Document:

Unassociated Document

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”)
      is
      made and entered into as of _________ __, 2008, by and between Xcorporeal,
      Inc.
      (“Company”)
      and
      Kelly McCrann (“Executive”),
      to
      become effective the 2nd
      day of
      October, 2008 (the “Effective
      Date”).

     

    RECITALS

     

    A. WHEREAS,
      Executive has experience and expertise to perform as the Chief Executive Officer
      of Company, Company has agreed to employ Executive, and Executive has agreed
      to
      enter into such employment, on the terms set forth in this
      Agreement.

     

    B. WHEREAS,
      Executive acknowledges that this Agreement is necessary for the protection
      of
      Company’s investment in its business, good will, products, methods of operation,
      information, and relationships with its customers and other
      employees.

     

    C. WHEREAS,
      Company acknowledges that Executive desires clarification of his compensation,
      benefits, and other terms of employment.

     

    NOW,
      THEREFORE, in consideration thereof and of the covenants and conditions
      contained herein, the parties agree as follows:

     

    AGREEMENT

     

    1. TERM
      OF
      AGREEMENT

     

    The
      term
      of this Agreement shall begin on the Effective Date and shall continue until
      the
      earlier of: (a) the date on which it is terminated pursuant to Section 5; or
      (b)
      two (2) years following the Effective Date (“Term”).
      In
      the event Executive ceases to be employed by Company for any reason, Executive
      shall tender his resignation from all positions he holds with the Company,
      effective on the date his employment terminates.

     

    2. EMPLOYMENT

     

    2.1 Employment
      of Executive.
      Company
      agrees to employ Executive to render services on the terms set forth herein.
      Executive hereby accepts such employment on the terms and conditions of this
      Agreement.

     

    2.2 Position
      and Duties.
      Executive shall serve as Chief Executive Officer of Company, reporting to the
      Company’s Board of Directors (“Board”),
      and
      shall have the general powers, duties and responsibilities of management usually
      vested in that office and such other powers and duties as may be prescribed
      from
      time to time by the Board. 

     

    2.3 Standard
      of Performance.
      Executive agrees that he will at all times faithfully and industriously and
      to
      the best of his ability, experience and talents perform all of the duties that
      may be required of and from him pursuant to the terms of this Agreement. Such
      duties shall be performed at such place or places as the interests, needs,
      business and opportunities of Company shall require or render
      advisable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.4 Exclusive
      Service.
      Executive shall devote substantially all of his business energies and abilities
      and all of his productive time to the performance of his duties under this
      Agreement (reasonable absences during holidays and vacations excepted). The
      Company acknowledges that Executive currently serves as the Chairman of
      PatientFYI, LLC as well as an independent director of several other non-public
      companies. The Company agrees that Executive may continue those activities
      in
      addition to his responsibilities as Chief Executive Officer. 

     

    3. COMPENSATION

     

    3.1 Compensation.
      During
      the term of this Agreement, Company shall pay the amounts and provide the
      benefits described in this Section 3, and Executive agrees to accept such
      amounts and benefits in full payment for Executive’s services under this
      Agreement.

     

    3.2 Base
      Salary.
      Company
      shall pay to Executive an annual base salary of $325,000, less applicable taxes,
      earned and payable in substantially equal installments in accordance with
      Company’s standard payroll practices. At Company’s sole discretion, Executive’s
      base salary may be increased, but not decreased, annually. 

     

    3.3 Discretionary
      Bonus.
      Executive is eligible to receive an annual bonus in the sole discretion of
      Company, based on Executive achieving designated individual goals and
      milestones, and the overall performance and profitability of Company. The goals
      and milestones will be established and reevaluated on an annual basis by mutual
      agreement of Executive and the Board. Any bonus under this Section 3.3 will
      be
      based on a calendar year and shall be paid on or about April 30th
      of the
      following year, and in no event later than December 31 of the following year.
      The first annual bonus, to the extent granted at the sole discretion of Company,
      shall be prorated based on the Effective Date. The goals and objectives related
      to the 2008 target bonus shall be established within thirty (30) days of the
      Effective Date. Executive must be employed as of the last day of the calendar
      year to which the bonus relates in order to receive any bonus for such year.
      

     

    3.4 Equity
      Incentive Plan.

     

    (i) Executive
      shall be granted options to purchase 700,000 shares of Company’s common stock
      (the "Initial
      Grant"),
      at an
      exercise price equal to the greater of (a) $1.50 per share or (b) the fair
      market value of a share of Company common stock on the Effective Date, pursuant
      to a Stock Option Agreement granted under the provisions of the Company's Stock
      Incentive Plan (the "Plan").
      The
      option will vest as follows: 25% on the first, second, third, and fourth
      anniversaries of the Effective Date.

     

    (ii) If
      Company issues shares to National Quality Care, Inc. ("NQCI")
      pursuant
      to its current negotiations with NQCI, Executive shall, upon the date of such
      issuance to NQCI (the "Grant
      Date"),
      be
      granted an additional option under the Plan to purchase such shares of Company's
      common stock, at an exercise price equal to the greater of (a) $1.50 per share
      or (b) the fair market value of a share of Company common stock on the Grant
      Date, necessary to preserve Executive's ownership percentage of the Company
      on a
      fully diluted basis, based upon the ownership percentage determined as of the
      date of the Initial Grant. The option shall be granted pursuant to a Stock
      Option Agreement granted under the provision of the Plan, and shall vest as
      follows: 25% on the first, second, third, and fourth anniversaries of the Grant
      Date.

     

    
      
         

      

      
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    (iii) Except
      as
      otherwise set forth herein, vesting of options will cease upon the termination
      of Executive’s employment with Company.

     

    3.5 Fringe
      Benefits.
      Upon
      satisfaction of the applicable eligibility requirements, during the term of
      his
      employment, Executive (and his dependents) shall be included in any medical,
      dental, disability and life insurance, pension and retirement plans and other
      benefit plans or programs maintained by Company for the benefit of its
      employees, subject to the terms of such plans and programs.

     

    3.6 Paid
      Time Off.
      Executive shall accrue, on a daily basis, a total of four (4) workweeks of
      paid
      time off (PTO) per year following the Effective Date, provided, however, that
      Executive’s accrued and unused PTO may not exceed a total of seven (7)
      workweeks. Thereafter, Executive will not continue to accrue PTO benefits until
      he has used enough PTO time to fall below this maximum amount. Any accrued
      but
      unused PTO will be paid to Executive, on a pro rata basis, at the time that
      his
      employment is terminated. This PTO shall be in addition to normal Company
      holidays, which shall be determined at the discretion of Company from time
      to
      time.

     

    3.7 Relocation.
      If
      Executive chooses to relocate his principal residence so that he may reside
      in
      closer proximity to the Company's headquarters, the Company shall reimburse
      Executive for the reasonable packing, shipping, and transportation costs
      incurred in relocating Executive's and his family's personal effects from his
      then current home to the area in which the Company then is located, and for
      any
      additional costs upon which the Company and Executive then may mutually
      agree.

     

    3.8 Deduction
      from Compensation.
      Company
      shall deduct and withhold from all compensation payable to Executive all amounts
      required to be deducted or withheld pursuant to any present or future law,
      ordinance, regulation, order, writ, judgment, or decree requiring such deduction
      and withholding.

     

    4. REIMBURSEMENT
      OF EXPENSES

     

    4.1 Travel
      and Other Expenses.
      Company
      shall pay to or reimburse Executive for those travel, cell phone, promotional,
      professional continuing education and licensing costs (to the extent required),
      professional society membership fees, seminars and similar expenditures incurred
      by Executive which Company determines are reasonably necessary for the proper
      discharge of Executive’s duties under this Agreement and for which Executive
      submits appropriate receipts and indicates the amount, date, location and
      business character in a timely manner.

     

    4.2 Liability
      Insurance.
      Company
      shall provide Executive with officers and directors’ insurance, or other
      liability insurance, consistent with its usual business practices, to cover
      Executive against all insurable events related to his employment with Company.
      

     

    
      
         

      

      
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    4.3 Indemnification.
      Promptly upon written request from Executive, Company shall indemnify Executive,
      to the fullest extent under applicable law, for all judgments, fines,
      settlements, losses, costs or expenses (including attorneys’ fees), arising out
      of Executive’s activities as an agent, employee, officer or director of Company,
      or in any other capacity on behalf of or at the request of Company, unless
      such
      judgment, fine, settlement, loss, cost or expense is the result of Executive’s
      gross negligence or misconduct. Such agreement by Company shall not be deemed
      to
      impair any other obligation of Company respecting indemnification of Executive
      otherwise arising out of this or any other agreement or promise of Company
      or
      under any statute.

     

    5. TERMINATION

     

    5.1 Termination
      With Good Cause; Resignation Without Good Reason.
      Company
      may terminate Executive’s employment at any time, with or without notice, for
      Good Cause (as defined below). If Company terminates Executive’s employment for
      Good Cause, or if Executive resigns without Good Reason (as defined below),
      Company shall pay Executive his base salary prorated through the date of
      termination, at the rate in effect at the time notice of termination is given,
      together with any benefits mandated under the Consolidated Omnibus Budget
      Reconciliation Act of 1985 (COBRA), or required under the terms of any death,
      insurance or retirement plan, program or agreement provided by Company and
      to
      which Executive is a party or in which Executive is a participant. Company
      shall
      have no further obligations to Executive under this Agreement or any other
      agreement, and all unvested options will terminate.

     

    5.2 Termination
      Without Good Cause; Resignation with Good Reason.
      Executive shall have the right to terminate his employment with notice and
      Good
      Reason and Company shall have the right to terminate Executive’s employment at
      anytime without Good Cause. If, at anytime prior to the expiration of the Term,
      Company terminates Executive’s employment without Good Cause, or Executive
      resigns for Good Reason:

     

    (i) Company
      shall pay Executive his base salary prorated through the date of termination,
      at
      the rate in effect at the time notice of termination is given, together with
      any
      benefits mandated under COBRA, or required under the terms of any death,
      insurance or retirement plan, program or agreement provided by Company and
      to
      which Executive is a party or in which Executive is a participant;

     

    (ii) Company
      shall continue to pay Executive his base salary (at the annual rate in effect
      at
      the time of termination) for a period of twelve (12) months following
      termination (the “Severance
      Period”),
      payable in substantially equal installments in accordance with Company’s payroll
      policy from time to time in effect; and

     

    (iii) If
      Executive elects COBRA continuation coverage, Company shall pay for such health
      insurance coverage through the Severance Period at the same rate as it pays
      for
      health insurance coverage for its active employees (with Executive required
      to
      pay for any employee-paid portion of such coverage). After the Severance Period
      concludes, Executive shall be responsible for the payment of all premiums
      attributable to COBRA continuation coverage at the same rate as Company charges
      all COBRA beneficiaries. Nothing herein provided, however, shall be construed
      to
      extend the period of time over which such COBRA continuation coverage otherwise
      may be provided to Executive and/or his dependents. 

     

    
      
         

      

      
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    To
      be
      eligible for the compensation provided for in Sections 5.2(ii) and (iii) above,
      Executive must sign an agreement acceptable to Company that (a) waives any
      rights Executive may otherwise have against Company, (b) releases Company from
      actions, suits, claims, proceedings and demands related to the period of
      employment and/or the termination of employment, and (c) contains certain other
      obligations which shall be set forth at the time of the termination. Company
      shall have no further obligations to Executive under this Agreement or any
      other
      agreement.

     

    5.3 Good
      Cause.
      For
      purposes of this Agreement, a termination shall be for “Good Cause” if
      Executive, in the subjective, good faith opinion of Company, shall:

     

    (i) Commit
      an
      act of fraud, moral turpitude, misappropriation of funds or embezzlement in
      connection with his duties;

     

    (ii) Breach
      Executive’s fiduciary duty to Company, including, but not limited to, acts of
      self-dealing (whether or not for personal profit);

     

    (iii) Breach
      this Agreement, the Confidentiality Agreement (defined below), or Company’s
      written Codes of Ethics as adopted by the Board;

     

    (iv) Commit
      a
      willful, reckless or grossly negligent violation of any material provision
      of
      Company’s written Employee Handbook, or any applicable municipal, state or
      federal law or regulation;

     

    (v) Fail
      or
      refuse (whether willfully, recklessly or negligently) to comply with all
      relevant and material obligations, assumable and chargeable to an executive
      of
      his corporate rank and responsibilities, under the Sarbanes-Oxley Act and the
      regulations of the Securities and Exchange Commission promulgated
      thereunder;

     

    (vi) Fail
      to
      or refuse to comply with the lawful directives of the Board in the performance
      of his duties under this Agreement (other than a failure caused by temporary
      disability); provided, however, that no termination shall occur on that basis
      unless Company first provides the Executive with written notice to cure. The
      notice to cure shall reasonably specify the acts or omissions that constitute
      the Executive’s failure or refusal to perform his duties, and the Executive
      shall have a reasonable opportunity (not to exceed 10 days after the date of
      notice to cure) to correct his failure or refusal to perform his duties.
      Termination under this subsection (vi) shall be effective as of the date of
      written notice to cure; or

     

    (vii) Be
      convicted of, indicted for, or enter a plea of guilty or no contest to, a felony
      or misdemeanor under state or federal law, other than a traffic violation or
      misdemeanor not involving dishonesty or moral turpitude.

     

    
      
         

      

      
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    5.4 Good
      Reason.
      For
      purposes of this Agreement, a resignation shall be for “Good Reason” if tendered
      within ninety (90) days of any of the following actions by Company:

     

    (i) Assignment
      to Executive of duties materially inconsistent with Executive’s status as
      defined in Section 2.2, or a material reduction in the nature or status of
      Executive’s responsibilities;

     

    (ii) A
      material change in the geographic location at which Executive must perform
      the
      services hereunder;

     

    (iii) Any
      other
      action or inaction that constitutes a material breach of this Agreement by
      Company; or

     

    (iv) Executive
      is asked to report to any one other than the Board.

     

    A
      resignation with Good Reason shall not be effective unless Company is first
      provided with written notice of the action constituting Good Reason and an
      opportunity to cure. The notice to cure shall reasonably specify the event
      or
      action constituting Good Reason and Company shall have an opportunity of thirty
      (30) days to remedy such action. 

     

    5.5 Death
      or Disability.
      To the
      extent consistent with federal and state law, Executive’s employment, salary,
      and compensation shall terminate on his death or disability. “Disability” means
      any health condition, physical or mental, or other cause beyond Executive’s
      control, that prevents him from performing his duties, even after reasonable
      accommodation is made by Company, for a period of 180 days within any 360 day
      period. In the event of termination due to death or Disability, Company shall
      pay Executive (or his legal representative) his salary prorated through the
      date
      of termination, at the rate in effect at the time of termination, together
      with
      any benefits accrued through the date of termination. Company shall have no
      further obligations to Executive (or his legal representative) under this
      Agreement.

     

    5.6 Return
      of Company Property.
      Upon
      the termination of his employment or at any time prior thereto upon the request
      of Company, Executive shall return to Company all products, books, records,
      forms, specifications, formulae, data processes, designs, papers and writings
      relating to the business of Company including without limitation proprietary
      or
      licensed computer programs, customer lists and customer data, and/or copies
      or
      duplicates thereof in Executive’s possession or under Executive’s control.
      Executive shall not retain any copies or duplicates of such property and all
      licenses granted to him by Company to use computer programs or software shall
      be
      revoked upon the termination of Executive’s employment, unless earlier
      terminated by Company. 

     

    5.7 Compliance
      with Section 409A.
      Payments and benefits under this Paragraph 5 shall be paid or provided only
      at
      the time of a termination of Executive’s employment that constitutes a
“separation from service” within the meaning of Section 409A of the Internal
      Revenue Code of 1986, as amended (the “Code”),
      and
      the regulations and guidance promulgated thereunder. Further, if Executive
      is a
“specified employee” as such term is defined under Section 409A of the Code and
      the regulations and guidance promulgated thereunder, any payments described
      in
      Paragraph 5 shall be delayed for a period of six (6) months following
      Executive’s separation of employment to the extent and up to an amount necessary
      to ensure such payments are not subject to the penalties and interest under
      Section 409A of the Code.

     

    
      
         

      

      
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    5.8 Excess
      Parachute Payments.
      If
      Executive would, except for this Section 5.8, be subject to a tax pursuant
      to Section 4999 of the Code, or any successor provision that may be in effect,
      as a result of "parachute payments" (as that term is defined in Section
      280G(b)(2)(A) and (d)(3) of the Code) made pursuant to this Agreement or
      pursuant to any plan, program, or policy of Company, or a deduction would not
      be
      allowed to Company for all or any part of such payments by reason of Section
      280G(a) of the Code, or any successor provision that may be in effect, such
      payments shall be reduced, eliminated, or postponed in such amounts as are
      required to reduce the aggregate "present value" (as that term is defined in
      Section 280G(d)(4) of the Code) of such payments to one dollar less than an
      amount equal to three times Executive's "base amount" (as that term is defined
      in Section 280G(b)(3)(a) and (d)(1) and (2) of the Code). To achieve such
      required reduction in aggregate present value, Executive shall determine what
      item(s) constituting the parachute payments shall be reduced, eliminated, or
      postponed, the amount of each such reduction, elimination, or postponement,
      and
      the period of each such postponement. To enable Executive to make such
      determination, Company shall be required to provide Executive with such
      information as is reasonably necessary for such determination. Prior to the
      making of any payment under this Agreement, either party may request a
      determination as to whether such payment would constitute a "parachute payment,"
      and, if so, the amount by which the payment must be reduced in accordance with
      this Section 5.8. If such a determination is requested, it shall be made
      promptly, at Company's expense, by tax counsel selected by Company and approved
      by Executive (which approval shall not unreasonably be withheld), and such
      determination shall be conclusive and binding on the parties. Company shall
      provide such information as such counsel may reasonably request, and such
      counsel may engage accountants or other experts at Company’s expense to the
      extent that it reasonably deems it necessary to reach a
      determination.

     

    6. DUTY
      OF
      LOYALTY

     

    Other
      than those activities described in Section 2.4, during the term of his
      employment, Executive shall not, without the prior written consent of Company,
      directly or indirectly render services of a business, professional, or
      commercial nature to any person or firm, whether for compensation or otherwise,
      or engage in any activity directly or indirectly competitive with or adverse
      to
      the business or welfare of Company, whether alone, as a partner, or as an
      officer, director, employee, consultant, or holder of more than 1 % of the
      capital stock of any other corporation. Otherwise, Executive may make personal
      investments in any other business so long as these investments do not require
      him to participate in the operation of the companies in which he invests.

     

    7. CONFIDENTIAL
      INFORMATION

     

    7.1 Trade
      Secrets of Company.
      Executive, during the term of his employment, will develop, have access to
      and
      become acquainted with various trade secrets which are owned by Company and/or
      its affiliates and which are regularly used in the operation of the businesses
      of such entities. Executive shall not disclose such trade secrets, directly
      or
      indirectly, or use them in any way, either during the term of his employment
      or
      at any time thereafter, except as required in the course of his employment
      by
      Company. All files, contracts, manuals, reports, letters, forms, documents,
      notes, notebooks, lists, records, documents, customer lists, vendor lists,
      purchase information, designs, computer programs and similar items and
      information, relating to the businesses of such entities, whether prepared
      by
      Executive or otherwise and whether now existing or prepared at a future time,
      coming into his possession shall remain the exclusive property of such entities,
      and shall not be removed, other than for work-related purposes, from the
      premises where the work of Company is conducted, except with the prior written
      authorization by Company.

     

    
      
         

      

      
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    7.2 Confidential
      Data of Customers of Company.
      Executive, in the course of his duties, will have access to and become
      acquainted with financial, accounting, statistical and personal data of
      customers of Company and of their affiliates. All such data is confidential
      and
      shall not be disclosed, directly or indirectly, or used by Executive in any
      way,
      either during the term of his employment (except as required in the course
      of
      employment by Company) or at any time thereafter.

     

    7.3 Continuing
      Effect.
      The
      provisions of this Section 7 and Sections 8 and 9 of this Agreement shall remain
      in effect after the Term and/or following the termination of Executive’s
      employment with Company.

     

    8. NO
      SOLICITATION

     

    8.1 No
      Solicitation of Employees.
      Executive agrees that he will not, during his employment with Company, and
      for
      one (1) year thereafter if terminated without Good Cause or with Good Reason
      or
      for two (2) years thereafter if his employment terminates for any other reason,
      encourage or solicit any other employee of Company to terminate his or her
      employment for any reason, or solicit the service of any other employee of
      Company (or any individual who was an employee of Company during the year
      preceding such solicitation), nor will he assist others to do so, nor agree
      to
      hire any employee of Company (or an individual who was an employee of Company
      during the year preceding such hire) into employment with himself or any other
      person or entity. 

     

    8.2 No
      Solicitation of Customers.
      Executive agrees that he will not, during his employment with Company, and
      for
      one (1) year thereafter if terminated without Good Cause or with Good Reason
      or
      for two (2) years thereafter if his employment terminates for any other reason,
      directly or indirectly call on, or otherwise solicit business from any actual
      customer or potential customer known by Executive to be targeted by Company,
      nor
      will he assist others in doing so, nor will he otherwise interfere in Company’s
      relationship with any of its customers. 

     

    9. INTELLECTUAL
      PROPERTIES.

     

    To
      the
      extent permissible under applicable law, all intellectual properties made or
      conceived by Executive arising out of or relating to this Agreement or Company’s
      business during the term of this employment by Company shall be the right and
      property solely of Company, whether developed independently by Executive or
      jointly with others. As a condition to his employment, Executive will sign
      the
      Company’s standard Executive Innovation, Proprietary Information and
      Confidentiality Agreement (“Confidentiality
      Agreement”).

     

    
      
         

      

      
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    10. OTHER
      PROVISIONS

     

    10.1 Compliance
      With Other Agreements.
      Executive represents and warrants to Company that the execution, delivery and
      performance of this Agreement will not conflict with or result in the violation
      or breach of any term or provision of any order, judgment, injunction, contract,
      agreement, commitment or other arrangement to which Executive is a party or
      by
      which he is bound. 

     

    10.2 Injunctive
      Relief.
      Executive acknowledges that the services to be rendered under this Agreement
      and
      the items described in Sections 6, 7, 8 and 9 are of a special, unique and
      extraordinary character, that it would be difficult or impossible to replace
      such services or to compensate Company in money damages for a breach of such
      Sections. Accordingly, Executive agrees and consents that if he violates any
      of
      the provisions of this Agreement, Company, in addition to any other rights
      and
      remedies available under this Agreement or otherwise, shall be entitled to
      temporary and permanent injunctive relief, without the necessity of proving
      actual damages and without the necessity of posting any bond or other
      undertaking in connection therewith.

     

    10.3 Attorneys’
      Fees.
      The
      prevailing party in any suit or other proceeding brought to enforce, interpret
      or apply any provisions of this Agreement, shall be entitled to recover all
      costs and expenses of the proceeding and investigation (not limited to court
      costs), including all attorneys’ fees.

     

    10.4 Counsel.
      The
      parties acknowledge and represent that, prior to the execution of this
      Agreement, they have had an opportunity to consult with their respective counsel
      concerning the terms and conditions set forth herein. Additionally, Executive
      represents that he has had an opportunity to receive independent legal advice
      concerning the taxability of any consideration received under this Agreement.
      Executive has not relied upon any advice from Company and/or its attorneys
      with
      respect to the taxability of any consideration received under this Agreement.
      Executive further acknowledges that Company has not made any representations
      to
      him with respect to tax issues.

     

    10.5 Nondelegable
      Duties.
      This is
      a contract for Executive’s personal services. The duties of Executive under this
      Agreement are personal and may not be delegated or transferred in any manner
      whatsoever, and shall not be subject to involuntary alienation, assignment
      or
      transfer by Executive during his life. 

     

    10.6 Governing
      Law.
      The
      validity, construction and performance of this Agreement shall be governed
      by
      the laws, without regard to the laws as to choice or conflict of laws, of the
      State of California.

     

    10.7 Venue.
      If any
      dispute arises regarding the application, interpretation or enforcement of
      any
      provision of this Agreement, including fraud in the inducement, such dispute
      shall be resolved either in federal or state court in Los Angeles,
      California.

     

    
      
         

      

      
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    10.8 No
      Jury.
      If any
      dispute arises regarding the application, interpretation or enforcement of
      any
      provision of this Agreement, including fraud in the inducement, the parties
      hereby waive their right to a jury trial.

     

    10.9 No
      Punitive Damages.
      If any
      dispute arises regarding the application, interpretation or enforcement of
      any
      provision of this Agreement, including fraud in the inducement, the parties
      hereby waive their right to seek punitive damages in connection with said
      dispute.

     

    10.10 Severability.
      If any
      provision of this Agreement shall be found invalid or unenforceable for any
      reason, in whole or in part, then such provision shall be deemed modified,
      restricted, or reformulated to the extent and in the manner necessary to render
      the same valid and enforceable, or shall be deemed excised from this Agreement,
      as the case may require, and this Agreement shall be construed and enforced
      to
      the maximum extent permitted by law, as if such provision had been originally
      incorporated herein as so modified, restricted, or reformulated or as if such
      provision had not been originally incorporated herein, as the case may be.
      The
      parties further agree to seek a lawful substitute for any provision found to
      be
      unlawful; provided, that, if the parties are unable to agree upon a lawful
      substitute, the parties desire and request that a court or other authority
      called upon to decide the enforceability of this Agreement modify those
      restrictions in this Agreement that, once modified, will result in an agreement
      that is enforceable to the maximum extent permitted by the law in existence
      at
      the time of the requested enforcement.

     

    10.11 Binding
      Effect.
      The
      rights and obligations of Company under this Agreement shall be binding upon
      and
      inure to the benefit of its successors and assigns.

     

    10.12 Notice.
      Any and
      all notices required in connection with this Agreement shall be deemed
      adequately given only if in writing and (a) personally delivered, or sent
      by first class, registered or certified mail, postage prepaid, return receipt
      requested, or by recognized overnight courier, (b) sent by facsimile,
      provided a hard copy is mailed on that date to the party for whom such notices
      are intended, or (c) sent by other means at least as fast and reliable as
      first class mail. A written notice shall be deemed to have been given to the
      recipient party on the earlier of (a) the date it shall be delivered to the
      address required by this Agreement; (b) the date delivery shall have been
      refused at the address required by this Agreement; (c) with respect to
      notices sent by mail or overnight courier, the date as of which the Postal
      Service or overnight courier, as the case may be, shall have indicated such
      notice to be undeliverable at the address required by this Agreement; or
      (d) with respect to a facsimile, the date on which the facsimile is sent
      and receipt of which is confirmed. Any and all notices referred to in this
      Agreement, or which either party desires to give to the other, shall be
      addressed to his residence in the case of Executive, or to its principal office
      in the State of California, marked “Attention: Chairman” in the case of
      Company.

     

    10.13 Headings.
      The
      Section and other headings contained in this Agreement are for reference
      purposes only and shall not affect in any way the meaning or interpretation
      of
      this Agreement.

     

    10.14 Amendment
      and Waiver.
      This
      Agreement may be amended, modified or supplemented only by a writing executed
      by
      each of the parties. Either party may in writing waive any provision of this
      Agreement to the extent such provision is for the benefit of the waiving party.
      No waiver by either party of a breach of any provision of this Agreement shall
      be construed as a waiver of any subsequent or different breach, and no
      forbearance by a party to seek a remedy for noncompliance or breach by the
      other
      party shall be construed as a waiver of any right or remedy with respect to
      such
      noncompliance or breach.

     

    10.15 Entire
      Agreement.
      This
      Agreement is the only agreement and understanding between the parties pertaining
      to the subject matter of this Agreement, and supersedes all prior agreements,
      summaries of agreements, descriptions of compensation packages, discussions,
      negotiations, understandings, representations or warranties, whether verbal
      or
      written, between the parties pertaining to such subject matter.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

     

    EXECUTIVE:

     

    
      	 	 	 	 
	
               Kelly
                McCrann

            	 	 	 
	 	 	 	 
	 	 	
              COMPANY:

               

              XCORPOREAL,
                INC.

            
	 	 	 	 
	 	 	By	 
	 	 	 	Terren S. Peizer
	 	 	 	
              Its
                Chairman

            

    

     

    
      
         

      

      
        -11-EXCLUSIVE
      LICENSE AGREEMENT

    

    between

    

    THE
      REGENTS OF THE UNIVERSITY OF CALIFORNIA

    

    and

    

    LANTIS
      LASER INC.

    

    for

    

    Near-infrared
      Transillumination for the Imaging of Early Dental Decay

    

    UC
      Case
      No. SF2003-060

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE
      OF
      CONTENTS

    

    
      	
              Article No.

            	
              Title

            	
              Page

            
	 	 	 
	
              BACKGROUND

            	
              1

            
	 	 
	
              1.

            	
              DEFINITIONS

            	
              2

            
	 	 	 
	
              2.

            	
              GRANT

            	
              8

            
	 	 	 
	
              3.

            	
              SUBLICENSES

            	
              10

            
	 	 	 
	
              4.

            	
              PAYMENT
                TERMS

            	
              12

            
	 	 	 
	
              5.

            	
              LICENSE
                ISSUE FEE

            	
              14

            
	 	 	 
	
              6.

            	
              LICENSE
                MAINTENANCE FEE

            	
              14

            
	 	 	 
	
              7.

            	
              PAYMENTS
                ON SUBLICENSES

            	
              14

            
	 	 	 
	
              8.

            	
              EARNED
                ROYALTIES AND MINIMUM ANNUAL ROYALTIES

            	
              15

            
	 	 	 
	
              9.

            	
              MILESTONE
                PAYMENTS

            	
              16

            
	 	 	 
	
              10.

            	
              DUE
                DILIGENCE

            	
              16

            
	 	 	 
	
              11.

            	
              PROGRESS
                AND ROYALTY REPORTS

            	
              17

            
	 	 	 
	
              12.

            	
              BOOKS
                AND RECORDS

            	
              20

            
	 	 	 
	
              13.

            	
              LIFE
                OF THE AGREEMENT

            	
              20

            
	 	 	 
	
              14.

            	
              TERMINATION
                BY THE REGENTS

            	
              21

            
	 	 	 
	
              15.

            	
              TERMINATION
                BY LICENSEE

            	
              22

            
	 	 	 
	
              16.

            	
              DISPOSITION
                OF LICENSED PRODUCT AND LICENSED SERVICES UPON TERMINATION OR
                EXPIRATION

            	
              22

            
	 	 	 
	
              17.

            	
              USE
                OF NAMES AND TRADEMARKS

            	
              22

            
	 	 	 
	
              18.

            	
              LIMITED
                WARRANTY

            	
              23

            
	 	 	 
	
              19.

            	
              LIMITATION
                OF LIABILITY

            	
              24

            
	 	 	 
	
              20.

            	
              PATENT
                PROSECUTION AND MAINTENANCE

            	
              24

            
	 	 	 
	
              21.

            	
              PATENT
                MARKING

            	
              26

            
	 	 	 
	
              22.

            	
              PATENT
                INFRINGEMENT

            	
              26

            
	 	 	 
	
              23.

            	
              INDEMNIFICATION

            	
              28

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              24.

            	
              NOTICES

            	
              30

            
	 	 	 
	
              25.

            	
              ASSIGNABILITY

            	
              31

            
	 	 	 
	
              26.

            	
              WAIVER

            	
              31

            
	 	 	 
	
              27.

            	
              FORCE
                MAJEURE

            	
              32

            
	 	 	 
	
              28.

            	
              GOVERNING
                LAWS; ATTORNEYS’ FEES

            	
              32

            
	 	 	 
	
              29.

            	
              GOVERNMENT
                APPROVAL OR REGISTRATION

            	
              32

            
	 	 	 
	
              30.

            	
              COMPLIANCE
                WITH LAWS

            	
              33

            
	 	 	 
	
              31.

            	
              CONFIDENTIALITY

            	
              33

            
	 	 	 
	
              32.

            	
              MISCELLANEOUS

            	
              35

            
	 	 	 
	
              CONSENT
                TO SUBSTITUTION OF PARTY

            	
              37

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXCLUSIVE
      LICENSE AGREEMENT

    for

    Near-infrared
      Transillumination for the Imaging of Early Dental Decay

    

    This
      license agreement ("Agreement") is made effective this 9th day of July, 2008
      ("Effective Date"), by and between The Regents of the University of California,
      a California corporation, having its statewide administrative offices at 1111
      Franklin Street, 12th Floor, Oakland, California 94607-5200 ("The Regents"),
      and
      acting through its Office of Technology Management, University of California,
      San Francisco (“UCSF”), 185 Berry Street, Suite 4603, San Francisco, CA 94107,
      and Lantis Laser Inc., a New Jersey corporation, having a principal place of
      business at 11 Stonebridge, Denville, New Jersey 07834
      ("Licensee").

     

    BACKGROUND

    

    A. Certain
      inventions, generally characterized as near-infrared transillumination for
      the
      imaging of early dental decay and microstructural defects (collectively
      "Invention"), were made in the course of research at the University of
      California, San Francisco by Drs. Daniel Fried and Robert Jones (“Inventors”)
      and are claimed in Patent Rights as defined below.

    B. The
      development of the Invention was sponsored in part by the Department of Health
      and Human Services and, as a consequence, this license is subject to overriding
      obligations to the United States Federal Government under 35 U.S.C. §§ 200-212
      and applicable regulations including a non-exclusive, non-transferable,
      irrevocable, paid-up license to practice or have practiced the Invention for
      or
      on behalf of the United States Government throughout the world.

    C. The
      Licensee has evaluated the Invention under a Confidential Disclosure Agreement
      with The Regents with an effective date of October 18, 2007.

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

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

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

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

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

    

    —
oo
      0
      oo —

    

    The
      parties agree as follows:

    

    1. DEFINITIONS

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

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.2 "Attributed
      Income" means the total gross proceeds (exclusive of Earned Royalties of
      Sublicensees or Development Partners, but including, without limitation, any
      license fees, maintenance fees, or milestone payments), whether consisting
      of
      cash or any other forms of consideration and whether any rights other than
      Patent Rights are granted, which gross proceeds are received by or payable
      to
      the Licensee, any Affiliate and/or Joint Venture from any Sublicensee in
      consideration of the grant of a sublicense and from any Development Partner
      in
      connection with any agreement, arrangement or other relationship described
      in
      Paragraph 1.4.
      Notwithstanding the foregoing, Attributed Income shall not include proceeds
      attributed in such sublicense or such agreement, arrangement or other
      relationship to bona fide (i) debt financing; (ii) equity (and conditional
      equity, such as warrants, convertible debt and the like) investments in the
      Licensee at market value; (iii) reimbursements of Patent Prosecution Costs
      actually incurred by the Licensee; and (iv) reimbursement for the cost of
      research and/or development services to be provided on a going forward basis
      by
      Licensee for the applicable Sublicensee and/or Development Partner under such
      sublicense or such agreement, arrangement or other relationship on the basis
      of
      full-time equivalent ("FTE") efforts of personnel at or below commercially
      reasonable and standard FTE rates.
      For the
      avoidance of doubt, any gross proceeds meeting the definition set forth above
      in
      this Article 1.2
      shall be
“Attributed Income” irrespective of whether such gross proceeds are received
      under one or more separate agreements and irrespective of how such gross
      proceeds are referred to or characterized by the Licensee, the Sublicensee
      or
      the Development Partner.

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.4 "Development
      Partner" means (i) any person or entity other than a Sublicensee that develops,
      Sells, transfers, leases, exchanges or otherwise disposes or provides Licensed
      Products in connection with, or as a result of, an agreement, arrangement or
      other relationship with the Licensee, any Affiliate, any Joint Venture or any
      Sublicensee; and (ii) any person or entity other than a Sublicensee that has
      an
      agreement, arrangement or other relationship with the Licensee, any Affiliate,
      any Joint Venture or any Sublicensee for the research or development of Licensed
      Products.

    1.5 "Earned
      Royalty" means Sublicensee Royalty (as defined in Paragraph 7.2)
      and
      Royalty (as defined in Paragraph 8.1).

    1.6 "Field
      of
      Use" means all human and veterinary dental applications. 

    1.7 "FTE"
      is
      defined in Paragraph 1.2
      (Attributed Income).

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

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

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

    
       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

    

    1.11 "Net
      Invoice Price" means (a) the gross invoice price charged and the value of any
      other consideration owed to the Licensee, any Sublicensee and/or any Development
      Partner for a Licensed Product, or (b) in those instances where the Licensed
      Product is combined in any manner with any other Product or service, the gross
      invoice price charged and the value of any other consideration owed to the
      Licensee any Sublicensee and/or any Development Partner for the combined Product
      or service in its entirety, less the following items, but only to the extent
      that they actually pertain to the disposition of such Licensed Product, are
      included in the gross invoice price charged or other consideration owed, and
      are
      identified separately on a bill or invoice:

    
      	
            	1.11.1	
              Allowances
                actually granted to customers for rejections, returns and prompt
                payment
                and volume discounts;

            

    

    
      	
            	1.11.2	
              Freight,
                transport packing and insurance charges associated with
                transportation;

            

    

    
      	
            	1.11.3	
              Taxes,
                including Deductible Value Added Tax, tariffs or import/export duties
                based on Sales when included in the gross invoice price, but excluding
                value-added taxes other than Deductible Value Added Tax or taxes
                assessed
                on income derived from Sales. "Deductible Value Added Tax" means
                only the
                portion of the value added tax that is actually incurred and is not
                reimbursable, refundable or creditable under the tax authority of
                any
                country;

            

    

    
      	
            	1.11.4	
              Only
                those normal and customary discounts and rebates given as a part
                of a
                formulary program that are paid or credited to customers, third-party
                payers, healthcare systems, or administrators for a Licensed Product
                that
                is included in such formulary program, as permitted by applicable
                law;
                

            

    

    
      	
            	1.11.5	
              Only
                those normal and customary wholesaler's discounts and rebates given
                as a
                part of a formulary program that are paid or credited to customers,
                third-party payers, health care systems, or administrators for a
                Licensed
                Product that is included in such formulary program, as permitted
                by
                applicable law;

            

    

    and

    
      	
            	1.11.6	
              Rebates
                and discounts paid or credited pursuant to applicable
                law.

            

    

    
       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

    

    
      
        
          
            1.12
              "Net
              Sale" means:

          

        

      

    

    
      	
            	1.12.1	
              except
                in the instances described in Paragraphs 1.12.2,
                1.12.3
                and 1.12.4
                of
                this Paragraph, the Net Invoice
                Price;

            

    

    
      	
            	1.12.2	
              for
                any Relationship-Influenced Sale of a Licensed Product, Net Sales
                shall be
                based on the Net Invoice Price at which the Relationship-Influenced
                Sale
                Purchaser re-Sells such Licensed
                Product;

            

    

    
      	
            	1.12.3	
              in
                those instances where Licensed Product is not Sold, but is otherwise
                exploited, the Net Sales for such Licensed Product shall be the Net
                Invoice Price of products of the same or similar kind and quality,
                Sold in
                similar quantities, currently being offered for Sale by the Licensee,
                any
                Sublicensee and/or any Development Partner. Where such products are
                not
                currently being offered for Sale by the Licensee, any Sublicensee
                and/or
                any Development Partner, the Net Sales for Licensed Product otherwise
                exploited, for the purpose of computing royalties, shall be the average
                Net Invoice Price at which products of the same or similar kind and
                quality, Sold in similar quantities, are then currently being offered
                for
                Sale by other manufacturers. Where such products are not currently
                Sold or
                offered for Sale by the Licensee, any Sublicensee and/or any Development
                Partner, or others, then the Net Sales shall be the Licensee's, any
                Sublicensee's and/or any Development Partner's cost of manufacture
                of
                Licensed Product, determined according to Generally Accepted Accounting
                Principles (“GAAP”), plus fifty percent (50%);
                and

            

    

    
      	
            	1.12.4	
              for
                a Reacquisition Sale or Exploitation, Net Sales shall mean the Net
                Invoice
                Price upon the Reacquisition Sale or Exploitation of a Licensed
                Product.

            

    

    

    For
      a
      Combination Product, Net Sales shall be calculated as:

    
      	 	
              A/(A+B)
                x [Net Sales, calculated without regard to this formula, of the Licensed
                Product that is the Combination
                Product],

            

    

    Where:

    
      
        
          	
                	(i)	
                  "A"
                    is the total of Net Sales of each Licensed Product contained
                    within or
                    used in the Combination Product when Sold separately;
                    and

                

        

        
           

          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

           

        

      

    

    
      	 	
              (ii)

            	
              "B"
                is the total of Net Sales of each Combination Product Component contained
                within or used in the Combination Product when Sold separately,
                

            

    

    provided,
      however, that in no event shall Net Sales for a Combination Product be less
      than
      fifteen percent (15%) of Net Sales, calculated without regard to this formula,
      of the Licensed Product that is the Combination Product.

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

    1.14 "Patent
      Prosecution Costs" is defined in Paragraph 20.4.

    1.15 "Patent
      Rights" means the Valid Claims of, to the extent assigned to or otherwise
      obtained by The Regents, the United States patent application number 11/347,637,
      claiming priority from United States provisional patent application number
      60/493,569
      filed on
      August 8, 2003. Patent
      Rights shall further include the Valid Claims of, to the extent assigned to
      or
      otherwise obtained by The Regents, any reissues, extensions, substitutions,
      continuations, divisions, and continuation-in-part applications (but only those
      Valid Claims in the continuation-in-part applications that are entirely
      supported in the specification and entitled to the priority date of the parent
      application). This definition of Patent Rights excludes any rights in and to
      New
      Developments.

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

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

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

    
       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

    

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

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

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

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

    1.23 "Sublicense
      Fee" is defined in Paragraph 7.1.

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

    

    2. GRANT

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

    
       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

    

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

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

    
      	
            	2.3.1	
              The
                obligations to the United States Government under 35 U.S.C. §§ 200-212 and
                all applicable governmental implementing regulations, as amended
                from time
                to time, including the obligation to report on the utilization of
                the
                Invention as set forth in 37 CFR. § 401.14(h), and all applicable
                provisions of any license to the United States Government executed
                by The
                Regents; and

            

    

    
      	
            	2.3.2	
              the
                National Institutes of Health "Principles and Guidelines for Recipients
                of
                NIH Research Grants and Contracts on Obtaining and Disseminating
                Biomedical Research Resources," 64 F.R. 72090 (Dec. 23, 1999), as
                amended
                from time to time.

            

    

    2.4 The
      license granted in Paragraphs 2.1
      and
2.2
      is
      limited to methods and products that are within the Field of Use. For other
      methods and products, the Licensee has no license under this
      Agreement.

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

    
       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

    

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

    2.7 The
      Agreement will terminate immediately if Licensee files a claim including in
      any
      way the assertion that any portion of The Regents’ Patent Rights is invalid or
      unenforceable where the filing is by the Licensee, a third party on behalf
      of
      the Licensee, or a third party at the written urging of the
      Licensee.

    

    3. SUBLICENSES

    3.1 The
      Regents also grants to the Licensee the right to sublicense to third parties
      (including to Affiliates and Joint Ventures) the rights granted to the Licensee
      hereunder, with no right to further sublicense except as provided below, as
      long
      as the Licensee has current exclusive rights thereto under this Agreement.
      Each
      Sublicensee must be subject to a written sublicense agreement. All sublicenses
      will include all of the rights of, and will require the performance of all
      the
      obligations due to, The Regents (and, if applicable, the United States
      Government and other sponsors), other than those rights and obligations
      specified in Article 5
      (License
      Issue Fee), Article 6
      (License
      Maintenance Fee) and Paragraph 8.2
      (Minimum
      Annual Royalty) and Paragraphs 20.4
      and
20.5
      (reimbursement of Patent Prosecution Costs). For the avoidance of doubt, the
      Licensee shall have no right to permit any Sublicensee and no Sublicensee shall
      have any right to further sublicense any of the rights granted to the Licensee
      hereunder, except that each Sublicensee (except Affiliates and Joint Ventures)
      may sublicense to its affiliates as affiliate is defined in Paragraph
1.1
      with
      Sublicensee substituted for licensee in the definition, to the extent needed
      for
      the development and commercialization of Licensed Products in accordance with
      this Agreement. Also, for the avoidance of doubt, Affiliates and Joint Ventures
      shall have no licenses under this Agreement unless such Affiliates and Joint
      Ventures are granted a sublicense. For the purposes of this Agreement, the
      operations of all Sublicensees shall be deemed to be the operations of the
      Licensee, for which the Licensee shall be responsible.

    
       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

    

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

    3.3 The
      Licensee will notify The Regents of each sublicense granted hereunder and will
      provide The Regents with a complete copy of each sublicense (along with a
      summary of the material terms of each such sublicense) and each amendment to
      such sublicense within thirty (30) days of issuance of such sublicense or such
      amendment. The Licensee will collect from Sublicensees and pay to The Regents
      all fees, payments, royalties and the cash equivalent of any consideration
      due
      The Regents. The Licensee will guarantee all monies due The Regents from
      Sublicensees. For clarity, if the Licensee grants a sublicense that contains
      a
      provision for payment of royalties by any Sublicensee in an amount that is
      less
      than the Sublicensee Royalty required to be paid under Paragraph 7.2
      below,
      then the Licensee will pay to The Regents a total amount equal to the
      Sublicensee Royalty based on the Sublicensees’ Net Sales as provided for in
      Paragraph 7.2.
      The
      Licensee will require Sublicensees to provide it with copies of all progress
      reports and royalty reports in accordance with the provisions herein and the
      Licensee will collect and deliver all such reports due The Regents from
      Sublicensees.

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

    3.5 Upon
      any
      expiration or termination of this Agreement for any reason, all sublicenses
      shall automatically terminate, unless The Regents, at its sole discretion,
      agrees in writing to an assignment to The Regents of any sublicense. In the
      event of termination of this Agreement and if The Regents accepts assignment
      of
      any sublicense, The Regents will not be bound by any grant of rights broader
      than or will not be required to perform any obligation other than those rights
      and obligations contained in this Agreement. Moreover, The Regents will have
      the
      sole right to modify each such assigned sublicense to include all of the rights
      of The Regents (and, if applicable, the United States Government and other
      sponsors) that are contained in this Agreement, including the payment of Earned
      Royalties directly to The Regents by the Sublicensee as if it were the Licensee
      at a rate that is no lower than the rate set forth in Article 8
      (Earned
      Royalties and Minimum Annual Royalties) in accordance with Article 4
      (Payment
      Terms).

    
       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

    

    4. PAYMENT
      TERMS

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

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

    4.3 All
      consideration due The Regents will be payable and will be made in United States
      dollars by check payable to "The Regents of the University of California" or
      by
      wire transfer to an account designated by The Regents. The Licensee is
      responsible for all bank or other transfer charges. When Licensed Products
      are
      Sold for monies other than United States dollars, the Earned Royalties and
      other
      consideration will first be determined in the foreign currency of the country
      in
      which such Licensed Products were Sold and then converted into equivalent United
      States dollars. The exchange rate will be the average exchange rate quoted
      in
      the The
      Wall Street Journal
      during
      the last ninety (90) days of the reporting period. 

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

    
       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

    

    4.5 Notwithstanding
      the provisions of Article 27
      (Force
      Majeure) if at any time legal restrictions prevent the prompt remittance of
      Earned Royalties or other consideration owed to The Regents by the Licensee
      with
      respect to any country where a sublicense is issued or a Licensed Product is
      Sold or otherwise exploited, then the Licensee shall convert the amount owed
      to
      The Regents into United States dollars and will pay The Regents directly from
      another source of funds in order to remit the entire amount owed to The Regents.
      

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

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

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

    
       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

      

    

    5. LICENSE
      ISSUE FEE

    The
      Licensee will pay to The Regents a one-time license issue fee of ten thousand
      dollars ($10,000) within seven (7) days of the Effective Date. This fee is
      non-refundable, non-cancelable and is not an advance or otherwise creditable
      against any royalties or other payments required to be paid under the terms
      of
      this Agreement. 

    

    6. LICENSE
      MAINTENANCE FEE

    The
      Licensee will also pay to The Regents a license maintenance fee of five thousand
      dollars ($5,000) beginning on the one-year anniversary of the Effective Date
      and
      continuing annually on each anniversary of the Effective Date. The license
      maintenance fee is not due on any anniversary of the Effective Date if on that
      date, the Licensee is Selling or otherwise exploiting Licensed Products and
      is
      paying an Earned Royalty to The Regents on the Net Sales of such Licensed
      Product. The license maintenance fee is non-refundable and is not an advance
      or
      otherwise creditable against any royalties or other payments required to be
      paid
      under the terms of this Agreement.

    

    7. PAYMENTS
      ON SUBLICENSES

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

    
      	
            	7.1.1	
              Forty
                percent (40%) of all Attributed Income attributable to any sublicense
                that
                is granted prior to the generation of a prototype;
                

            

    

    
      	
            	7.1.2	
              Twenty-five
                percent (25%) of all Attributed Income attributable to any sublicense
                that
                is granted upon or after the occurrence of the event specified in
                Paragraph 7.1.1 but prior to the initiation of clinical trials with
                respect to a Licensed Product for purposes of regulatory approval
                by the
                United States Food and Drug Administration (“FDA”) or
                equivalent;

            

    

    
      	
            	7.1.3	
              Ten
                percent (10%) of all Attributed Income attributable to any sublicense
                that
                is granted upon or after the occurrence of the event specified in
                Paragraph 7.1.2 but prior to FDA market approval (or equivalent)
                with
                respect to a Licensed Product; or

            

    

    
       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

    
      	
            	7.1.4	
              Five
                percent (5%) of all Attributed Income attributable to any sublicense
                that
                is granted upon or after the occurrence of FDA market approval (or
                equivalent) specified in Paragraph 7.1.3.

            

    

    7.2 The
      Licensee will also pay to The Regents, with respect to each Sublicensee and
      each
      Development Partner (other than an Affiliate or Joint Venture), an earned
      royalty of five percent (5%) of the Net Sales of each Licensed Product or
      Licensed Method ("Sublicensee Royalty"). 

    

    8. EARNED
      ROYALTIES AND MINIMUM ANNUAL ROYALTIES

    8.1 The
      Licensee will also pay to The Regents an earned royalty of five percent (5%)
      of
      the Net Sales of Licensed Product or Licensed Method by the Licensee or any
      Affiliate or Joint Venture
      ("Royalty"). 

    8.2 The
      Licensee will also pay to The Regents a minimum annual royalty for the life
      of
      Patent Rights, beginning with the year of the first Sale of Licensed Product,
      but no later than calendar year 2010. The minimum annual royalty will be due
      as
      follows:

    
      	
            	8.2.1	
              Ten
                thousand dollars ($10,000) for the first
                year;

            

    

    
      	
            	8.2.2	
              Fifty
                thousand dollars ($50,000) for the second
                year;

            

    

    
      	
            	8.2.3	
              One
                hundred thousand dollars ($100,000) for the third
                year;

            

    

    
      	
            	8.2.4	
              One
                hundred fifty thousand dollars ($150,000) for the fourth year;
                and

            

    

    
      	
            	8.2.5	
              Two
                hundred thousand dollars ($200,000) for the fifth year and all subsequent
                years.

            

    

    The
      minimum annual royalty will be paid to The Regents by February 28 of each year
      and will be credited against the Earned Royalty due for the calendar year in
      which the minimum payment was made. However, if the year of the first Sale
      is
      earlier than calendar year 2009, then the Licensee's obligation to pay the
      minimum annual royalty will be pro-rated for the number of months remaining
      in
      that calendar year when Sales commence and will be due the following February
      28
      (along with the minimum annual royalty payment for that year), to allow for
      crediting of the pro-rated year's Earned Royalties.

    
       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

         

      

    

    9. MILESTONE
      PAYMENTS

    9.1 With
      respect to each Licensed Product, the Licensee will pay to The Regents the
      following non-refundable, non-creditable amounts: 

    
      	
            	9.1.1	
              Fifteen
                thousand dollars ($15,000) upon notice of allowance of United States
                patent application number 11/347,637 from the United States Patent
                and
                Trademark Office; and

            

    

    
      	
            	9.1.2	
              Twenty-five
                thousand dollars ($25,000) upon United States Food and Drug Administration
                (“FDA”) market approval (or
                equivalent).

            

    

    9.2 For
      the
      avoidance of doubt, each of the milestone payments set forth in Paragraphs
      9.1.1
      through 9.1.2 will be payable with respect to each Licensed Product.
      Furthermore, each such milestone payment will be payable regardless of whether
      the applicable milestone event has been achieved by the Licensee or any
      Affiliate, Joint Venture, Sublicensee, or Development Partner.

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

    

    10. DUE
      DILIGENCE

    10.1 The
      Licensee, upon execution of this Agreement, will diligently proceed with the
      development, manufacture and Sale of Licensed Products and will earnestly and
      diligently market the same after execution of this Agreement and in quantities
      sufficient to meet the market demands therefor.

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

    10.3 The
      Licensee will: 

    
      	
            	10.3.1	
              generate
                a prototype within six (6) months from the Effective
                Date;

            

    

    
      	
            	10.3.2	
              obtain
                market approval from the United States FDA within fifteen (15) months
                from
                the Effective Date; 

            

    

    
      	
            	10.3.3	
              market
                Licensed Product within eighteen (18) months from the Effective Date;
                

            

    

    
      	
            	10.3.4	
              market
                Licensed Product in the United States within six (6) months of receiving
                approval of such Licensed Product from the United States FDA;
                and

            

    

    
       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

    

    
      	
            	10.3.5	
              fill
                the market demand for Licensed Products following commencement of
                marketing at any time during the exclusive period of this
                Agreement.

            

    

    10.4 If
      the
      Licensee is unable to perform any of the above provisions, then The Regents
      has
      the right and option to either terminate this Agreement or reduce the exclusive
      license granted to the Licensee to a nonexclusive license in accordance with
      Paragraph 10.8
      below.
      This right, if exercised by The Regents, supersedes the rights granted in
      Article 2
      (Grant).

    10.5 In
      addition to the obligations set forth above, the Licensee shall spend an
      aggregate of not less than fifty thousand dollars ($50,000) for the development
      of Licensed Products during the first year of this Agreement.

    10.6 The
      Regents and Inventors will, to the extent possible, provide any and all
      information that is reasonably requested by Licensee for the purposes of United
      States FDA approval.

    10.7 If
      the
      Licensee fails or is unable to comply with the spending requirement set forth
      in
      Paragraph 10.5,
      then
      The Regents has the right and option to either terminate this Agreement or
      reduce the exclusive license granted to the Licensee to a nonexclusive license.
      This right, if exercised by The Regents, supersedes the rights granted in
      Article 2
      (Grant).

    10.8 To
      exercise either the right to terminate this Agreement or to reduce the exclusive
      license granted to the Licensee to a non-exclusive license for lack of diligence
      required in this Article 10
      (Due
      Diligence), The Regents will give the Licensee written notice of the deficiency.
      The Licensee thereafter has sixty (60) days to cure the deficiency. If The
      Regents has not received written tangible evidence satisfactory to The Regents
      that the deficiency has been cured by the end of the sixty (60)-day period,
      then
      The Regents may, at its option, terminate this Agreement immediately without
      the
      obligation to provide sixty (60) days' notice as set forth in Article
14
      (Termination by The Regents) or reduce the exclusive license granted to the
      Licensee to a non-exclusive license by giving written notice to the
      Licensee. 

    

    11. PROGRESS
      AND ROYALTY REPORTS

    11.1 Beginning
      on December 31, 2008, and semi-annually thereafter, the Licensee will submit
      to
      The Regents a written progress report as described in Paragraph 11.2
      below
      covering the Licensee's (and any Affiliates', Joint Ventures', Sublicensee's
      or
      Development Partner's) activities related to the development and testing of
      all
      Licensed Products and related to the obtaining of the governmental approvals
      necessary for marketing and the activities required and undertaken in order
      to
      meet the diligence requirements set forth in Article 10
      (Due
      Diligence). Progress reports are required for each Licensed Product until the
      first Sale or other exploitation of that Licensed Product occurs in the United
      States and shall be again required if Sales of such Licensed Product are
      suspended or discontinued.

    
       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

    

    11.2 Progress
      reports submitted under Paragraph 11.1
      shall
      include, but are not limited to, a detailed summary of the following topics
      so
      that The Regents will be able to determine the progress of the development
      of
      Licensed Products and will also be able to determine whether or not the Licensee
      has met its diligence obligations set forth in Article 10
      (Due
      Diligence) above:

    
      	
            	11.2.1	
              summary
                of work completed as of the submission date of the progress
                report;

            

    

    
      	
            	11.2.2	
              key
                scientific discoveries as of the submission date of the progress
                report;

            

    

    
      	
            	11.2.3	
              summary
                of work in progress as of the submission date of the progress
                report;

            

    

    
      	
            	11.2.4	
              current
                schedule of anticipated events and milestones, including those event
                and
                milestones specified in Article 10
                (Due Diligence);

            

    

    
      	
            	11.2.5	
              market
                plans for introduction of Licensed Products including the anticipated
                and
                actual market introduction dates of each Licensed
                Product;

            

    

    
      	
            	11.2.6	
              Sublicensees’
                activities relating to the above items, if there are any Sublicensees;
                and

            

    

    
      	
            	11.2.7	
              a
                summary of resources (dollar value) spent in the reporting
                period.

            

    

    

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

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

    
       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

    

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

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

    
      	
            	11.6.1	
              the
                gross invoice prices and Net Sales of Licensed Products Sold or otherwise
                exploited (itemizing the applicable gross proceeds and any deductions
                therefrom) and any Attributed Income (itemizing the applicable gross
                proceeds and any deductions therefrom) due to the
                Licensee;

            

    

    
      	
            	11.6.2	
              the
                quantity of each type of Licensed Product Sold or otherwise exploited;
                

            

    

    
      	
            	11.6.3	
              the
                country in which each Licensed Product was made, used or Sold or
                otherwise
                exploited;

            

    

    
      	
            	11.6.4	
              the
                Earned Royalties, in United States dollars, payable with respect
                to Net
                Sales;

            

    

    
      	
            	11.6.5	
              the
                Sublicense Fees, in United States dollars, payable with respect to
                Attributed Income;

            

    

    
      	
            	11.6.6	
              the
                method used to calculate the Earned Royalty, specifying all deductions
                taken and the dollar amount of each such
                deduction;

            

    

    
      	
            	11.6.7	
              the
                exchange rates used, if any;

            

    

    
      	
            	11.6.8	
              the
                amount of the cash and the amount of the cash equivalent of any non-cash
                consideration including the method used to calculate the non-cash
                consideration;

            

    

    
      	
            	11.6.9	
              for
                each Licensed Product, the specific Patent Rights identified by UC
                Case
                Number exercised by the Licensee or any Affiliate, Joint Venture,
                Sublicensee, or any Development Partner in the course of making,
                using,
                selling, offering for Sale or importing such Licensed Product;
                and

            

    

    
       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

    

    
      	
            	11.6.10	
              any
                other information reasonably necessary to confirm Licensee's calculation
                of its financial obligations
                hereunder.

            

    

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

    

    12. BOOKS
      AND
      RECORDS

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

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

    

    13. LIFE
      OF
      THE AGREEMENT

    13.1 Unless
      otherwise terminated by operation of law, Paragraph 13.2,
      or by
      acts of the parties in accordance with the terms of this Agreement, this
      Agreement will remain in effect from the Effective Date until the expiration
      or
      abandonment of the last of the Patent Rights licensed hereunder.

    13.2 This
      Agreement will automatically terminate without the obligation to provide sixty
      (60) days' notice as set forth in Article 14
      (Termination By The Regents) upon the filing of a petition for relief under
      the
      United States Bankruptcy Code by or against the Licensee as a debtor or alleged
      debtor.

    
       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

    

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

    

      
        	
                Article 1

              	
                Definitions

              
	
                Paragraph 4.8

              	
                Late
                  Payments

              
	
                Article 5

              	
                License
                  Issue Fee

              
	
                Article 7

              	
                Payments
                  on Sublicenses

              
	
                Paragraphs 8.1 and 8.2

              	
                Earned
                  Royalties and Minimum Annual Royalties

              
	
                Article 12

              	
                Books
                  and Records

              
	
                Article 13

              	
                Life
                  of the Agreement

              
	
                Article 16

              	
                Disposition
                  of Licensed Products and Licensed Services Upon Termination or
                  Expiration

              
	
                Article 17 

              	
                Use
                  of Names and Trademarks

              
	
                Article 18

              	
                Limited
                  Warranty

              
	
                Article 19

              	
                Limitation
                  of Liability

              
	
                Paragraphs 20.4 & 20.5

              	
                Patent
                  Prosecution and Maintenance

              
	
                Article 23 

              	
                Indemnification

              
	
                Article 24

              	
                Notices

              
	
                Article 28

              	
                Governing
                  Laws; Venue; Attorneys Fees

              
	
                Article 31

              	
                Confidentiality

              

      

    

     

    13.4 The
      termination or expiration of this Agreement will not relieve the Licensee of
      its
      obligation to pay any fees, royalties or other payments owed to The Regents
      at
      the time of such termination or expiration and will not impair any accrued
      right
      of The Regents, including the right to receive Earned Royalties in accordance
      with Articles 7
      (Payments on Sublicenses), 8
      (Earned
      Royalties and Minimum Annual Royalties) and 16
      (Disposition of Licensed Products and Licensed Services Upon Termination or
      Expiration).

    

    14. TERMINATION
      BY THE REGENTS

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    15. TERMINATION
      BY LICENSEE

    The
      Licensee has the right at any time to terminate this Agreement by providing
      a
      Notice of Termination to The Regents. Termination of this Agreement (but not
      termination of any patents or patent applications under Patent Rights, which
      termination is subject to Paragraph 20.5)
      will be
      effective sixty (60) days from the effective date of such notice.

    

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

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

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

    

    17. USE
      OF
      NAMES AND TRADEMARKS

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

    
       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

         

      

    

    18. LIMITED
      WARRANTY

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

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

    18.3 This
      Agreement does not:

    
      	
            	18.3.1	
              express
                or imply a warranty or representation as to the validity, enforceability,
                or scope of any Patent Rights; or

            

    

    
      	
            	18.3.2	
              express
                or imply a warranty or representation that anything made, used, Sold,
                offered for Sale or imported or otherwise exploited under any license
                granted in this Agreement is or will be free from infringement of
                patents,
                copyrights, or other rights of third parties;
                or

            

    

    
      	
            	18.3.3	
              obligate
                The Regents to bring or prosecute actions or suits against third
                parties
                for patent infringement except as provided in Article 22
                (Patent Infringement); or

            

    

    
      	
            	18.3.4	
              confer
                by implication, estoppel or otherwise any license or rights under
                any
                patents or other rights of The Regents other than Patent Rights,
                regardless of whether such patents are dominant or subordinate to
                Patent
                Rights; or

            

    

    
       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

         

      

    

    
      	
            	18.3.5	
              obligate
                The Regents to furnish any New Developments, know-how, technology
                or
                information not provided in Patent
                Rights.

            

    

    

    19. LIMITATION
      OF LIABILITY

    THE
      REGENTS WILL NOT BE LIABLE FOR ANY LOST PROFITS, COSTS OF PROCURING SUBSTITUTE
      GOODS OR SERVICES, LOST BUSINESS, ENHANCED DAMAGES FOR INTELLECTUAL PROPERTY
      INFRINGEMENT OR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER
      SPECIAL DAMAGES SUFFERED BY LICENSEE, SUBLICENSEES, JOINT VENTURES, AFFILIATES
      OR DEVELOPMENT PARTNERS ARISING OUT OF OR RELATED TO THIS AGREEMENT FOR ALL
      CAUSES OF ACTION OF ANY KIND (INCLUDING TORT, CONTRACT, NEGLIGENCE, STRICT
      LIABILITY AND BREACH OF WARRANTY) EVEN IF THE REGENTS HAS BEEN ADVISED OF THE
      POSSIBILITY OF SUCH DAMAGES.

    

    20. PATENT
      PROSECUTION AND MAINTENANCE

    20.1 As
      long
      as the Licensee has paid Patent Prosecution Costs as provided for in this
      Article 20
      (Patent
      Prosecution and Maintenance), The Regents will diligently prosecute and maintain
      the United States patents comprising the Patent Rights using counsel of its
      choice. The Regents' counsel will take instructions only from The Regents.
      The
      Regents will provide the Licensee with copies of all relevant documentation
      so
      that the Licensee will be informed of the continuing prosecution and may comment
      upon such documentation sufficiently in advance of any initial deadline for
      filing a response, provided, however, that if the Licensee has not commented
      upon such documentation in a reasonable time for The Regents to sufficiently
      consider the Licensee’s comments prior to a deadline with the relevant
      government patent office, or The Regents must act to preserve the Patent Rights,
      The Regents will be free to respond without consideration of the Licensee’s
      comments, if any. The Licensee agrees to keep this documentation confidential
      as
      provided for in Article 31
      (Confidentiality). 

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

    
       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

         

      

    

    20.3 The
      Licensee will apply for an extension of the term of any patent included within
      the Patent Rights if appropriate under the Drug Price Competition and Patent
      Term Restoration Act of 1984 and/or European, Japanese and other foreign
      counterparts of this Law. The Licensee shall prepare all documents and The
      Regents agrees to execute the documents and to take additional action as the
      Licensee reasonably requests in connection therewith. Licensee shall be liable
      for all costs relating to such application.

    20.4 The
      Licensee will bear the costs of preparing, filing, prosecuting and maintaining
      all United States patent applications contemplated by this Agreement ("Patent
      Prosecution Costs"). The Regents and Licensee will make best efforts to discuss
      and agree upon patent prosecution strategy and costs. Patent Prosecution Costs
      billed by The Regents' counsel will be rebilled to the Licensee and are due
      within thirty (30) days of rebilling by The Regents. These Patent Prosecution
      Costs will include, without limitation, patent prosecution costs for the
      Invention incurred by The Regents prior to the execution of this Agreement
      and
      any patent prosecution costs that may be incurred for patentability opinions,
      re-examination, re-issue, interferences, oppositions or inventorship
      determinations. Prior Patent Prosecution Costs will be due upon execution of
      this Agreement and billing by The Regents and are at least thirteen thousand
      dollars ($13,000).

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

    
       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

         

      

    

    20.6 The
      Regents may file, prosecute or maintain patent applications or patents at its
      own expense in any country in which the Licensee has not elected to file,
      prosecute or maintain patent applications or patents in accordance with this
      Article 20
      (Patent
      Prosecution and Maintenance) and those applications, resultant patents and
      patents will not be subject to this Agreement.

    

    21. PATENT
      MARKING

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

    

    22. PATENT
      INFRINGEMENT

    22.1 In
      the
      event that The Regents (to the extent of the actual knowledge of the licensing
      professional responsible for the administration of this Agreement) or the
      Licensee learns of infringement of potential commercial significance of any
      patent licensed under this Agreement, the knowledgeable party will provide
      the
      other (i) with written notice of such infringement and (ii) with any evidence
      of
      such infringement available to it (the "Infringement Notice"). During the period
      in which, and in the jurisdiction where, the Licensee has exclusive rights
      under
      this Agreement, neither The Regents nor the Licensee will notify a possible
      infringer of infringement or put such infringer on notice of the existence
      of
      any Patent Rights without first obtaining consent of the other. If the Licensee
      puts such infringer on notice of the existence of any Patent Rights with respect
      to such infringement without first obtaining the written consent of The Regents
      and if a declaratory judgment action is filed by such infringer against The
      Regents, then Licensee’s right to initiate a suit against such infringer for
      infringement under Paragraph 22.2
      below
      will terminate immediately without the obligation of The Regents to provide
      notice to the Licensee. Both The Regents and the Licensee will use their
      diligent efforts to cooperate with each other to terminate such infringement
      without litigation.

    22.2 If
      infringing activity of potential commercial significance by the infringer has
      not been abated within ninety (90) days following the date the Infringement
      Notice takes effect, then the Licensee may institute suit for patent
      infringement against the infringer. The Regents may voluntarily join such suit
      at its own expense, but may not otherwise commence suit against the infringer
      for the acts of infringement that are the subject of the Licensee's suit or
      any
      judgment rendered in that suit. The Licensee may not join The Regents as a
      party
      in a suit initiated by the Licensee without The Regents' prior written consent.
      If, in a suit initiated by the Licensee, The Regents is involuntarily joined
      other than by the Licensee, then the Licensee will pay any costs incurred by
      The
      Regents arising out of such suit, including but not limited to, any legal fees
      of counsel that The Regents selects and retains to represent it in the
      suit.
      Licensee
      may reject counsel selected by The Regents, however, in the event that Licensee
      has rejected three (3) representatives or agents of The Regents, The Regents
      shall have the right to use representatives or agents of its choice without
      Licensee's assent.

    
       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

         

      

    

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

    22.4 Notwithstanding
      anything to the contrary in this Agreement, in the event that the infringement
      or potential infringement pertains to an issued patent included within the
      Patent Rights and written notice is given under the Drug Price Competition
      and
      Patent Term Restoration Act of 1984 (and/or foreign counterparts of this Law),
      then the party in receipt of such notice under the Act (in the case of The
      Regents to the extent of the actual knowledge of the licensing officer
      responsible for the administration of this Agreement) shall provide the
      Infringement Notice to the other party promptly. If the time period is such
      that
      the Licensee will lose the right to pursue legal remedy for infringement by
      not
      notifying a third party or by not filing suit, the notification period and
      the
      time period to file suit will be accelerated to within forty-five (45) days
      of
      the date of such notice under the Act to either party.

    22.5 Any
      recovery or settlement received in connection with any suit will first be shared
      by The Regents and the Licensee equally to cover any litigation costs each
      incurred and next shall be paid to The Regents or the Licensee to cover any
      litigation costs it incurred in excess of the litigation costs of the other.
      In
      any suit initiated by the Licensee, any recovery in excess of litigation costs
      will be shared between Licensee and The Regents as follows: (a) for any recovery
      other than amounts paid for willful infringement: (i) The Regents will receive
      fifteen percent (15%) of the recovery if The Regents was not a party in the
      litigation and did not incur any litigation costs, (ii) The Regents will receive
      twenty-five percent (25%) of the recovery if The Regents was a party in the
      litigation whether joined as a party under the provisions of Paragraph
22.2
      or
      otherwise, but The Regents did not incur any litigation costs, and (iii) The
      Regents will receive fifty percent (50%) of the recovery if The Regents incurred
      any litigation costs in connection with the litigation; and (b) for any recovery
      for willful infringement, The Regents will receive fifty percent (50%) of the
      recovery. In any suit initiated by The Regents, any recovery in excess of
      litigation costs will belong to The Regents. The Regents and the Licensee agree
      to be bound by all determinations of patent infringement, validity and
      enforceability (but no other issue) resolved by any adjudicated judgment in
      a
      suit brought in compliance with this Article 22
      (Patent
      Infringement).

    
       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

    

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

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

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

    

    23. INDEMNIFICATION

    23.1 The
      Licensee will, and will require its Sublicensees to, indemnify, hold harmless
      and defend The Regents, the sponsors of the research that led to the Invention,
      and the inventors of any invention claimed in patents or patent applications
      under Patent Rights (including the Licensed Products and Licensed Methods
      contemplated thereunder) and their employers, and the officers, employees and
      agents of any of the foregoing, against any and all claims, suits, losses,
      damage, costs, fees and expenses resulting from, or arising out of, the exercise
      of this license or any sublicense. This indemnification will include, but not
      be
      limited to, any product liability. If The Regents, in its sole discretion,
      believes that there will be a conflict of interest or it will not otherwise
      be
      adequately represented by counsel chosen by the Licensee to defend The Regents
      in accordance with this Article 23 (Indemnification), then The Regents may
      obtain counsel of its choice to represent it. If The Regents retains such
      counsel due to a conflict of interest, the Licensee will pay all expenses for
      such representation. If The Regents retains such counsel because it believes
      it
      will not otherwise be adequately represented by counsel chosen by the Licensee,
      then The Regents will pay all expenses for such representation.

    
       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

    

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

    
      	
            	23.2.1	
              Commercial
                Form General Liability Insurance (contractual liability included)
                with
                limits as follows:

            

    

    
      
        	
                Each
                  Occurrence

              	 	
                $  

              	
                1,000,000

              	 
	
                Products/Completed
                  Operations Aggregate

              	 	
                $

              	
                2,000,000

              	 
	
                Personal
                  and Advertising Injury

              	 	
                $

              	
                1,000,000

              	 
	
                General
                  Aggregate (commercial form only)

              	 	
                $

              	
                2,000,000

              	 

      

    

    
      	
            	23.2.2	
              Upon
                United States FDA market approval (or equivalent) of its first Licensed
                Product, Licensee shall increase its Commercial Form General Liability
                Insurance to limits as follows:

            

    

    
      	
              Each
                Occurrence

            	 	
              $  

            	
              1,000,000

            	 
	
              Products/Completed
                Operations Aggregate

            	 	
              $

            	
              5,000,000

            	 
	
              Personal
                and Advertising Injury

            	 	
              $

            	
              1,000,000

            	 
	
              General
                Aggregate (commercial form only)

            	 	
              $

            	
              5,000,000

            	 

    

     

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

    
      	
            	23.2.3	
              Worker's
                Compensation as legally required in the jurisdiction in which the
                Licensee
                is doing business.

            

    

    23.3 The
      coverage and limits referred to in Paragraphs 23.2.1,
      23.2.3,
      and
      23.2.3 above will not in any way limit the liability of the Licensee under
      this
      Article 23
      (Indemnification). Upon the execution of this Agreement, the Licensee will
      furnish The Regents with certificates of insurance evidencing compliance with
      all requirements. Such certificates will:

    
       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

         

      

    

    
      	 	
              -

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

            

    

    
      	 	
              -

            	
              Indicate
                that The Regents has been endorsed as an additional insured under
                the
                coverage described above in Paragraphs 23.2.1 and 23.2.2;
                and

            

    

    
      	
               

            	
              -

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

            

    

    

    23.4 The
      Regents will promptly notify the Licensee in writing of any claim or suit
      brought against The Regents for which The Regents intends to invoke the
      provisions of this Article 23
      (Indemnification). The Licensee will keep The Regents informed of its defense
      of
      any claims pursuant to this Article 23
      (Indemnification).

    

    24. NOTICES

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

    
      	
            	24.1.1	
              on
                the date of delivery if delivered in
                person;

            

    

    
      	
            	24.1.2	
              on
                the date of mailing if mailed by first-class certified mail, postage
                paid;
                or

            

    

    
      	
            	24.1.3	
              on
                the date of mailing if mailed by any global express carrier service
                that
                requires the recipient to sign the documents demonstrating the delivery
                of
                such notice or payment.

            

    

     

    
      
        	
                In
                  the case of Licensee:

              	
                Lantis
                  Laser Inc.

              
	 	
                11
                  Stonebridge

              
	 	
                Denville,
                  NJ 07834

              
	 	
                Attention:
                  Stanley Baron, CEO

              

      

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      
        	
                In
                  the case of The Regents:

              	
                For
                  notices:

              
	 	 
	 	
                The
                  Regents of the University of California

              
	 	
                UCSF
                  Office of Technology Management

              
	 	
                185
                  Berry Street, Suite 4603

              
	 	
                San
                  Francisco, CA 94107

              
	 	
                Attention:
                  Director

              
	 	
                RE:
                  UC Case No. SF2003-060

              
	 	 
	 	
                For
                  remittance of payments:

              
	 	 
	 	
                The
                  Regents of the University of California

              
	 	
                UCOP
                  Office of Technology Transfer

              
	 	
                1111
                  Franklin Street, 7th Floor

              
	 	
                Oakland,
                  CA 94607-5200

              
	 	
                Attention:
                  Accounts Receivable

              
	 	
                RE:
                  UC Case No. SF2003-060

              

      

    

    

    25. ASSIGNABILITY

    This
      Agreement is personal to the Licensee. The Licensee may not assign or transfer
      this Agreement, including by merger, operation of law, or otherwise, without
      The
      Regents' prior written consent, except that such consent will not be required
      in
      the case of assignment or transfer to a party that succeeds to all or
      substantially all of Licensee's business or assets relating to this Agreement,
      whether by sale, merger, operation of law or otherwise, provided that such
      assignee or transferee promptly agrees to be bound by the terms and conditions
      of this Agreement and signs The Regents' standard substitution of party letter
      (the form of which is attached hereto as Appendix A). Any attempted assignment
      by Licensee in violation of this Article 25 (Assignment) will be null and void.
      This Agreement is binding upon and will inure to the benefit of The Regents,
      its
      successors and assigns.

    

    26. WAIVER

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

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    27. FORCE
      MAJEURE

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

    27.2 Either
      party to this Agreement, however, will have the right to terminate this
      Agreement upon thirty (30) days’ prior written notice if either party is unable
      to fulfill its obligations under this Agreement due to any of the causes
      specified in Paragraph 27.1
      for a
      period of one (1) year.

    

    28. GOVERNING
      LAWS;
      ATTORNEYS’ FEES

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

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

    

    29. GOVERNMENT
      APPROVAL OR REGISTRATION

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

    
      

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

    30. COMPLIANCE
      WITH LAWS

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

    

    31. CONFIDENTIALITY

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

    31.2 The
      Licensee and The Regents may use and disclose Proprietary Information to their
      employees, agents, consultants, contractors and, in the case of the Licensee,
      its Sublicensees, provided that such parties are bound by a like duty of
      confidentiality as that found in this Article 31
      (Confidentiality). Notwithstanding anything to the contrary contained in this
      Agreement, The Regents may release this Agreement or any sublicense, including
      any terms thereof, and information regarding royalty payments or other income
      received in connection with this Agreement to the inventors, senior
      administrative officials employed by The Regents and individual Regents upon
      their request. If such release is made, The Regents will request that such
      terms
      be kept in confidence in accordance with the provisions of this Article
31
      (Confidentiality). In addition, notwithstanding anything to the contrary in
      this
      Agreement, if a third party inquires whether a license to Patent Rights is
      available, then The Regents may disclose the existence of this Agreement and
      the
      extent of the grant in Articles 2
      (Grant)
      and 3
      (Sublicenses) and related definitions to such third party, but will not disclose
      the name of the Licensee unless Licensee has already made such disclosure
      publicly.

    
      

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

    

     

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

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

    
      	
            	31.4.1	
              that
                recipient can demonstrate by written records was previously known
                to it
                prior to its disclosure by the disclosing
                party;

            

    

    
      	
            	31.4.2	
              that
                recipient can demonstrate by written records is now, or becomes in
                the
                future, public knowledge other than through acts or omissions of
                recipient;

            

    

    
      	
            	31.4.3	
              that
                recipient can demonstrate by written records was obtained lawfully
                and
                without restrictions on the recipient from sources independent of
                the
                disclosing party; and

            

    

    
      	
            	31.4.4	
              that
                The Regents is required to disclose pursuant to the California Public
                Records Act or other applicable
                law.

            

    

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

    
      

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

         

      

    

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

    

    32. MISCELLANEOUS

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

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

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

    32.4 This
      Agreement embodies the entire understanding of the parties and supersedes all
      previous communications, representations or understandings, either oral or
      written, between the parties relating to the subject matter hereof. The
      Confidential Disclosure Agreement dated October 18, 2007 is hereby
      superseded.

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

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

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

    
      

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

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

    

      
        	
                LANTIS
                  LASER INC.

              	 	
                THE
                  REGENTS OF THE UNIVERSITY OF CALIFORNIA

              
	 	 	 	 	 
	
                By:

              	    
	 	
                By:

              	     

	 	
                (Signature)

              	 	 	
                (Signature)

              
	 	 	 	 	 
	
                Name:

              	    
	 	
                Name:

              	
                Joel
                  B. Kirschbaum

              
	 	
                (Please
                  Print)

              	 	 	 
	 	 	 	 	 
	
                Title:

              	    
	 	
                Title:

              	
                Director,
                  UCSF Office of

              
	 	 	 	 	
                Technology
                  Management

              
	 	 	 	 	 
	
                Date:

              	    
	 	
                Date:

              	    

      

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    

    APPENDIX
      A

    

    CONSENT
      TO SUBSTITUTION OF PARTY

    

    This
      substitution of parties ("Agreement") is effective this      day
      of    
              ,
      200_,
      among The
      Regents of the University of California ("The Regents), a California
      corporation, having its statewide administrative offices at 1111 Franklin
      Street, 12th Floor, Oakland, California 94607-5200, and acting through its
      Office of Technology Management, University of California San Francisco, 185
      Berry Street, Suite 4603, San Francisco, CA 94107; [licensee name
      (“XXX”)],
      a
      ________________ corporation, having a principal place of business at
      ______________________; and [new licensee name] [("YYY")] a
      ______________________ corporation, having a principal place of business at
      _________________________________.

    

    BACKGROUND

    

    A. The
      Regents and [XXX] entered into a license agreement effective ________________
      (UC Control No. __-__-____), entitled _____________________ ("License
      Agreement"), wherein [XXX] was granted certain rights.

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

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

      

    

     

    The
      parties agree as follows:

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

    2. [YYY]
      is
      substituted for [XXX], provided that [YYY] assumes all liability and obligations
      under the License Agreement as if [YYY] were the original party named as
“Licensee” as of the effective date of the License Agreement.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

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

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

    

      
        	
                [XXX]
                  COMPANY

              	 	
                THE
                  REGENTS OF THE UNIVERSITY OF CALIFORNIA

              
	 	 	 	 	 
	
                By:
                  

              	    
	 	
                By:
                  

              	    

	 	
                (Signature)

              	 	 	 
	 	 	 	 	 
	
                Name:

              	   
	 	
                Name:

              	
                Joel
                  B. Kirschbaum

              
	 	
                (Please
                  print)

              	 	 	 
	 	 	 	 	 
	
                Title:

              	    
	 	
                Title:

              	
                Director

              
	 	 	 	 	
                UCSF
                  Office of Technology

              
	 	 	 	 	
                Management

              
	 	 	 	 	 
	
                Date:

              	    
	 	
                Date:

              	    

	 	 	 	 	 
	
                [YYY]
                  COMPANY

              	 	 	 
	 	 	 	 	 
	
                By:

              	   
	 	 	 
	 	
                (Signature)

              	 	 	 
	 	 	 	 	 
	
                Name:

              	   
	 	 	 
	 	
                (Please
                  print)

              	 	 	 
	 	 	 	 	 
	
                Title:

              	   
	 	 	 
	 	 	 	 	 
	
                Date:

              	    
	 	 	 

      

    

     

    
      
        
        

      

      
        38

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