, duties and tariffs only if separately stated on an invoice; but before the deduction of sales and excise taxes, costs of insurance, and agents' commissions; and (f) any sales or similar tax imposed on the buyer but required by law to be collected by the seller and remitted to the taxing authority and any gross receipts or similar tax imposed on or measured by the seller's receipts, but only if passed on to the buyer and separately stated as a tax on the invoice and only to the extent remitted to the taxing authority.

 

  

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2. GRANT

2.1 The University grants to Licensee, subject to Paragraphs 2.2 and 2.3, an exclusive License to make, have made, use, import, sell and offer to sell, and have sold LICENSED INVENTIONS and LICENSED SERVICES under the PATENT RIGHTS, with the right to sublicense others under the terms of Article 3.

 

2.2 Rights not expressly granted to the Licensee herein are expressly reserved to the University.

 

2.3 The University expressly reserves the right to use the TECHNOLOGY, including the right to make, have made, use and have used LICENSED INVENTIONS and LICENSED SERVICES for any noncommercial purpose, including, but not limited to, Cooperative Research and Development Agreements, Work for Others Agreements, and User Facility Agreements.

 

2.4 The U.S. Government has a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced throughout the world, for or on behalf of the U.S. Government; inventions covered by the University's PATENT RIGHTS, and has certain other rights under 35 U.S.C. 200-212 and applicable implementing regulations.

 

2.5 Under 35 U.S.C. 203 the U.S. Department of Energy has the right to require the Licensee to grant a nonexclusive, partially exclusive or exclusive license under the PATENT RI GHTS in any field-of-use to a responsible applicant or applicants in accordance with 48 CFR 27.304-1 (g).

 

2.6 The Licensee will make available to the University and will grant an irrevocable, paid-Up, royalty-free nonexclusive license to the University to make, have made, use, and have used for any purpose permitted under the Contract any improvements or developments to the TECHNOLOGY made by the Licensee. Such improvements can be used for any U.S. Government or non-commercial purpose and the University does not have the right to sublicense such improvements for any commercial purpose.

 

3. SUBLICENSES

 

3.1 The University grants to the Licensee the right to grant sublicenses to third parties to make, use, import, sell and offer to sell LICENSED INVENTIONS and LICENSED SERVICES in which the Licensee has current exclusive rights under this License Agreement.

 

3.2 Sublicenses granted under this clause must contain all of the conditions, restrictions and reservations of this License Agreement, except for loose provisions related to fees, and royalties, and must preserve the rights and reservations of the University and the U.S. Government existing under this License Agreement.

 

3.3 The Licensee must provide the University with a copy of each sublicense within thirty (30) days after its execution.

 

  

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3.4. The Licensee must pay to the University the payments prescribed in Appendix B. With respect to any sublicense, this obligation continues as long as a sublicense granted by the Licensee is in effect, and is an obligation of the Licensee whether or not royalty payments are actually received by the Licensee from its sublicensee(s).

 

3.5 The Licensee must deliver to the University copies of all progress and royalty reports delivered to the Licensee by the Licensee's sublicensee(s). With respect to any sublicense, this obligation continues as long as a sublicense granted by the Licensee is in effect.

 

3.6 Termination of this License Agreement by the Licensee automatically operates as an assignment by the Licensee to tile University of all Licensee's right, title and interest in and to each sublicense granted by the Licensee. If this License Agreement is terminated by either Party, any sublicensee(s) not in default of the terms and conditions or its sublicense agreement with the Licensee must make a written election to the University to continue such sublicense agreement as a license agreement with the University. The Licensee will give its sublicensee(s) written notice thirty (30) days prior to effective date of termination of this License Agreement. Sublicensee(s) must make such written election to the University within thirty (30) days thereafter. The University's obligations under any assigned sublicense are limited only to the University's obligations under this License Agreement.

 

4. FEES, ROYALTIES AND SHAREHOLDER EQUITY

 

4.1 In consideration for the rights, privileges and license granted under this License Agreement, the Licensee must pay to the University the fees, royalties, and equity payments specified in Appendix B, incorporated herein by reference. The acceptance of Licensee's common stock is subject to the final approval of the Office of the President of the University of California, and, in the event that such an approval is not granted, this Agreement shall remain in effect and Licensee and the University shall re-negotiate in good faith for a substitution of similar value for consideration. However, if such re-negotiations fail to produce a mutually agreeable substitution for the common stock within ninety (90) days of the date such negotiations commence, the Licensee will, within thirty (30) days thereafter, pay the University a cash payment equal to the value of the common stock calculated using the highest cost per share at which the common stock has previously been issued, failing which the University may immediately terminate this License Agreement without recourse to the notification procedure specified in Article 9.

 

4.2 Notwithstanding Paragraph 4.1 above, the Licensee has no obligation to pay royalties on any SALES of any LICENSED INVENTION or provision of LICENSED SERVICES to the U.S. Government or any agency thereof or any U.S. Government contractor that certifies that its purchase of the LICENSED INVENTION or LICENSED SERVICE is for or on behalf of the U.S. Government. The Licensee must not impose royalty charges on SALES of LICENSED INVENTION or LICENSED SERVICES to U.S. Government entities, and must refund to them any royalty collected on such SALES.

 

  

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4.3 Royalty payments are to be calculated based on NET SALES during the quarterly periods extending from January 1 through March 31 (first quarter), April 1 through June 30 (second quarter), July 1 through September 30 (third quarter), and from October 1 through December 31 (fourth quarter) of each year, for as long as this License Agreement remains in effect. The first royalty payment due under this License Agreement is based on NET SALES from the effective date of this License Agreement to the end of the quarterly period which includes such effective date. Subsequent royalty payments are due concurrently with the Royalty Reports, pursuant to Paragraph 6.2, on the following dates:

 

• May 31 for the calendar quarter beginning January 1 and ending March 31.

 

• August 31 for the calendar quarter beginning April 1 and ending June 30.

 

• November 30 for the calendar quarter beginning July 1 and ending September 30.

 

• February 28 for the calendar quarter beginning October 1 and ending December 31.

4.4 All payments due the University must be paid in U.S. currency to the University, at the address set forth in Paragraph 19. The Licensee must convert NET SALES invoiced in foreign currency into equivalent U.S. currency at the exchange rate for the foreign currency prevailing as of the last day of the reporting period, as reported in the Wall Street Journal®.

 

4.5 The Licensee will not be required to pay a royalty on its own internal use of the PATENT RIGHTS, or on sales of Therapeutics and Diagnostics identified, discovered, researched or developed (internally or for third parties as LICENSED SERVICES) through the practice of the PATENT RIGHTS.

 

4.6 The Licensee will not be required t0 pay royalties from sales of LICENSED PRODUCTS where such LICENSED PRODUCTS are manufactured and sold in countries in which the University does not have patent protection.

 

5. DILIGENCE

 

5.1 The Licensee will use its best efforts to bring one or more LICENSED INVENTIONS to market through a thorough, vigorous and diligent program for exploitation of the PATENT RIGHTS and to continue active, diligent marketing efforts for LICENSED INVENTIONS and LICENSED SERVICES throughout the life of this License Agreement.

 

5.2 To be in compliance with Paragraph 5.1, the Licensee must meet the Commercialization Milestones set out in Appendix C, incorporated herein by reference.

 

5.3 Article 5 is a material term of this Agreement, without which the license grant under Article 2 would not have been made, and the Licensee's failure to perform in accordance with Paragraphs 5.1 and 5.2 is grounds for the University to terminate this License Agreement pursuant to Paragraph 9.1.

 

  

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6. REPORTS

 

6.1 Progress Reports. The Licensee will submit to the University a semi-annual progress report covering activities by the Licensee related to the development and testing of all LICENSED INVENTIONS and the provision of LICENSED SERVICES and obtaining government approvals necessary for marketing them. These progress reports will be provided to the University to cover the progress of the research, development and commercialization activities, until NET SALES exceed Ten Million Dollars ($10,000,000). Progress reports shall comply with the report Format shown in Appendix D. Reports marked by the Licensee as proprietary financial or business information of the Licensee will be treated by the University as proprietary information.

 

Progress reports are due on the following dates:

 

• August 31 for the calendar half beginning January 1 and ending June 30.

 

• February 28 for the calendar half beginning July 1 and ending December 31.

6.2 Royalty Reports. The Licensee must submit quarterly royalty reports. Royalty reports shall comply with the report format shown in Appendix E. Reports marked by the Licensee as proprietary financial or business information of the Licensee will be treated by the University as proprietary information.

 

IF NO SALE, SUBLICENSE OR USE or LICENSED INVENTION OR PROVISION OF LICENSED SERVICES HAS BEEN MADE DURING A REPORTING PERIOD, A STATEMENT TO THIS EFFECT MUST BE SENT TO THE UNIVERSITY.

 

Royalty reports are due on the following dates:

 

• May 31 for the calendar quarter beginning January 1 and ending March 31.

 

• August 31 for the calendar quarter beginning April 1 and ending June 30.

 

• November 30 for the calendar quarter beginning July 1 and ending September 30.

 

• February 28 for the calendar quarter beginning October 1 and ending December 31.

7. BOOKS AND RECORDS

 

7.1 The Licensee must keep books and records according to Generally Accepted Accounting Principles, accurately showing all activities related to commercializing LICENSED INVENTIONS and providing LICENSED SERVICES by the Licensee and its sublicensee(s) under the terms of this License Agreement. Such books and records must be open to inspection and audit on a proprietary basis by representatives or agents of the University at reasonable times, but in no event more than once for each calendar year, for the purpose of verifying the accuracy of the royalty and progress reports and the royalties due. The Licensee may request that any such inspection and audit be conducted by an independent auditor, in which event the Licensee will pay the costs of the auditor.

 

  

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7.2 The fees and expenses of the University's representatives performing the inspection and audit will be borne by the University. However, if the audit discloses an error in royalties owed the University of more than Ten percent (10%) of royalties paid to the University, then the Licensee will pay the fees and expenses of said representatives within thirty (30) days after receipt of invoice.

 

7.3 The Licensee's books and records related to LICENSED INVENTIONS and LICENSED SERVICES must be preserved for at least five (5) years from the last date that the royalty payments were made.

 

8. TERM OF THE LICENSE AGREEMENT

 

8.1 This License Agreement will be effective upon execution by the Parties and the University's receipt of the License Issue Fee specified in Appendix B.

 

8.2 This License Agreement is in full force and effect from the effective date and remains in effect until the expiration of the last to expire of the patents included within the University's PATENT RIGHTS, unless sooner terminated by operation of law or by acts of either of the Parties in accordance with the terms of this License Agreement.

 

9. TERMINATION BY THE UNIVERSITY

 

9.1 If the Licensee fails to deliver to the University any report when due, or fails to pay any royalty or fee when due, or if the Licensee breaches any other material term of this Lice.nse Agreement, including, but not limited to, Article 5, DILIGENCE, the University may give written notice of default to the Licensee.  If the Licensee fails to cure the default within sixty (60) days from the date of delivery of the notice of default to the Licensee, the University has the right to terminate this License Agreement. This License Agreement will terminate upon delivery of written notice of termination to the Licensee. Termination does not relieve the Licensee of its obligation to pay any royalty or license fees due or owing at the time of termination and does not impair any accrued right of the University.

 

9.2 The Licensee must provide notice to the University of its intention to file a voluntary petition in bankruptcy or, where known to the Licensee, of another party's intention to file an involuntary petition in bankruptcy for the Licensee, said notice must be received by the University at least thirty (30) days prior to filing such petition. The University may terminate this License Agreement upon receipt of such notice at its sole discretion. The Licensee's failure to provide such notice to the University will be deemed a material, pre-petition, incurable breach or this License Agreement and the License Agreement will terminate automatically on the date of filing such voluntary or involuntary petition in bankruptcy.

 

  

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10. TERMINATION BY THE LICENSEE

 

10.1 The Licensee may terminate this License Agreement by giving written notice to the University. Such termination will be effective ninety (90) days from the date of delivery of the notice, and all the Licensee's rights under this License Agreement will cease as of that date.

 

10.2 Termination pursuant to this Article does not relieve the Licensee of any obligation or liability accrued by the Licensee prior to the effective date of termination or affect any rights of the University arising under this License Agreement prior to termination.

 

11. PATENT PROSECUTION, MAINTENANCE AND DISCLAIMER

 

11.1 The University will prosecute U.S. patent applications identified in Appendix A in the U.S. Patent and Trademark Office (USPTO), and will maintain U.S. patents identified in Appendix A, using counsel of its choice. The University will provide the Licensee, upon the Licensee's written request, with copies of relevant documentation relating to any such patent prosecution. The Licensee will hold such documentation in confidence in the same manner as if it were the Licensee's financial or business information or trade secrets.

 

11.2 The University may amend U.S. patent applications identified in Appendix A to include reasonable claims requested by the Licensee if such claims are required to protect commercial applications of the LICENSED INVENTION. Requested amendments will be introduced into the patent applications at the sole discretion of the University.

 

11.3 The Licensee understands and agrees that the prosecution of patent applications is uncertain and that certain claims therein may not be allowed or may receive narrower breadth of scope than when originally filed and that patent applications may not issue as a U.S. patent. Therefore, the University provides no representation or warranty that any of the patent applications identified in Appendix A will issue as a U.S. patent or that the scope of claims coverage of any resulting patent issuing thereon will have the same scope of claims coverage as when filed by the University or when reviewed by the Licensee.

 

11.4 The University agrees to provide written notification to the Licensee if any of the patent applications identified in Appendix A receive a final rejection, and further agrees to review recommendations from the Licensee and/or the Licensee's patent attorneys as to how to further the University's prosecution efforts in the USPTO. However, it will be at the University's sole discretion whether the University implements the prosecution advice of the Licensee and/or the Licensee's patent attorneys.

 

11.5 The University agrees to provide written notification to the Licensee if the University intends to terminate prosecution of any of the U.S. patent applications identified in Appendix A. Acceptance by the University of allowed claims in any of the U.S. patent applications and allowing the U.S. patent applications to proceed to issuance with these claims, or abandonment of any of the U.S. patent applications will be at the sole discretion of the University.  If the University elects to terminate prosecution of a U.S. patent application for a reason other than to accept allowed claims, the Licensee may elect in writing to assume responsibility for such prosecution in the name of the University at its own expense.

 

  

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11.6 The costs associated with U.S. and Patent Cooperation Treaty (PCT) cases will be borne by the University. The costs associated with international cases will be borne by the Licensee for each national case identified in Appendix A.

 

11.7 The Licensee must take the following actions to obtain and maintain international rights:

 

• The Licensee must diligently pursue, at the Licensee' s expense, in the name of the University and assigned to the University, the filing, prosecution, and maintenance of all international patent applications and patents listed in Appendix A using counsel of the Licensee's choice.

• The Licensee may request amendments to Appendix A, Foreign Patent Rights, in writing to the University, provided such requests are made at least ninety (90) days before any action on the cases affected by the requested amendment is due.

• The Licensee must provide the University with a copy of all foreign filing actions, including a copy of official records, correspondence, costs of such actions (including attorney's fees, filing fees, and translation expenses), and a cumulative sum of such costs to date, within thirty (30) business days from the date such action is taken by or received by the Licensee.

11.8 The obligation of the Licensee to prosecute and pay for costs of international patents and patent applications under this Article continues as long as this License Agreement remains in effect irrespective of when invoiced by the Licensee's foreign associates. The Licensee may terminate such prosecution and obligations with respect to any foreign case by giving ninety (90) days written notice to the University. The University may at its election continue prosecution of maintenance of such cases at the expense of the University and the Licensee will have no further right or license thereunder.

 

11.9 The failure of the Licensee to include countries in Appendix A for international patent rights will be considered an election by the Licensee not to secure such rights. The University has the right to seek such patent rights in any country for which a patent application has not been filed as of the effective date of this Agreement and for which the Licensee has declined international rights and may seek additional licensees of such rights.

 

12. USE OF NAMES, TRADENAMES AND TRADEMARKS AND NONDISCLOSURE OF AGREEMENT TERMS

12.1 Nothing contained in this License Agreement confers any right to use in advertising, publicity, or order promotional activities any name, tradename, trademark, or other designation of either Party hereto or the Department of Energy or Los Alamos National Laboratory (including any contraction, abbreviation, or simulation of any of the foregoing). Unless required by law, the use of the name "University of California," "The Regents of the University of California," or the name of any facility or campus of the University of California is expressly prohibited.

 

  

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12.2 The University may disclose to third parties the existence of this License Agreement and the extent of the grant in Article 2, but will not disclose information identified as proprietary by the Licensee herein, if any, except where the University is required to release information under either the California Public Records Act or other applicable law. A decision to release information under applicable law will be at the sole discretion of the University.

 

12.3 The Licensee may disclose to third parties the existence of this License Agreement and the terms and conditions to the extent determined appropriate by the Licensee.

 

12.4 The University acknowledges that the Licensee considers Appendices B and C of this License Agreement to contain proprietary business information of the Licensee and Appendices B and C are marked as such. All other portions of this License Agreement are non­proprietary.

 

13. WARRANTY AND DISCLAIMER

 

l3.1 The University warrants that it is the lawful owner of the PATENT RIGHTS listed in Paragraph 1.2.

 

THE TECHNOLOGY IS PROVIDED AS IS WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. NEITHER THE UNIVERSITY NOR THE U.S. GOVERNMENT MAKES ANY REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS, LICENSED METHODS, OR LICENSED SERVICES WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT. IN NO EVENT WILL THE UNIVERSITY OR THE U.S. GOVERNMENT BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF LICENSED PRODUCTS OR LICENSED METHODS OR PROVISION OF LICENSED SERVICES.

13.2 Nothing in this License Agreement will be construed as:

 

a. a warranty or representation by the University or the U.S. Government as to the validity or scope of the University's PATENT RIGHT;

 

b. an obligation to bring or prosecute actions or suits against third parties for patent infringement, except as provided in Article 14;

 

c. conferring by implication, estoppel, or otherwise any license or rights under any patents of the University or the U. S. Government other than the University's PATENT RIGHTS; or

d. an obligation by the University or the U.S. Government to furnish any know-how, technical assistance, or technical data other than as stated in Article 2 above.

 

13.3 NEITHER THE UNITED STATES NOR THE UNITED STATES DEPARTMENT OF ENERGY, NOR THE UNIVERSITY NOR ANY OF THEIR EMPLOYEES, AGENTS OR CONTRACTORS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, OR ASSUMES ANY LEGAL LIABILITY OR RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, OR USEFULNESS OF ANY SOFTWARE, INFORMATION, APPARATUS, PRODUCT, OR PROCESS DISCLOSED, OR REPRESENTS THAT ITS USE WOULD NOT INFRINGE PRIVATELY OWNED RIGHTS.

 

  

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14.  INFRINGEMENT

 

14.1 In the event that the Licensee learns of the substantial infringement of any PATENT RIGHTS under this License Agreement, the Licensee will notify the University in writing and will provide the University with reasonable evidence of such infringement. The Licensee will not notify a third party of the infringement of any PATENT RIGHTS without first obtaining consent of the University, which consent will not be unreasonably withheld. The Parties will use their best efforts in cooperation with each other to terminate such infringement without litigation.

 

14.2 If the Licensee desires that PATENT RIGHTS be enforced against infringers, the Licensee may request permission from the University to file suit against the infringement of PATENT RIGHTS or may request that the University take legal action against the infringement of PATENT RIGHTS. Such request must be made in writing and must include reasonable evidence of such infringement and damages to the Licensee. If the infringing activity has not been abated within ninety (90) days following the receipt of such request, the University will have the right to elect to

 

a. commence suit on its own account;

b. commence suit jointly with the Licensee; or

c. refuse to participate in such suit.

The University will give notice of its election in writing to the Licensee by the end of the 10th day after receiving such request from the Licensee. The Licensee may thereafter bring suit for patent infringement if and only if the University elects not to commence suit and if the infringement occurred during the period and in a jurisdiction where the Licensee had exclusive rights under this License Agreement. In the event, however, the Licensee elects to bring suit in accordance with this Paragraph, the University may thereafter join such suit at its own expense. Both parties agree to be bound by the outcome of a suit for patent infringement through the pendency of such a suit under this Paragraph.

 

14.3 Any legal action under this Article will be at the expense of the Party initiating the legal action. The Licensee will bear all expenses of any action brought by the Licensee under this Article, including attorney fees and costs of both Parties in the defense of any declaratory judgment actions or counter-claims brought by the infringer. If legal action is brought by the Licensee, the University is entitled to twenty-five percent (25%) of any damage recovery based on lost profits of the Licensee or a reasonable royalty. Legal action brought jointly by the University and the Licensee and fully participated in by both will be at the joint expense of the Parties and all recoveries will be shared jointly by them in proportion to the share of expenses paid by each.

 

  

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14.4 Each Party will cooperate with the other in proceedings instituted hereunder, provided expenses arc borne by the Party bringing suit. Litigation will be controlled by the Party bringing suit, except that the University will control the litigation if brought jointly. The University may be represented by its choice of counsel in any suit brought by the Licensee.

 

14.5 Neither Party will settle or compromise any suit without the other Party's written consent.

 

15. WAIVER

 

15.1 No waiver by either Party of any breach or default of any of the covenants or terms of this License Agreement will be deemed a waiver as to any prior, subsequent and/or similar breach or default.

 

16. ASSIGNMENT AND CONTROLLING INTEREST

 

16.1 This License Agreement may be assigned by the University, but is personal to the Licensee and assignable by the Licensee only with the prior written consent of the University, which will not be withheld unreasonably.

 

16.2 In the event that a controlling interest in the Licensee is obtained by an entity different than the entity having a controlling interest on the effective date of this License Agreement, the University may terminate this License Agreement at its discretion, which discretion will not be exercised unreasonably. The Licensee will notify the University ninety (90) days prior to any such change in controlling interest.

17. INDEMNIFICATION

 

17.1 The Licensee will, and will require its sublicensee(s) to indemnify, hold harmless and defend the University and the U.S. Government, their officers, employees, and agents; the sponsors of the research that led to the TECHNOLOGY; the inventors of any invention covered by patents or patent applications in PATENT RIGHTS (including the LICENSED PRODUCT LICENSED METHOD, and LICENSED SERVICES contemplated thereunder); and their employers against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license or any sublicense.  This indemnification will include, but will not be limited to, any product liability.

 

17.2 The Licensee, at its sole cost and expense, will insure its activities in connection with the work under this License Agreement and obtain, keep in force, and maintain insurance or an equivalent program of self insurance as follows:

 

a. Comprehensive or Commercial Form General Liability Insurance (contractual liability included) with limits as follows:

 

Each Occurrence $5,000,000 Products/Completed Operations Aggregate $5,000,000 Personal and Advertising Injury $5,000,000 General Aggregate (commercial form only) $5,000,000

 

  

14

  

 

b. It should be expressly understood, however, that the coverages and limits referred to under the above will not in any way limit the liability of the Licensee. Within thirty (30) days of receiving a written request from the University, the Licensee will furnish the University with certificates of insurance or evidence of self-insurance documenting compliance with all requirements. Such certificates will:

 

i. Provide for 30 day advance written notice to the University of any modification;

 

ii. Indicate that the University has been endorsed as an additional insured under the coverages referred to under the above; and

 

iii. Include a provision that the coverages will be primary and will not participate with or be excess over any valid and collectable insurance or program of self-insurance carried or maintained by the University.

 

17.3 The University will promptly notify the Licensee in writing of any claim or suit brought against the University or the U.S. Government in respect of which the University or the U.S. Government intend to invoke the provisions of this Article. The Licensee will keep the University informed on a current basis of its defense of any claims pursuant to this Article.

 

18. LATE PAYMENTS

 

18.1  In the event royalty payments or fees are not received by the University when due, the Licensee will pay to the University the amount due plus simple interest calculated at the rate of 0.83 percent (0.83%) per month from the date the payment or fee was due to the date payment is actually made.

 

19. NOTICES

 

19.1 Any notice or payment required to be given to either Party will be deemed to have been properly given and to be effective on the date of

 

a.           delivery, if delivered in person;

 

b.           mailing, if mailed by first-class certified mail;

 

c.           mailing, if mailed by any express carrier service that requires the recipient to sign the documents demonstrating the delivery of such notice or payment; or

 

d.           transmission by facsimile with confirmation of transmission

 

to the respective addresses given below:

 

  

15

  

 

In the case of the Licensee:

 

Caldera Pharmaceuticals, Inc.

903 Tewa Loop

Los Alamos, NM 87544

Attention: Benjamin P. Warner

Telephone: (505) 412-2345

Email address: wamer@alwll.mit.edu

In the case of the University:

Los Alamos National Laboratory

Technology Transfer Division

P.O. Box 1663, Mail Stop C334

Los Alamos, New Mexico 87545

Attention: License Compliance Officer

Telephone: (505) 665-9091

Facsimile: (505) 665-0154 or (505) 665-6 127

 

For Courier Service to the University:

 

Los Alamos National Laboratory

Technology Transfer Division

Bikini Atoll Road, Bldg. SM-30

Los Alamos, NM 87545

Attention: License Compliance Officer

Telephone: (505) 665-9091

For payments due the University:

Los Alamos National Laboratory

Technology Transfer Division

P.O. Box 462

Los Alamos, NM 87544

Attention: License Compliance Officer

20. FORCE MAJEURE

 

20.1 Neither Party is responsible for delay or failure in performance of any of the obligations imposed by this License Agreement if the failure is caused by fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil, court order or government interference, civil commotion, riot, war, or by any cause of like or unlike nature beyond the control and without fault or negligence or either Party.

21. EXPORT CONTROL LAWS

21.1 Licensee acknowledges and understands that the export of commodities and/or related technical data from the United States may require an export license from the Bureau of Export Administration, and that failure to obtain such export license may result in criminal liability under federal law. Failure of Licensee to comply with this requirement is a material breach of this Agreement for which the University has tile right to terminate this Agreement pursuant to paragraph 9. 1.

 

  

16

  

 

22. PREFERENCE FOR UNITED STATES INDUSTRY

 

22.1 LICENSED PRODUCTS or products produced through the use of LICENED METHOD sold in the United States must be manufactured substantially in the United States.

 

23. DISPUTE RESOLUTION

 

23.1 The individuals designated in Paragraph 19 agree to exert their best efforts to resolve disputes arising from this License Agreement. In the event that any claim or controversy arising out of this License Agreement cannot be resolved by the aforestated individuals or their successors, such matter will immediately be referred jointly to the respective management of each Party who will meet and undertake to resolve the matter. In the event these individuals fail to resolve the matter within sixty (60) days of referral of the matter to them, either Party may give the other Party notice of its intention to seek other recourse.

 

24. PATENT MARKING

 

24.1 The Licensee agrees to mark, in accordance with the applicable patent marking statute, all LICENSED PRODUCTS, and their containers, which have been made, used, sold or otherwise transferred to a third party, under the terms of this License Agreement.

 

25. GOVERNING LAW

 

25.1 THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that would direct the application of the laws of another jurisdiction.

 

26. SURVIVAL

 

26.1 When this License Agreement expires or is terminated in accordance with the terms hereof, the following Articles will survive any expiration or termination:

 

Article 1                      DEFINITIONS

Article 3                      SUBLICENSES

Article 7                      BOOKS AND RECORDS

Article 11                      PATENT PROSECUTION, MAINTENANCE AND DISCLAIMER

Article 12                      USE OF NAMES, TRADENAMES, AND TRADEMARKS

Article 13                      WARRANTY AND DISCLAIMER

 

  

17

  

 

Article 17                      INDEMNIFICATION

Article 18                      LATE PAYMENTS

Article 26                      SURVIVAL

 

27. GOVERNMENT APPROVAL OR REGISTRATION

 

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

 

28. DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATlON

28.1 Upon termination of this License Agreement, the Licensee will have the privilege of selling all previously made or partially made LICENSED PRODUCTS and completing all previously commenced LICENSED SERVICES, but no more, within a period of 120 days. The sale of such LICENSED PRODUCTS and LICENSED SERVICES will be subject to the terms of this License Agreement including, but not limited to, the payment of royalties based on the NET SALES of LICENSED PRODUCTS and LICENSED SERVICE at the rates and at the times provided herein and the rendering of reports in connection therewith.

 

29. MISCELLANEOUS

 

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

 

29.2 No amendment or modification of this License Agreement is binding on the Parties unless made in a writing executed by duly authorized representatives of the Parties.

 

29.3 This License Agreement, with the attached Appendices, embodies the entire understanding of the Parties and supersedes all previous communications, representations, or understandings, either oral or written, between the parties relating to this License Agreement.

 

29.4 In the event anyone or more of the provisions of this License Agreement is held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability will not affect any other provisions hereof, and this License Agreement will be construed as if such invalid or illegal or unenforceable provisions had never been part of this License Agreement.

 

29.5 This License Agreement has been negotiated and prepared jointly by both Parties and shall not be construed for or against any Party.

 

  

18

  

 

IN WITNESS WHEREOF, both the University and the Licensee have executed this License Agreement, in duplicate originals, by their respective officers on the day and year hereinafter written.

 

 

	THE REGENTS OF THE UNIVERSITY OF CALIFORNIA	 
	 	 	 
	
By: 

	/s/ Duncan W. McBranch	 
	 	Duncan W. McBranch, Division Leader	 
	 	Technology, Transfer Division	 
	 	 	 
	Date:	9/6/05	 
	 	 	 
	 	 	 
	CALDERA PHARMACEUTICALS, INC.	 
	 	 	 
	By: 	/s/  	 
	Printed Name: 	Benjamin Peter Warner	 
	Title:	CEO 	 
	 	 	 
	Date:	9/8/05	 
	 	 	 

 

  

19

  

 

APPENDIX A

 

PATENT RIGHTS

I. U.S. Patent Rights

 

a. DOE S-94,661 -  "Method for Detecting Binding Events Using Micro X-Ray Fluorescence Spectrometry," Benjamin P. Warner et al., U.S. Patent Application No. 09/859,701, filed May 16, 2001.

 

b. DOE S-99,911 -  "Flow Method and Apparatus for Screening Chemicals Using Micro X-Ray Fluorescence," George J. Havrilla et al., U.S. Patent Application No. 10/206,524, filed July 25, 2002.

 

c. DOE S-l00, 585 -  "Method and Apparatus for Detecting Chemical Binding," Benjamin P. Warner et al., U.S. Patent Application No. 10/62 1,825, filed July 16, 2003.

 

d. DOE S-102,376 -   "Drug Development and Manufacturing," Benjamin P. Warner et al., U.S. Patent Application No. 10/880,388, filed June 29, 2004.

2. International Patent Rights

 

a. DOE S-94,661 -   "Method for Detecting Binding Events Using Micro X-Ray Fluorescence Spectrometry," Benjamin P. Warner et al., U.S. Patent Application No. 09/859,701, filed May 16, 2001I. International Patent protection is not available for this case.

 

b. DOE S-99,91J - "Flow Method and Apparatus for Screening Chemicals Using Micro X-Ray Fluorescence," George J. Havrilla et al., U.S. Patent Application No. 101206,524, filed July 25,2002. PCT Application 03/20 103 was filed on June 24, 2003. The Licensee elects international patent prosecution in the following countries:

	
Country

	
Application No.

	
Filing Date

	
Japan

	  	  
	
European Patent Office

	  	  
	  	  	  

 

  

20

  

 

c. DOE S-J 00,585 -  "Method and Apparatus for Detecting Chemical Binding," Benjamin P. Warner et. al., U.S. Patent Application No. 10/621,825, filed July 16, 2003. PCT Application 04119678 was filed on June 16, 2004. The Licensee elects international patent prosecution in the following countries:

	
Country

	
Application No.

	
Filing Date

	
Japan

	  	  
	
European Patent Office

	  	  
	  	  	  

 

d. DOE S-1O2,376 -  "Drug Development and Manufacturing," Benjamin P. Warner et al., U.S. Patent Application No. 10/880,388, filed June 29, 2004. A PCT Application may be filed on or before July 16, 2005. The Licensee elects international patent prosecution in the following countries:

 

	
Country

	
Application No.

	
Filing Date

	
Japan

	  	  
	
European Patent Office

	  	  
	  	  	  

 

  

21

  

 

APPENDIX B FEES AND ROYALTIES

 

 

I. Fees

 

a. A non-refundable License Issue Fee of Forty thousand U.S. Dollars ($40,000.00), to be paid upon execution of the License Agreement.

 

b. Annual License Fees, as cash payments, are due and payable according to the following schedule:

 

	
February 28, 2006

	
$25,000.00

	
February 28, 20 15

	
$50,000.00

	
February 28, 2007

	
$25,000.00

	
February 28, 20 16

	
$50,000.00

	
February 28, 2008

	
$25,000.00

	
February 28, 2017

	
$50,000.00

	
February 28, 2009

	
$25,000.00

	
February 28, 20 18

	
$50,000.00

	
February 28, 2010

	
$25,000.00

	
February 28, 20 19

	
$50,000.00

	
February 28, 20 II

	
$50,000.00

	
February 28, 2020

	
$50,000.00

	
February 28, 2012

	
$50,000.00

	
February 28, 202 1

	
$50,000.00

	
February 28, 20 13

	
$50,000.00

	
February 28, 2022

	
$50,000.00

	
February 28, 20 14

	
$50,000.00

	  	  

The University will credit the Annual License Fee for a particular calendar year against any royalties earned during that same year. After the royalties accumulated during a given year equals the Annual License Fee previously paid to the University on February 28th of that same year, Licensee shall consider such credit as having been fully applied and shall pay actual royalties earned for the remainder of that same calendar year.

XXXX

 

 

 

XXXX - redacted pursuant to a confidentiality request with the United States Securities and Exchange Commission

 

  

22

  

 

d. Patent Issue Fees of Twenty thousand U.S. Dollars ($20,000.00) per issuance of each U.S. Patent listed in Appendix A (PATENT RIGHTS), payable to the University within thirty (30) days after receiving official notice from the University regarding the issuance of each U.S. patent.

2. Royalties

 

The Licensee will pay the University a royalty of two percent (2.0%) of NET SALES during the term of this License Agreement.

 

Licensee's sublicensees will pay the University a royalty of two percent (2.0%) of NET SALES during the term of this License Agreement.

3. Shareholder Equity

a. As partial consideration for this Agreement, Licensee will issue to The Regents of the University California ("University") shares of Founders Stock, equivalent in value to three percent (3.0%) of the outstanding common shares of Caldera Pharmaceuticals Inc.'s Founders Stock available as of the effective date of this License Agreement. Such shares shall be convertible to publicly tradable shares in the event that Caldera Pharmaceuticals, Inc. completes an Initial Public Offering. Final acceptance by the University of said equity is conditioned upon receipt and acceptance of any Licensee shareholders' agreement and other relevant information the University deems necessary in order to make a properly informed decision in accordance with the University's applicable guidelines for accepting equity in University technology licensing transactions. Upon final acceptance of said equity, the University reserves the right and sole discretion to direct Licensee to distribute the University's inventors' shares directly to the respective inventors or to the University's Office of the Treasurer that is responsible for managing University equity transactions.

 

b. From and after the effective date of this Agreement, Licensee agrees that University shall be entitled to all rights of a holder of common stock in Licensee, protected from dilution to the same extent that each other holder of shares as of the effective date (referred to for convenience as a "founder") is protected from dilution and shall suffer no greater dilution than any other founder who holds common stock of the Licensee. Licensee further agrees that the relative proportionate ownership of the University shall not be diluted to less than three percent (3.0%) of the total

Number of outstanding shares until such time as Caldera Pharmaceuticals, Inc.

completes an aggregate of $20 million of equity (funds-in) financing.

 

XXXX

 

XXXX - redacted pursuant to a confidentiality request with the United States Securities and Exchange Commission

 

  

23

  

 

APPENDIX C

 

COMMERCIALIZATION MILESTONES

 

 

XXXX

 

XXXX - redacted pursuant to a confidentiality request with the United States Securities and Exchange Commission

 

  

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APPENDIX D

 

PROGRESS REPORT FORMAT

 

	Date of Report	 	 	 	 
	Reporting Period:	[ ] 	January 1 – June 30	 	 
	 	[ ] 	July 1 – December 31	 	 

 

I. Development:

 

• Progress towards commercialization and milestones (Appendix C)

• Problems encountered

• Pre-commercialization marketing efforts

• Any shift in time-line from original business plan

• Expected launch date

• Any improvements, new patents, derivative works, etc. arising from the work

2. Commercialization:

 

• First commercial sale in the U.S.

• First commercial sale outside the U.S.

• Sales, production, provision of Licensed Services or other royalty-generating activity

• Royalty calculations and royalties due

3. Continuing:

 

• Continued efforts in evolving the product/service

• Improvements

• Sublicenses

• Foreign registrations, licenses, commercialization, etc.

• Any problems which would potentially effect the License Agreement

• Any infringements of intellectual properly (as provided in the License Agreement)

• Any potential litigation involving the licensed intellectual property

4. Of General Interest:

 

• Promotional material, news releases, etc.

• Company annual reports

• Testing activity, scientific publications

• Any feedback, positive or negative

• Suggestions

  

25

  

 

APPENDIX E

 

ROYALTY REPORT FORMAT

 

Licensee: _______________ Agreement No.: _______

 

Period Covered:                    [ ]           January 1 -March 31

[ ]           April 1 -June 30

[ ]           July 1 -September 30

[ ]           October I -December31

Approved By: ______________    Date:                             

 

 

Note: If license covers several major product lines or sublicenses, please prepare a separate report for each product line or sublicense. Then combine all product lines or sublicenses into a summary report. Under a separate coversheet indicate any fee, annual license fee and royalties in excess of annual fees due the University. All reports must be submitted in U.S. Dollars.

 

 

• The use, manufacture or sale of LICENSED INVENTIONS or the provision of LICENSED SERVICES by the Licensee and, if permitted by License Agreement, the number of LICENSED INVENTIONS sold or LICENSED SERVICES provided by the Licensee's sublicensee(s).

•• As stipulated in Paragraph 4.4 of the License Agreement.

 

 

26fs12012ex10iv_caldera.htm

Exhibit 10.4

PROJECT PARTICIPATION AGREEMENT

This Project Participation Agreement (this "Agreement") is made and entered into as of September 21, 2006 by and between the Incorporated County of Los Alamos, an incorporated County of the State of New Mexico, (the "County"), and Caldera Pharmaceuticals Inc., a Delaware corporation qualified to do business in New Mexico, ("Caldera").

RECITALS

THE PARTIES HERETO enter into this Agreement on the basis of the following facts, understandings, and intentions:

A. The County has adopted Ordinance No. 501, An Ordinance Establishing an Economic Development Plan which ordinance was enacted pursuant to the express authority conferred upon municipalities by the Local Economic Development Act 5-10-1 to 5-l0-13, NMSA 1978) to allow the public support of economic development to foster, promote, and enhance local economic development efforts through the use of project participation agreements with qualifying entities while continuing to protect against the unauthorized use of public money and other public resources.

B. The County has adopted Ordinance No. 512 providing for the public support of Caldera (the "Project") in the form of a loan (the "Project Loan") in the principal amount not to exceed Two Million Two Hundred Thousand Dollars ($2,200,000) for construction of a building (the "Building") and purchase of equipment (the "Equipment“).

C. Caldera's economic activity complies with the local Economic Development Plan adopted by the County on May 3, 2005, by providing a public benefit to the residents of the County in the following respects:

(1) Caldera proposes to establish its financial and management stability by procurement of a matching investment from qualified sources and utilization of a Chief Executive Officer with experience in spin-off technology companies.

(2) The cost-benefit to the community of the Project and the activity of Caldera is demonstrated by a total investment of two times the County's public support in slightly over one year, and a total investment of five times the County's public support in slightly over two years, with a projected investment of eighteen times the County's public support in five years.

(3) Caldera‘s economic activity meets the objective of economic diversification by creating a biotech industry for which there is no competing biotech industry in the County, generating $10-25 million dollars of Research and Development Spending from out-of-state prospective customers or financial backers and by selling to pharmaceutical companies and other customers.

(4) Ca1dera's economic activity meets the objective of expansion of the tax base by generating increased taxes from the purchase of equipment within the County.

(5) Ca1dera‘s economic activity meets the objective of increased job and income opportunities by proposing to create 100 primary and 250 secondary jobs.

(6) Caldera's economic activity meets the objective of recruitment of businesses that utilize the County's science and technology assets and which complement and support the Los Alamos National Laboratory by expanding the scientific employment base.

(7) Caldera is a private business that provides a biotech laboratory space and contract research and development for the pharmaceutical industry. Caldera enhances the ability of County businesses to operate and expand by encouraging technology spin-offs, and is seeking to build, expand, or relocate facilities by building a commercial biotech laboratory.

 

  

1

  

 

(8) Caldera is a research and development and high technology firm engaged in pharmaceutical development that enhances the technology base of the County by retaining scientists who might otherwise not find employment within the County.

(9) Caldera enhances the exporting capacity of companies or reduces the net level of imports in the local economy by creating a customer base and use of financial backers from outside New Mexico.

(10) Caldera has obtained commitments for four million five hundred thousand dollars ($4,500,000), consisting of an equity investment agreement of two million five hundred thousand dollars ($2,500,000) and a research and development contract for two million dollars ($2,000,000).

D. The County and Caldera have entered into a Loan Agreement (the "Loan Agreement") and a Promissory Note (the "Promissory Note"), of even date herewith for the Project Loan.

E. As a condition precedent to its receipt of public assistance in the form bf the Project Loan, Caldera is required to execute this Project Participation Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and promises herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Contributions of the County:

(a) Investment. The County will contribute an amount not to exceed Two Million Two Hundred Thousand Dollars ($2,200,000) in the form of a loan (the "Project Loan"), the proceeds of which shall be used to secure and repay a construction loan for construction of the Building and purchase of the Equipment for use in Los Alamos County. Prior to commencing construction of the Building, Caldera shall submit to the County building designs and constructions specifications for the County's review and approval.

(b) Disbursement. Disbursement of the Project Loan shall be as follows:

(i) The County shall release to Caldera to reimburse Caldera for Equipment purchased by Caldera, upon receipt of the equipment by Caldera and upon Caldera providing serial numbers and product descriptions of all assets to the County.

(ii) The County shall release to Caldera the Project Loan on a schedule agreed to in the Construction Agreement (as defined in the Loan Agreement) and approved by the County.

(c) Contingencies. The disbursement of the Project Loan described in this section shall be contingent upon the following:

(i) Caldera shall obtain secured and non-revocable financing commitment(s) from sources other than the County in the amount of Four Million Four Hundred Thousand Dollars ($4,400,000) prior to the disbursal of any funds.

(ii) Caldera shall enter into legal and binding employment contracts with Benjamin Warner as President and Chief Executive Officer for a minimum of three years attached hereto as Exhibit A (provided, however, that the financial terms may be redacted). Caldera may replace Benjamin Warner as President and Chief Executive Officer, provided that Caldera provides a new President and Chief Executive Officer acceptable to the County within ninety (90) days after the replacement of Benjamin Warner.

 

  

2

  

 

2. Contributions of Caldera.

(a) First Additional Investment. No later than the end of one year from the effective date of this Agreement, Caldera shall have realized private investment and related economic activity of Four Million Four Hundred Thousand Dollars ($4,400,000).

(b) Second Additional Investment. No later than the end of three years from the effective date of this Agreement, Caldera shall have realized private investment and related economic activity of Eleven Million Dollars ($11,000,000).

(c) "Private Investment and Related Economic Activity”. As used above, "private investment and related economic activity" shall include all financing of Caldera, including equity investments, loans, gross receipts taxes paid by Caldera in the County; property taxes paid by Caldera in the County; and direct expenditures by Caldera including employee Wages and benefits for employees domiciled in the County or working in the County but not including building construction expenditures paid for directly or indirectly by the Project Loan.

(d) Employment. Caldera shall create the following number of Full Time Equivalent jobs (i.e., 2080 hours annually each, employed and salaries paid directly by Caldera) by the anniversary dates of the signing of this Agreement:

	  	
1st

	
2dn

	
3rd

	
4th

	
5th

	
6th

	
7th

	
Total FTE

	
1

	
15

	
27

	
40

	
54

	
75

	
100

(i) Promotion. Caldera shall make good faith efforts to promote Los Alamos County as a good and desirable place to live and Work.

3. Performance Review and Measurement. Caldera shall, within 90 days of the end of each year during the term of this Agreement, provide the County with a written report of its progress in achieving the performance measures required by Section 2 ("Contributions of Caldera") above (collectively, the "Performance Measures"). Thereafter, for each year during the term of this Agreement, Caldera may at the sole option of the County Administrator's Office be subject to an annual performance review and audit conducted by the County Administrator's Office or its designee to evaluate whether Caldera has achieved the Performance Measures. Caldera shall fully cooperate in the performance review and audit process by making all of its personnel, employees, and books and records available to the County at all reasonable times upon request. Caldera shall be permitted to submit credible proof of "private investment and related economic activity" to demonstrate that it has met the Performance Measures. All information regarding Caldera shall be treated in confidence to the fullest extent allowed by law; provided, however, that nothing in this Agreement shall be construed or permit or require the County to circumvent, obstruct, or fail to comply with the New Mexico Inspection of Public Records Act, 14-2-l et seq. (NMSA 1978).

4. Security. Caldera shall furnish the following security for the Project Loan:

(a) Building. The Building will be constructed within the County. Prior to construction, Caldera shall submit its plans to the County for the County's review and approval. Approval by the County pursuant to this subsection shall only constitute approval pursuant to this Agreement and shall neither imply nor constitute approval under applicable statutes, ordinances, and regulations, all of which shall remain the obligation of Caldera. The County, at its option, may require Caldera to enter into additional agreements to secure the County's interest in the Building.

(b) Equipment. Caldera shall grant a security interest, in a form and manner acceptable to the County, in all the Equipment paid for in whole or in part with the Project Loan. Such security interest shall be superior to any other security interests in the Equipment. Caldera shall not remove the Equipment from the County Without the County's written approval.

5. Termination and Recovery of Investment.

(a) Events of Default. The following events shall constitute events of default under this Agreement:

 

  

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(i) Failure of Caldera to fulfill, in Whole or in part, any Performance Measure or other obligation required by this Agreement.

(ii) Cessation by Caldera of its management or its research and development operations in the County, or reduction of either of those operations in the County to a level below the Performance Measures.

(iii) Filing by Caldera of a petition, case, proceeding, or other action against the County as a debtor under any debtor relief law or seeking appointment of a receiver, trustee, custodian, or liquidator of Caldera, the Building, or any of the Equipment.

(iv) The abandonment by Caldera of all or a portion of the Building.

(v) The discovery by the County that any representation, warranty, or covenant made by Caldera in connection with this Agreement, the Loan Agreement, or the Promissory Note was or has become false, materially misleading, erroneous, or breached in any material respect.

(vi) Caldera assigns, sells, hypothecates, or transfers a majority interest in its business entity, whether in a single transaction or a series of transactions. (If Caldera desires to assign, sell, hypothecate, or transfer a majority interest in its business entity, whether in a single transaction or a series of transactions, before expiration of this Agreement, the County retains the right to reject any and all assignments, sales, hypothecations, or transfers of any interest in Caldera's business entity until, in the sole discretion of the County, adequate assurances are given that the assignee, buyer, hypothecatee, or transferee is a qualifying entity under the Los Alamos Economic Development Plan and that terms of this Agreement will be satisfied by the assignee, buyer, hypothecatee, or transferee.)

(vii) Caldera or any subsidiaries of Caldera conduct business operations with greater than a cumulative total of fifty employees based or located outside of the County.

(b) Caldera Response to Default. Upon the occurrence of an event of default by Caldera specified in this Agreement, the County shall notify Caldera in writing that an event of default has occurred under this Agreement. Within thirty (30) days of the receipt of such notice, Caldera shall:

(i) Cause the default to be cured; or

(ii) Furnish a written response indicating:

(1) The factors which caused or contributed, in whole or in part, to the occurrence of default;

(2) The measures Caldera has undertaken to avoid the reoccurrence of default in the future;

(3) Whether any Performance Measure not achieved can still be achieved in a timeframe acceptable to the County; and

(4) What further action Caldera plans to take to achieve the Performance Measure in a timeframe acceptable to the County.

(c) County Response to Default. The County staff shall review the response furnished  by Caldera and within thirty (30) days from the receipt of such response, recommend to the County Council Whether to modify or terminate this Participation Agreement. Caldera shall have an opportunity to make a presentation to the County Council at any meeting where such recommendation will be acted upon. The decision of the County Council will be final and binding. Other than the opportunity for Caldera to make a presentation to the County Council, in the event of default nothing herein shall be construed to limit in any way the power and authority of the County Council to take any of the following actions, all of which are hereby authorized by this Agreement:

 

  

4

  

 

(i) To terminate this Agreement and to demand immediate repayment of the Project Loan, including all interest both accrued and deferred; and to foreclose upon, collect, and recover all collateral pledged by Caldera as security for the Project Loan, the Building, or the Equipment if repayment is not made;

(ii) To terminate any interest deferral provisions in the Loan Agreement or the Promissory Note;

(iii) To increase the interest rate under the Promissory Note to prime plus two percent (2%);

(iv) To do any, some, or all of the foregoing.

6. Term. The term of this Agreement shall commence on the effective date of this Agreement and continue for thirteen (13) years unless terminated sooner as provided herein. If the Loan Agreement or the Promissory Note is extended for any reason, then the term of this Agreement shall automatically be extended so that the agreements are of the same duration. Caldera has the right to repay the Project Loan and any interest accrued or deferred at any time without any prepayment penalty.

7. Obligation to Perform. The failure of the County to insist, in any one or more instances, upon performance of any of the terms or covenants of this Agreement shall not be construed as a Waiver or relinquishment of the County's right to the future performance of any such terms and covenants, and the obligations of Caldera with respect to such future performance shall continue in full force and effect.

8. Excusable Delay. Caldera and the County shall be excused from performance for any period that they are prevented from performing any obligation hereunder in whole or in part as a result of an act of God, war, civil disturbance, epidemic, court order, or other cause beyond their reasonable control, and such nonperformance shall not be a ground for termination of this Agreement but shall not by itself extend the term of this Agreement.

9. Notices. All notices and communications required or permitted under this Agreement (including change of address and facsimile or telephone number set forth below) shall be in Writing and shall be deemed given to, and received by, the receiving party: (i) when hand-delivered to the street address of the receiving party set forth below; (ii) when sent by facsimile transmission to the facsimile number of the receiving party set forth below; (iii) one (l) day after deposit with a national overnight courier addressed to the receiving party at the street address set forth below; or (iv) five (5) days after deposit in the U. S. mail, certified mail, return receipt requested, postage prepaid, addressed to the receiving party at the mailing address set forth below.

The County:         County Administrator

Incorporated County of Los Alamos

Post Box 30

Los Alamos, New Mexico 87544

Telephone No.1 (505) 662-8080

Facsimile No.: (505) 662-8079

Caldera:                  Benjamin Warner, Ph.D., President

Caldera Pharmaceuticals, Inc.

3491 Trinity Drive, Suite B

Los Alamos, New Mexico 87544

Telephone No.1 (505) 661-2420

Facsimile No.1 (302) 347-1326

10. Amendment. This Agreement shall not be altered, changed, or amended other than by a written instrument executed by the parties.

ll. Assignment. Caldera shall not assign or transfer any rights, obligations, duties, or other interest in this Agreement, or assign any claim for money due under this Agreement, without the prior written consent of the County, which consent may be withheld in the County's sole and absolute discretion.

 

  

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12. Appropriations. The performance by the County of any of the terms, covenants, or conditions in this Agreement that the County is obligated to perform shall be subject to the availability of appropriated funds that may be lawfully used for such purpose.

13. Partnership. Nothing contained in this Agreement shall be construed as creating or establishing a joint venture or partnership between the County and Caldera.

14. Indemnification. Caldera shall hold harmless, indemnify and defend the County, its officials, employees, agents, successors, and assigns from any and all liabilities, damages, claims, suits, or actions, of any kind or nature, arising out of Caldera's operations or this Agreement, including all costs, expenses, attorneys‘ fees (including attorneys’ fees incurred in connection with, and/or staff attorneys salaries allocable to, any action the County takes to enforce this Agreement) and any judgment or settlement thereof.

15. Authority. The individua1(s) signing this Agreement on behalf of Caldera represent and warrant that they have the power and authority to bind Caldera, and that no further action, resolution, or approval from Caldera is necessary to enter into a binding contract.

16. Incorporation. Each and all of the recitals set forth at the beginning of this instrument, and any exhibits referenced herein and attached hereto, are incorporated herein by this reference.

17. Calculation of Time. Any time period herein calculated by reference to "days" means calendar days, i. e., including Saturdays, Sundays, and holidays as observed by the State of New Mexico; provided, however, that if the last day for a given act falls on a Saturday, Sunday, or such observed holiday, the day for such act shall be first day following such Saturday, Sunday, or observed holiday that is not a Saturday, Sunday, or such observed holiday.

18. Interpretation. The captions and paragraph headings of this Agreement are not necessarily descriptive, or intended or represented to be descriptive, of all the terms thereunder, and shall not be deemed to limit, define, or enlarge the terms of this Agreement. Whenever used herein, unless otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular, the use of any gender shall include all genders, and the use of the Words "include" and "including" shall be construed as if the phrases "without limitation" or "but not [be] limited to" were annexed thereafter. The parties Were, or had ample opportunity to be, represented by counsel, and as such this Agreement shall not be interpreted for or against either party based on authorship. The use herein of "Caldera" shall, where reasonable in the best interests of the County, be deemed to indicate and/or include all of the owners, partners, members, and employees of Caldera; provided, however, that such interpretation shall not be used in connection with Caldera's indemnity obligations contained in this Agreement.

19. Applicable Law. Each party shall perform its obligations hereunder in accordance with all applicable laws, rules, and regulations now or hereafter in effect. This Agreement shall be governed by the laws of the State of New Mexico (without giving effect to the State of New Mexic0’s choice of law provisions).

20. Survival. Terms of this Agreement that provide for rights, duties, and/or obligations that expressly or logically extend beyond the expiration or earlier termination of this Agreement, including Caldera's indemnity obligations, shall survive such expiration or earlier termination of this Agreement.

21. Severability. If any terms of this Agreement, or the application of such terms to any circumstance, person, or entity, shall be held illegal, invalid, or unenforceable, the remainder of this Agreement, or the application of such terms to persons or circumstances other than those to which it is held illegal, invalid, or unenforceable, shall not be affected; provided, however, that the remainder of this Agreement is still capable of performance in substantial accordance with the original intent of the parties.

22. Entire Agreement. This Agreement, the Loan Agreement, and the Promissory Note entered into by and between the parties and incorporated by reference as if fully set forth herein contain the entire understanding of the parties with respect to the subject matter hereof, and reflects all agreements and commitments made prior to the date hereof with respect to this Agreement by the County and Caldera. There are no other oral or written understandings, terms or conditions, and neither the County nor Caldera has relied upon any representation or statement, express or implied, that is not contained in this Agreement. Any modification of this Agreement and the understandings contained herein shall be in writing and executed by the County and Caldera.

[Signatures and approvals on following page.]

  

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IN WITNESS WHEREOF, the parties have entered into this Project Participation Agreement effective as of the date first Written above (the "Effective Date").

 

	INCORPORATED COUNTY OF LOS ALAMOS	 	 	Attest	 
	 	 	 	 	 
	
/Max Baker/   

	 	 	
/Mary Pat Kramer/

	 
	
Marx H. Baker, County Administrator

	 	 	
Mary Pat Kraemer, County Clerk

	 
	
 

	 	 	
 

	 

Approved to Form

/Peter A. Dwyer/

Peter A. Dwyer, County Attorney

 

Caldera Pharmaceuticals, Inc.

a Delaware corporation

by:          /Benjamin Warner//

Benjamin Warner, Ph.D.

President

  

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Exhibit A

to

Participation Agreement

CONTRACT OF BENJAMIN WARNER

[to be added]

  

8

  

 

LOAN AGREEMENT

This Loan Agreement (this "Loan Agreement") is made and entered into as of September 21, 2006 (the "Effective Date") by and between the Incorporated County of Los Alamos, an incorporated County of the State of New Mexico, (the "County"), and Caldera Pharmaceuticals Inc., a Delaware corporation qualified to do business in New Mexico, ("Borrower").

RECITALS

THE PARTIES HERETO enter into this Loan Agreement on the basis of the following facts, understandings, and intentions:

A. The County has adopted Ordinance No. 501, An Ordinance Establishing an Economic Development Plan which ordinance Was enacted pursuant to the express authority conferred upon municipalities by the Local Economic Development Act 5-10-l to 5-l0-13, NMSA 1978) to allow the public support of economic development to foster, promote, and enhance local economic development efforts through the use of project participation agreements with qualifying entities While continuing to protect against the unauthorized use of public money and other public resources.

B. The County has adopted Ordinance No. 512 providing for the public support of Borrower (the "Project") in the form of a loan (the "Project Loan") in the principal amount not to exceed Two Million Two Hundred Thousand Dollars ($2,200,000) for construction of a building (the "Building") and purchase of analytical and manufacturing equipment (the "Equipment").

C. Borrower's economic activity complies with the local Economic Development Plan adopted by the County on May 3, 2005, and will provide public benefit to the residents of the County.

D. The County and Borrower have entered into a Participation Agreement (the "Participation Agreement") and a Promissory Note (the "Promissory Note"), of even date herewith for the Project Loan (collectively, with this Agreement, the "Loan Documents"). As a condition precedent to its receipt of public assistance in the form of the Project Loan, Borrower is required to execute this Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and promises contained herein, and for other good and valuable consideration, the receipt and efficiency of which is hereby acknowledged, the parties agree as follows:

1. Loan Amount.

	
(a)  

	
The principal amount of the loan will not exceed Two Million Two Hundred K Thousand; Dollars ($2,200,000) (the "Loan Amount"). The anticipated amortization schedule (the "Amortization Schedule") is attached hereto as Attachment A.

	
(b)  

	
Pursuant to the terms of the Promissory Note and the Participation Agreement, the County shall disburse the loan proceeds as Borrower may request in amounts consistent with this Loan Agreement, the Participation Agreement, and Los Alamos County Ordinance No. 512. Such disbursements shall commence on or after the effective date of this Loan Agreement and the Participation Agreement and shall continue in no event later than the close of business on September 21, 2008 in an aggregate amount not to exceed the Loan Amount.

	
(c)  

	
If, at close of business on September 21, 2008, the County has not disbursed the entire Loan Amount, the County will prepare a new Amortization Schedule reflecting the amount of the loan proceeds actually disbursed and Borrower shall be required to repay the principal amount of the loan actually disbursed at the interest rate provided herein and in such amounts as the new Amortization Schedule shall provide. Any new Amortization Schedule prepared pursuant to the requirements of this provision shall become a part of this Loan Agreement replacing Attachment A hereto and shall be incorporated by reference as if fully set forth herein.

 

  

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2. Project Description. The County will provide the following public support, in the form of a loan, as an economic development project approved by Ordinance No. 512 and pursuant to the County's Economic Development Plan (Ordinance No. 501). Borrower shall expend the loan proceeds to secure and repay a construction loan for construction of the Building and purchase of the Equipment for use therein in Los Alamos County. Buyer shall use no more than $625,000 of the loan proceeds for purchase of the Equipment. The loan proceeds shall be disbursed to reimburse Borrower for amounts expended.

3. Construction.

	
(a)  

	
Plans and Specifications. The Building shall be constructed in accordance with Plans and Specifications (the "Plans and Specifications") which Borrower will hereafter submit to the County for the County's approval prior to commencement of construction. The County will approve or disapprove the Plans and Specifications Within ninety (90) days of receipt of full and final Plans and Specifications. Approval by the County pursuant to this subsection shall only constitute approval pursuant to this Agreement and shall neither imply nor constitute approval under applicable statutes, ordinances, and regulations, all of which shall remain the obligation of Borrower.

	
(b)  

	
Construction Agreement. Borrower will enter into a construction agreement (the "Construction Agreement") pursuant to the terms and conditions of which the contractor (the "Contractor") is to construct the Building, which Construction Agreement shall first be submitted to the County for approval. The County will approve or disapprove the Construction Agreement Within ninety (90) days of receipt of full and final copy thereof. Borrower shall require Contractor to perform in accordance with the terms of the Construction Agreement and shall not amend, modify, or alter the responsibilities of Contractor under the Construction Agreement without the County's prior written consent. Borrower shall execute, upon the County‘s request, an assignment of Borrower‘s rights under the Construction Agreement to the County as security for Borrower's obligations under this Agreement and shall cause the Contractor to consent to any such assignment.

	
(c)  

	
Architect's Agreement. Borrower Will enter into an architect's agreement (the "Architect's Agreement"), pursuant to which the architect (the "Architect") is to design the Building, which Architect's Agreement shall first be submitted to the County for approval. Borrower shall require Architect to perform in accordance with the terms of the Architect's Agreement and shall not amend, modify, or alter the responsibilities of Architect under the Architect's Agreement without the County's prior written consent. Upon the County's request, Borrower shall execute an assignment of the Architect's Agreement and the Plans and Specifications to the County as additional security for Borrower's performance under this Agreement and shall cause the Architect to consent to any such assignment.

	
(d)  

	
Prohibited Contracts. Without the County's prior Written consent, Borrower shall not contract for any materials, furnishings, equipment, fixtures, or other parts or components of the Building, if any third party shall retain any ownership interest (other than lien rights created by operation of law) in such items after their delivery to the Building.

	
(e)  

	
Liens. If a claim of lien is recorded which affects the Building is served upon the County, Borrower shall, Within twenty (20) calendar days of such service or within five (5) calendar days of the County's demand, whichever occurs first: (i) pay and discharge the claim of lien; (ii) effect the release thereof by recording or delivering to the County a surety bond in sufficient form and amount; or (iii) provide the County with other assurances which the County deems, in its sole discretion, to be satisfactory for the payment of such claim of lien and for the full and continuous protection of the County from the effect of such lien.

 

  

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(f)  

	
Construction Responsibilities. Borrower shall construct the Building in a workmanlike manner according to the Plans and Specifications and the recommendations of any soils or engineering report. Borrower shall comply with all applicable laws, ordinances, rules, regulations, building restrictions, recorded covenants and restrictions, and requirements of all regulatory authorities having jurisdiction over the Building. Borrower shall be solely responsible for all aspects of Borrower's business and conduct in connection with the Building, including, without limitation, for the quality and suitability of the Plans and Specifications and their compliance with all governmental requirements, the supervision of the work of construction, the qualifications, financial condition and performance of all architects, engineers, contractors, material suppliers, consultants and property managers, and the accuracy of all applications for payment and the proper application of all disbursements. The County is not obligated to supervise, inspect or inform Borrower or any third party of any aspect of the construction of the Building or any other matter referred to above.

	
(g)  

	
Inspections. The County shall have the right to enter upon the Building at all reasonable times to inspect the Building and the construction work to verify information disclosed or required pursuant to this Agreement. Any inspection or review of the Building by the County is solely to determine whether Borrower is properly discharging its obligations to the County and may not be relied upon by Borrower or by any third party as a representation or warranty of compliance with this Agreement or any other agreement. The County owes no duty of care to Borrower or any third party to protect against, or to inform Borrower or any third party of, any negligent, faulty, inadequate or defective design or construction of the Building as determined by the County.

4. Insurance. Borrower shall, while any obligation of Borrower under any Loan Document remains outstanding, maintain at Borrower's sole expense, with licensed insurers approved by the County, the following policies of insurance in form and substance satisfactory to the County:

	
(a)  

	
Property Insurance. A Builders Risk Completed Value Hazard Insurance policy, including, Without limitation, such endorsements as the County may require, insuring the County against damage to the Building in an amount acceptable to the County.

	
(b)  

	
Liability Insurance. A policy of comprehensive general liability insurance with limits as required by the County, insuring against liability for injury and/or death to any person and/or damage to any property occurring on the Building and/or in the Building from any cause whatsoever.

5. Disclosure Statement and Finance Costs.

	
(a)  

	
The annual percentage rate shall be five percent (5%). Interest shall accrue from and disbursement of any portion of the Loan Amount. Principal and interest payments Will be deferred for the thirty-six (3 6) months from the Effective Date of this Loan Agreement; provided, however, that all sums (principal and interest) shall be amortized over the remaining term of the loan.

	
(b)  

	
Finance charges shall total Six Hundred Thirty-Seven Thousand Six Hundred Thirty-Seven Dollars and Seventy Cents ($637,637.70).

	
(c)  

	
The amount financed shall total Two Million Three Hundred Thirty-Seven Thousand Five Hundred Dollars ($2,3 37,500.00).

	
(d)  

	
Total of payments shall be Two Million Nine Hundred Seventy-Five Thousand One Hundred Thirty-Seven Dollars and Twenty Cents ($2,975,137.20).

	
(e)  

	
All past due installments of principal and interest, including the unpaid balance of principal and interest during the existence of any default and after maturity of the Promissory Note, shall bear interest at the rate of the prime rate plus two percent (2%).

6. Repayment Schedule. The first payment of the principal and interest on this Loan Agreement shall become due as stated below:

	
(a)  

	
The number of payments shall be one hundred twenty (120).

 

  

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(b)  

	
The amount of each payment shall be Twenty-Four Thousand Seven Hundred Ninety-Two Dollars and Eight-One Cents ($24,792.81).

	
(c)  

	
The first payment is due thirty-six (36) months from the Effective Date of this Loan Agreement, and on the first day of each month thereafter for ten (10) years, or sooner until the amounts payable hereunder are paid in full.

	
(d)  

	
The Promissory Note may be prepaid in Whole or in part at any time Without premium or penalty. No partial prepayment shall affect the obligation of Borrower to pay the regular installments due hereunder until the Promissory Note has been paid in full

7. Security. In addition to Borrower's pledge of financial or material participation and cooperation to ‘guarantee the Borrower's performance pursuant to the Participation Agreement executed of even date herewith, Borrower shall pledge as security for this Loan Agreement the following:

	
(a)  

	
Building. Borrower shall grant a security interest, in a form and manner acceptable to the County, in the Building. Such security interest shall be superior to any other security interests in the Building. The Building will be constructed in Los Alamos County as approved by the County.

	
(b)  

	
Equipment. Borrower shall grant a security interest, in a form and manner acceptable to the County, in all the Equipment paid for in Whole or in part with the Project Loan. Such security interest shall be superior to any other security interests in the Equipment. Borrower shall not remove the Equipment from the County without the County's Written approval.

8. Representations and Warranties. As a material inducement to the County's entry into this Agreement, Borrower represents and warrants to the County as of the date of this Agreement and continuing thereafter that:

	
(a)  

	
Authority. Borrower is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to own and develop the Building as contemplated by the Loan Documents.

	
(b)  

	
Binding Obligations. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, and such obligations shall be valid and binding obligations of Borrower.

	
(c)  

	
Formation. Borrower has delivered to the County all formation and organizational documents of Borrower, of the partners, joint venturers or members of Borrower, if any, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they Were delivered to the County. Borrower shall immediately provide the County with copies of any amendments or modifications of the formation or organizational documents.

	
(d)  

	
No Violation. Borrower's execution, delivery, and performance under the Loan Documents do not: (i) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (ii) violate any governmental requirement applicable to the Building or any other statute, law, regulation or ordinance or any order or ruling of any court or governmental entity; (iii) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is or the Building are bound or regulated; or (iv) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity.

	
(e)  

	
Compliance with Laws. Borrower has, and at all times shall have obtained, all permits, licenses, exemptions, and approvals necessary to construct, occupy, operate and market the Building, and shall maintain compliance with all governmental requirements applicable to the Building and all other applicable statues, laws, regulations and ordinances necessary for the transaction of its business.

	
(f)  

	
Litigation. Except as disclosed to the County in Writing, there are no claims, actions, suits, or proceedings pending, or to Borrower's knowledge threatened, against Borrower or affecting the Building.

 

  

12

  

 

	
(g)  

	
Financial Condition. All financial statements and information heretofore delivered to the County by Borrower, including, without limitation, information relating to the financial condition of Borrower, the Building, the partners, joint venturers, shareholders or members of Borrower, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Borrower acknowledges and agrees that the County may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports.

	
(h)  

	
Material Adverse Change. There has been no material adverse change in the financial condition of Borrower since the dates of the latest financial statements furnished to the County and, except as otherwise disclosed to the County in writing, Borrower has not entered into any material transaction which is not disclosed in such financial statements.

	
(a)  

	
Loan Agreement 092106.doc

	
(i)  

	
Accuracy. All reports, documents, instruments, information and forms of evidence delivered to the County concerning the Project Loan or security for the Project Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give the County true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission.

	
(j)  

	
Taxes. Borrower has filed all required federal, state, and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such taxes and assessments.

	
(k)  

	
Utilities. All utility services, including, without limitation, gas, water, sewage, electrical, and telephone, necessary for the development and occupancy of the Building are available at or within the boundaries of the Building, or Borrower has taken all steps necessary to assure that all such services will be available upon completion of the Building.

	
(l)  

	
Compliance. Borrower is familiar with and in compliance with all governmental requirements for the construction of the Building and will conform to and comply with all governmental requirements and the Plans and Specifications.

	
(m)  

	
Americans with Disabilities Act. The Building shall been designed and shall be constructed and completed, and thereafter maintained, in strict accordance and full compliance With all of the requirements of the Americans With Disabilities Act, 42 U.S.C. § 12101, et. seq., as amended from time to time. Borrower shall be responsible for all ADA compliance costs.

9. Defaults. The occurrence of any one or more of the following shall constitute an event of default (hereinafter, "Default") under this Agreement and the other Loan Documents:

	
(a)  

	
Monetary. Borrower's failure to pay when due any sums payable under the Promissory Note or any of the other Loan Documents;

	
(b)  

	
Performance of Obligations. Borrower's failure to perform any obligation under any of the Loan Documents; provided, however, that if a cure period is provided for the remedy of such failure, Borrower's failure to perform will not constitute a Default until such date as the specified cure period expires;

	
(c)  

	
Representations and Warranties. (i) The failure of any representation or warranty of Borrower in any of the Loan Documents and the continuation of such failure for more than ten (10) days after written notice to Borrower from the County requesting that Borrower cure s/uchi failure; or (ii) any material adverse change in the financial condition of Borrower from the financial condition represented to the County as of the date of this Agreement;

	
(d)  

	
Voluntary Bankruptcy, Insolvency, Dissolution. (i) The filing of a petition by Borrower for relief under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing of any pleading or an answer by Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor relief law which admits the jurisdiction of the court or the petition's material allegations regarding Borrower's insolvency; (iii) a general assignment by Borrower for the benefit of creditors; or (iv) Borrower applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or any of its property;

 

  

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(e)  

	
Involuntary Bankruptcy. The failure of Borrower to effect a full dismissal of any involuntary petition under the Bankruptcy Code or under any other debtor relief law that is filed against Borrower or in any way restrains or limits Borrower or the County regarding the Project Loan or the Building, prior to the earlier of the entry of any court order granting relief sought in such involuntary petition, or thirty (30) days after the date of filing of such involuntary petition;

	
(f)  

	
Loss of Priority. The failure at any time of any security interest under any Loan Document to be a valid first lien upon the Building, the Equipment, or any portion thereof, other than as a result of any release by the County with respect to all or any portion of the Building or the Equipment pursuant to the terms and conditions of this Agreement;

	
(g)  

	
Default Under Leases. The occurrence of a default under a ground lease, lease, sublease, or other real property agreement affecting the Building;

	
(h)  

	
Key Person. The retirement, death, incapacity, termination, or Withdrawal of Benjamin Warner as Borrower's Chief Executive Officer and Borrower's failure to provide a substitute or replacement acceptable to the County within ninety (90) days after the occurrence of any such retirement, death, incapacity or Withdrawal;

	
(i)  

	
Transfer of Assets. The sale, assignment, pledge, hypothecation, mortgage or transfer of assets of Borrower other than in the ordinary course of business of said entity.

10. Remedies.

	
(a)  

	
Acceleration. Upon the occurrence of any Default which is not cured pursuant to the procedure described in the Participation Agreement, the County may, at its sole option, declare all sums owing to the County under the Promissory Note, this Agreement, and the other Loan Documents immediately due and payable, and any and all obligations of the County to fund further disbursements under the Loan shall terminate.

	
(b)  

	
Completion of Construction. Upon the occurrence of a Default which is not cured pursuant to the procedure described in the Participation Agreement, the County may, upon five (5) days prior written notice to Borrower, and with or without legal process, take possession of the Building, remove Borrower and all agents, employees and contractors of Borrower from the Building, complete the work of construction and market and sell or lease the Building. For this purpose, Borrower irrevocably appoints the County as its attorney-in-fact, which agency is coupled with an interest. As attorney-in-fact, the County may, in Borrower's name, take or omit to take any action the County may deem appropriate, including, without limitation, exercising Borrower's rights under the Loan Documents and all contracts concerning the Building.

	
(c)  

	
Cessation of Construction. If the County determines at any time that the Building is not being constructed in accordance with the Plans and Specifications and all governmental requirements, the County may immediately cause all construction to cease on any portion of the Building affected by the condition of nonconformance or the Building as a whole. Borrower shall thereafter not allow any construction Work, other than corrective work, to be performed on any portion of the Building affected by the condition of nonconformance until such time as the County notifies Borrower in writing that the nonconforming condition has been corrected.

	
(d)  

	
Repayment. Any funds expended by the County in the exercise of its rights or remedies under this Agreement and the other Loan Documents shall be payable to the County upon demand, together with interest at the rate applicable to the principal balance of the Promissory Note from the date the funds were expended.

 

  

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(e)  

	
Cumulative Rights. All the County's rights and remedies provided in this Agreement and the other Loan Documents, together with those granted by law or at equity, are cumulative and may be exercised by the County at any time. The County's exercise of any right or remedy shall not constitute a cure of any Default unless all sums then due and payable to the County under the Loan Documents are repaid and Borrower has cured all other Defaults. No Waiver shall be implied from any failure of the County to take, or any delay by the County in taking, action concerning any Default or failure of condition under the Loan Documents, or from any previous waiver of any similar or unrelated Default or failure of condition. Any waiver or approval under any of the Loan Documents must be in writing and shall be limited to its specific terms.

11. Miscellaneous Provisions.

	
(a)  

	
Incorporation. This Loan Agreement is made pursuant to and in accordance with the provisions of Ordinance No. 501, Ordinance No. 512, the Local Economic Development Act, the Participation Agreement, and Promissory Note, all of which are incorporated by reference as if fully set forth herein.

	
(b)  

	
Further Assurances. Upon the County's request and at Borrower's sole cost and expense, Borrower shall execute, acknowledge and deliver any other instruments and perform any other acts necessary, desirable or proper, as determined by the County, to carry out the purposes of this Agreement and the other Loan Documents or to perfect and preserve any security interests created by or contemplated by the Loan Documents.

	
(c)  

	
Disbursements. Borrower covenants that all disbursements will be made in accordance with this Loan Agreement, the Promissory Note, the Participation Agreement, Ordinance No. 501, and Ordinance No. 512.

	
(d)  

	
Transfer of Assets. Borrower shall not sell or transfer any of the property, personal or real, financed in whole or in part by the proceeds of this Loan Agreement Without the express written consent of the County, which consent may be given in the County's sole discretion. The County may place conditions on its consent. Upon partial repayment of the Loan Amount, Caldera may request that the County release its security interest as to specific assets, which request the County may approve or deny in its sole discretion and which approval, if any, must be in writing.

	
(e)  

	
Information. Borrower will provide to the County serial numbers and product descriptions of all assets to be used as collateral or replacement collateral.

	
(f)  

	
Further Encumbrances. Borrower agrees that it will not obligate any of the collateral pledged as security for this Loan Agreement without the express written consent of the County, which consent may be given at the County's sole discretion.

	
(g)  

	
Notices. All notices and communications required or permitted under this Agreement (including change of address and facsimile or telephone number set forth below) shall be in writing and shall be deemed given to, and received by, the receiving party: (i) when hand-delivered to the street address of the receiving party set forth below; (ii) when sent by facsimile transmission to the facsimile number of the receiving party set forth below; (iii) one (1) day after deposit with a national overnight courier addressed to the receiving party at the street address set forth below; or (iv) five (5) days after deposit in the U. S. mail, certified mail, return receipt requested, postage prepaid, addressed to the receiving party at the mailing address set forth below.

The County:         County Administrator

Incorporated County of Los Alamos

Post Box 30

Los Alamos, New Mexico 87544

Telephone No.2 (505) 662-8080

Facsimile No.1 (505) 662-8079

 

  

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Caldera:                  Benjamin Warner, Ph.D., President

Caldera Pharmaceuticals, Inc.

3491 Trinity Drive, Suite B

Los Alamos, New Mexico 87544

Telephone N0.: (505) 661-2420

Facsimile N0.: (302) 347-1326

	
(h)  

	
Indemnity. Borrower hereby agrees to defend, indemnify and hold harmless the County, its directors, officers, employees, agents, successors and assigns from and against any and all losses, damages, liabilities, claims, actions, judgments, court and legal or other expenses (including, without limitation, attorneys‘ fees and expenses) which the County may incur as a direct or indirect consequence of: (i) the purpose to which Borrower applies the Loan proceeds; (ii) the failure of Borrower to perform any obligations as and when required by this Agreement or any of the other Loan Documents; (iii) any failure at any time of any of Borrower's representations or warranties to be true and correct; or (iv) any act or omission by Borrower, constituent partner or member of Borrower, any contractor, subcontractor or material supplier, engineer, architect or other person or entity with respect to any of the Building. Borrower shall immediately pay to the County upon demand any amounts owing under this indemnity, together with interest from the date the indebtedness arises until paid at the rate of interest applicable to the principal balance of the Promissory Note. Borrower's duty and obligations to defend, indemnify and hold harmless the County shall survive cancellation of the Promissory Note and this Agreement.

	
(i)  

	
Joint and Several Liability. The liability of all persons and entities obligated in any manner under this Agreement and any of the Loan Documents shall be joint and several.

	
(j)  

	
Third Parties. No person other than the County and Borrower and their permitted successors and assigns shall have any right of action under any of the Loan Documents.

	
(k)  

	
Fees and Enforcement. If any attorney is engaged by the County to enforce or defend any provision of this Agreement, any of the other Loan Documents, or as a consequence of any Default under the Loan Documents, and if the County files an action in a court of competent jurisdiction, Borrower shall immediately pay to the County, upon demand, the amount of all attorneys’ fees and expenses and all costs incurred by the County in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance of the Promissory Note as specified therein.

	
(l)  

	
Signs. The County may place on the Building reasonable signs standard to construction loan transactions stating that construction financing is being provided by the County and any other the County's or participants in the Project Loan.

	
(m)  

	
Agents. The County may designate an agent or independent contractor to exercise any of the County's rights under this Agreement and any of the other Loan Documents. Any reference to the County in any of the Loan Documents shall include the County's agents, employees, or independent contractors.

	
(n)  

	
Severability. If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from the Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of the Loan Documents, provided, however, that if the rate of interest any Loan Document is declared to be or become invalid, illegal, or unenforceable, the County's obligations to make advances under the Loan Documents shall not be enforceable by Borrower.

	
(o)  

	
Successors and Assigns. Except as otherwise expressly provided under the terms and conditions of this Agreement, the terms of the Loan Documents shall bind and inure to the benefit of the heirs, successors, and assigns of the parties.

 

  

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(p)  

	
Time. Time is of the essence of each and every term of this Agreement.

	
(q)  

	
Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of New Mexico, except to the extent preempted by Federal laws. The County retains the right to seek enforcement of the terms of this Loan Agreement as provided herein and as provided by law. The parties agree that if the parties cannot reach agreement regarding disputes as to the terms and conditions of this Loan Agreement, such disputes are to be resolved as promptly and expeditiously as practicable in the First Judicial District Court of Los Alamos County which shall have exclusive jurisdiction, including venue, over the parties and the subject matter of this Loan Agreement and Waive the right to challenge such jurisdiction and venue.

	
(r)  

	
Integration. The Loan Documents, Ordinance No. 501, and Ordinance No. 512 contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by Written instrument executed by all parties. Any reference in any of the Loan Documents to the Building shall include all or any part of the Building. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by the County in Writing.

[Signatures and approvals on following page.]

  

17

  

 

IN WITNESS WHEREOF, the parties have entered into this Project Participation Agreement effective as of the "Effective Date".

 

	INCORPORATED COUNTY OF LOS ALAMOS	 	 	Attest	 
	 	 	 	 	 
	
/Max Baker/   

	 	 	
/Mary Pat Kramer/

	 
	
Marx H. Baker, County Administrator

	 	 	
Mary Pat Kraemer, County Clerk

	 
	
 

	 	 	
 

	 

 

Approved to Form

/Peter A. Dwyer/

Peter A. Dwyer, County Attorney

Caldera Pharmaceuticals, Inc.

a Delaware corporation

by:          /Benjamin Warner//

Benjamin Warner, Ph.D.

President

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