Document:

SEC Connect

 

Exhibit
10.3

CHROMADEX,
INC. - DARTMOUTH EXCLUSIVE LICENSE AGREEMENT

This
Agreement, effective this 13th day
of July 2012,
between

TRUSTEES OF
DARTMOUTH COLLEGE, a non-profit educational and research
institution existing under the laws of the State of New Hampshire,
and being located at Hanover, New Hampshire 03755, hereinafter
called Dartmouth,

and

CHROMADEX, INC., a
corporation of the State of California, with a principal place of
business at 10005 Muirlands Blvd., Suite G, Irvine, California
92618; hereinafter called Company.

WHEREAS, Dartmouth,
under the direction of principal investigator Charles Brenner,
Ph.D. has developed Nicotinamide Riboside Assay System and its
uses; and

WHEREAS, Dartmouth
represents that it has the right to grant licenses granted in this
agreement; and

WHEREAS, Company
wishes to obtain a license under the terms and conditions
hereinafter set forth, and to use its expertise and resources to
manufacture and market the technology;

NOW
THEREFORE, in consideration of the premises and the faithful
performance of the covenants herein contained, IT IS
AGREED:

ARTICLE
I. Definitions

Section
1.01 Dartmouth Patent
Rights. "Dartmouth Patent Rights" shall mean United States
Patent No. 8,197,807 Issued June 12, 2012, United States Patent
Application Serial No. 11/542,832 filed October 4, 2006, United
States Patent Application Serial No. 13/260,392, filed September
26, 2011, and United States Patent No. 8,114,626,Issued February
14, 2012 and any United States or Foreign Patents issuing
therefrom, and any continuations, continuations-in-part, divisions,
reissues, reexaminations or extensions thereof. Dartmouth shall be
the assignee and owner of all such Patents and Patent
Applications.

Section
1.02 Licensed
Products. "Licensed Products" shall mean any products or
processes covered by or made, in whole or in part in a given
territory, by the use of Dartmouth Patent Rights.

Section
1.03 Field. The
"Field" of this Agreement shall mean the following
fields:

Field
1: dietary supplements, sports performance enhancing products,
foods with health claims, such as energy bar, skin care/cosmetic
products;

Field
2: food or drink products requiring FDA approval;

Field
3: consumer foods, such as margarine, yogurt, and
cereal;

Field
4: research.

Section
1.04 Territory. The
“Territory” shall mean the world.

 

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Section
1.05 Subsidiary.
"Subsidiary" shall mean a legal entity at least 50% of the voting
stock of which is owned directly or indirectly by
Company.

Section
1.06 Agreement.
"Agreement" shall mean this License Agreement.

Section
1.07 Net Sales.
"Net Sales" shall mean the gross billing price Company or its
subsidiaries charge to their customers for Licensed Products, less
sales, use, occupation and excise taxes, and transportation,
discounts, returns and allowances in lieu of returns.

Section
1.08 Effective
Date. "Effective Date" shall mean the date first written
above and shall be the Effective Date of this
Agreement.

Section
1.09 License Year.
The "First License Year" shall mean the period commencing on the
Effective Date and ending December 31, 2012. The second and all
subsequent "License Years" shall commence on January 1 and end on
December 31 of each year.

Section
1.10 Calendar
Quarter. "Calendar Quarter" shall mean the periods ending on
March 31, June 30, September 30 and December 31 of each
year.

ARTICLE
II. 
Grant

Section
2.01 License Grant.
Dartmouth hereby grants to Company and its Subsidiaries an
exclusive,
royalty-bearing license under Dartmouth Patent Rights to make, have
made, use, and/or sell Licensed Products in the Field in the
Territory subject to any rights which may be required to be granted
to the Government of the United States of America pursuant to 35
U.S.C. §§200-211. Notwithstanding the foregoing,
Dartmouth expressly reserves a non-transferable royalty-free right
to use the Dartmouth Patent Rights in the Field by its faculty,
staff and researchers, for educational and research purposes only.
Company agrees during the period of exclusivity of this license in
the United States that any Licensed Product produced for sale in
the United States will be manufactured substantially in the United
States to the extent it is commercially reasonable.

Section
2.02 Sublicenses.
Company shall have the right to grant sublicenses to third parties
under Dartmouth Patent Rights to make, have made, use and sell the
Licensed Products with the consent of Dartmouth , which consent
shall not be unreasonably withheld, except that such sublicenses
shall be in writing and expressly subject to the terms of this
Agreement. Such consent is given to Opko Health, Inc. as of the
Effective Date. Company agrees to be responsible for the
performance hereunder by its sublicensees. Dartmouth shall have the
right to review such sublicenses to assure conformity with this
Section. Upon termination of this Agreement, any such sublicenses
will revert directly to Dartmouth.

Section
2.03 Patents. Upon
execution of the Agreement, Company shall reimburse Dartmouth for
expenses Dartmouth has incurred for the preparation, filing,
prosecution and maintenance of Dartmouth Patent Rights as of the
Effective Date and in accordance with the amounts
below:

a) 

US Patent No.
8,197,807 - $21,482.15

b) 

US Patent
Application Serial No. 11/542,832 - Company will reimburse for
future expenses.

c) 

US Patent No.
8,114,626 - $8,542.67

d) 

US Patent
Application Serial No. 13/260,392 - Company will reimburse for
future expenses.

e) 

Australian Patent
Application Serial No. 2006238858 – Company will pay
$1,269.02 Annuity due by August 1 and future expenses

f) 

Canadian Patent
Application Serial No. 2,609,633 – Company will pay $1,719.16
Annuity due by August 1 and future expenses

 

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Dartmouth shall
control all future preparation, filing, prosecution and maintenance
of Dartmouth Patent Rights. Dartmouth shall invoice and Company
shall reimburse Dartmouth for all future expenses in connection
with these activities. Late payments shall be subject to an
interest charge of one and one half percent (11/2%) per month. If
Company chooses to discontinue prosecution or maintenance of any
United States Patent or Patent Application, which is a subject of
Dartmouth Patent Rights, it will so inform Dartmouth within a
reasonable time before implementation of such decision. Dartmouth
then shall have the right to prosecute or maintain such Patent or
Patent Application on its own and at its own expense, in which case
the license to Company under such Patent or Patent Application will
terminate. COMPANY shall notify Dartmouth by at least three (3)
months before a National Phase deadline whether it will support the
filing of patent applications in particular foreign territories. If
COMPANY decides not to support the filing or maintaining foreign
applications, Dartmouth reserves the right to file or maintain such
applications on its own, in which case the license to COMPANY in
the particular territory will terminate.

 

           ARTICLE
III. 
Confidentiality and Representations

Section
3.01 Mutual
Confidentiality. Company and Dartmouth realize that some
information received by one party from the other pursuant to this
Agreement shall be confidential. It is therefore agreed that any
information received by one party from the other, and clearly
designated in writing as "CONFIDENTIAL" at the time of transfer,
shall not be disclosed by either party to any third party and shall
not be used by either party for purposes other than those
contemplated by this Agreement for a period of three (3) years from
the termination of the Agreement, unless or until --

(a)
said information shall become known to third parties not under any
obligation of confidentiality to the disclosing party, or shall
become publicly known through no fault of the receiving party,
or

(b)
said information was already in the receiving party's possession
prior to the disclosure of said information to the receiving party,
except in cases when the information has been covered by a
preexisting Confidentiality Agreement, or

(c)
said information shall be subsequently disclosed to the receiving
party by a third party not under any obligation of confidentiality
to the disclosing party, or

(d)
said information is approved for disclosure by prior written
consent of the disclosing party, or

(e)
said information is required to be disclosed by court order or
governmental law or regulation, provided that the receiving party
gives the disclosing party prompt notice of any such requirement
and cooperates with the disclosing party in attempting to limit
such disclosure.

Section
3.02 Corporate
Action. Dartmouth and Company each represent and warrant to
the other party that they have full power and authority to enter
into this Agreement and carry out the transactions contemplated
hereby, and that all necessary corporate action had been duly taken
in this regard.

 

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ARTICLE
IV. Due
Diligence

 

Section
4.01 Milestones.
Company has represented to Dartmouth, to induce Dartmouth to issue
this license, that it will commit itself to a diligent program of
exploiting the Licensed Products so that public utilization will
result therefrom. As evidence thereof, Company shall adhere to the
following milestones timeline from the

Effective Date and
associated payments:

	

Field

 

	

Milestone

 

	

Timing

 

	

Payment

 

	

Field
1

 

	

Commercial-scale
production

	

12
months

	

$2K

	

Cumulative
sales >3kg

	

18
months

	

$5K

	

$200K
cumulative sales

	

24
months

	

$10K

	

$1M
cumulative sales

	

36
months

	

$15K

	

Field
2

 

	

Cumulative
sales >3kg

	

36
months

	

$5K

	

Cumulative
sales >20kg

	

48
months

	

$10K

	

Field
3

 

	

Cumulative
sales >3kg

	

18
months

	

$5K

	

$100K
cumulative sales

	

24
months

	

$10K

	

$500K
cumulative sales

	

36
months

	

$15K

	

Field
4

 

	

$5K
cumulative sales

	

24
months

	

$500

	

$10K
cumulative sales

	

36
months

	

$1k

 

It is
acknowledged that if the above milestones are not accomplished by
the dates specified in this Section 4.01, the licenses shall
terminate unless payments in the above amounts are made to
Dartmouth within thirty (30) days of the specified dates in
accordance with Section 9.02.

 

ARTICLE
V. Payments, Records and
Reports

Section
5.01 Payments. For
the rights and privileges granted under this license, Company shall
pay to Dartmouth

(a) an
earned royalty of 3% based on the value of Net Sales of the
Licensed Products. If Licensed Product is combined with another
product and/or ingredient and sold by Company in such a combination
("Combination Product"), then Net Sales of the Licensed Product for
the earned royalty calculation shall be Net Sales of the
Combination Product multiplied by A divided by B (A/B), where A is
the sale price of the Licensed Product when sold separately and B
is the sale price of the Combination Product; and

(b) a
non-refundable, non-creditable, one-time license access fee of
$50,000 due upon execution of this Agreement; and

(c)
annual license maintenance fee of $35,000 due upon each anniversary
of the agreement and creditable towards preceding annum's royalty
payments per Section 5.01(a); and

 

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(d)
thirty percent (30%) of any consideration received from an
infringement settlement less litigation expenditures, as described
in Section 8.01, and from each sublicense, on the sale of Licensed
Products (e.g., license issue fees, license maintenance fees, lump
sum payments in lieu of royalty payments, stocks, and earned
royalty, etc.) received from each sublicensee of Company for the
grant of a sublicense

Section
5.02 Reports.
Company shall render to Dartmouth:

(a)
within forty five (45) days after the end of each Calendar Quarter
a written account of all quantities of Licensed Products subject to
royalty hereunder sold by Company, any Subsidiary, and any
sublicensee during such Calendar Quarter, the calculation of
royalty thereon, and sufficient data for Dartmouth to verify the
calculation, including gross sales and allowable deductions to
derive to Net Sales figures, and shall simultaneously pay in United
States dollars to Dartmouth the royalty due with respect to such
sales. Conversion of foreign currency to U.S. dollars shall be made
at the conversion rate existing in the United States on the date of
royalty payments by Company. Such report shall be certified as
correct by an officer of Company. If no Licensed Products subject
to royalty hereunder have been sold by Company, its Subsidiaries
and its sublicensees during any such quarter, Company shall so
report in writing to Dartmouth within forty five (45) days after
the end of said quarter. If royalties for any License Year do not
equal or exceed the minimum royalties established in Section 4.02,
Company shall include the balance of the minimum royalty with the
payment for the Calendar Quarter ending December 31. Late payments
shall be subject to an interest charge of one and one half percent
(11/2%) per month.

(b)
within sixty (60) days after the close of each License Year written
annual reports which shall include but not limited to: reports of
progress on research and development, regulatory approvals,
manufacturing, sublicensing, marketing and sales during preceding
twelve (12) months as well as plans for coming year. Company shall
also provide any reasonable additional data Dartmouth requires to
evaluate Company's performance.

(c)
within thirty (30) days of occurrence report of the date of first
sale of Licensed Products in each country.

Section
5.03 Books of
Accounts. Company, its Subsidiaries and sublicensees shall
keep full, true and accurate books of accounts and other records
containing all particulars which may be necessary for the purpose
of ascertaining and verifying the royalties payable to Dartmouth by
Company hereunder. Upon Dartmouth's request, Company, its
Subsidiaries and sublicensees shall permit an independent Certified
Accountant selected by Dartmouth (except one to whom Company has
some reasonable objection), to periodically have access during
ordinary business hours to such records of Company, its
Subsidiaries and sublicensees as may be necessary to determine, for
any quarter ending not more than three (3) years prior to the date
of such request, the correctness of any report and/or payment made
under this Agreement. In the event that any such inspection shows
an underreporting and underpayment in excess of five percent (5%)
for any twelve (12) month period, then Company shall pay the cost
of such examination.

ARTICLE
VI. Technical Assistance
and Commercial Development

Section
6.01 Technical
Assistance. Throughout the term of the Agreement, Dartmouth
agrees to permit Company and its designees to consult with its
employees and agents regarding developments and enhancements made
subsequent to the Effective Date relating to the Licensed Products,
at such times and places as may be mutually agreed upon; provided
that Company agrees to make suitable arrangements with, and to
compensate the Dartmouth employees and agents for such
consultation.

Section
6.02 Commercial
Development. During the term of this Agreement, Company
agrees to use commercially reasonable efforts to effectively
manufacture and market Licensed Products. Such efforts will include
sublicensing, development of promotional literature, mailings, and
journal advertisements.

Section
6.03 Name. Company
shall not use and shall not permit to be used by any other person
or entity the name of Dartmouth nor any adaptation thereof, or the
name of Dartmouth's employees, in any advertising, promotional or
sales literature, or for any other purpose without prior written
permission of Dartmouth, such permission not to be unreasonably
withheld, except that Company may state that it is licensed by
Dartmouth under Dartmouth Patent Rights and that Company may refer
to publications by Dartmouth personnel which relate to the
Dartmouth Patent Rights.

 

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ARTICLE
VII. Indemnity, Insurance,
Disclaimers

 

Section
7.01 Indemnity.
Company shall defend and indemnify and hold Dartmouth and its
trustees, officers, agents and employees (the "Indemnitees")
harmless from any judgements and other liabilities based upon
claims or causes of action against Dartmouth or its employees which
arise out of alleged negligence in the development, manufacture or
sale of Licensed Products by Company, its Subsidiaries, and
sublicensees, or from the use by the end users of Licensed
Products, except to the extent that such judgements or liabilities
arise in whole or in part from the gross negligence or willful
misconduct of Dartmouth or its employees, provided that Dartmouth
promptly notifies Company of any such claim coming to its attention
and that it cooperates with Company in the defense of such claim.
If any such claims or causes of action are made, Dartmouth shall be
defended by counsel to Company, subject to Dartmouth's approval,
which shall not be unreasonably withheld. Dartmouth reserves the
right to be represented by its own counsel at its own
expense.

 

Section
7.02 Insurance. At
such time as any product, process, service relating to, or
developed pursuant to, this Agreement is being commercially
distributed or sold (other than for the purpose of obtaining
regulatory approvals) by Company or by a sublicensee, Subsidiary or
agent of Company, Company shall at its sole cost and expense,
procure and maintain comprehensive general liability insurance in
amounts not less than $2,000,000 per incident and naming the
Indemnitees as additional insureds. Such comprehensive general
liability insurance shall provide (i) product liability coverage
and (ii) broad form contractual liability coverage for Company's
indemnification under this Agreement. If Company elects to
self-insure all or part of the limits described above (including
deductibles or retentions which are in excess of $250,000 annual
aggregate) such self-insurance program must be acceptable to
Dartmouth and Dartmouth Risk Manager. Such insurance will be
considered primary as to any other valid and collectible insurance,
but only as to acts of the named insured. The minimum amounts of
insurance coverage required shall not be construed to create a
limit of Company's liability with respect to its indemnification
under this Agreement.

Company
shall provide Dartmouth with written evidence of such insurance
upon request of Dartmouth. Company shall provide Dartmouth with
written notice at least fifteen (15) days prior to the
cancellation, non-renewal or material change in such insurance; if
Company does not obtain replacement insurance providing comparable
coverage within such fifteen (15) day period, Dartmouth shall have
the right to terminate this Agreement effective at the end of such
fifteen (15) day period without notice or any additional waiting
periods.

Company
shall maintain such comprehensive general liability insurance
beyond the expiration or termination of this Agreement during (i)
the period that any product, process, or service, relating to, or
developed pursuant to, this Agreement is being commercially
distributed or sold by Company or by a sublicensee, Subsidiary or
agent of Company and (ii) a reasonable period after the period
referred to in (i) above which in no event shall be less than
fifteen (15) years.

Section
7.03 Disclaimer.
Nothing contained in this Agreement shall be construed
as:

(a) a
warranty or representation by Dartmouth as to the validity or scope
of any Patent Rights;

(b) a
warranty or representation that any Licensed Products manufactured,
used or sold will be free from infringement of patents, copyrights,
or rights of third parties, except that Dartmouth represents that
it has no knowledge of any existing issued patents or copyrights
which might be infringed;

(c)
except as provided in Section 7.01, an agreement to defend against
actions or suits of any nature brought by any third
parties.

 

 

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DARTMOUTH
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF LICENSED
PRODUCTS

 ARTICLE
VIII. Infringement
Matters

Section
8.01 Infringement by Third
Parties. Company shall give Dartmouth prompt notice of any
incident of infringement of Dartmouth Patent Rights coming to its
attention. The parties shall thereupon confer together as to what
steps are to be taken to stop or prevent such infringement. Company
shall be entitled to commence proceedings in its own name against
the infringer, in which event Company shall be responsible for all
legal costs incurred, without recourse to Dartmouth, however
Dartmouth agrees to appear as a party in any such proceedings if
requested by COMPANY and such request is not unreasonably
burdensome on Dartmouth. Company also agrees to reimburse Dartmouth
for out of pocket costs spent in connection with said request.
Financial recoveries from any such litigation will first be applied
to reimburse Company for its litigation expenditures and 30% of
additional recoveries will be paid to Dartmouth. If Company chooses
not to commence litigation within ninety (90) days from the date
the parties confer regarding the infringement, Dartmouth may
commence proceedings against the infringer, in which case Dartmouth
shall be responsible for any legal costs incurred and will be
entitled to retain any damages recovered. In any action to enforce
Dartmouth Patent Rights, either party, at the request and expense
of the other party shall cooperate to the fullest extent reasonably
possible. Company may not settle any infringement action in any way
detrimental to Dartmouth Patent Rights without the expressed
written consent of Dartmouth.

ARTICLE
IX. Duration and
Termination

Section
9.01 Term. This
Agreement shall become effective upon the date first written above,
and unless sooner terminated in accordance with any of the
provisions herein, shall remain in full force during the life of
the last to expire patents under Dartmouth Patent Rights
contemplated by this agreement in the last to expire territory. If
mutually desired, the parties may negotiate for an extension of
this License. Upon the termination of the Agreement Company shall
have the right to sell the remainder of the Licensed Product on
hand, provided the sales will be subject to the royalty payments of
this Agreement.

Section
9.02 Termination -
Breach. In the event that either party defaults or breaches
any of the provisions of this Agreement, the other party shall have
the right to terminate this Agreement by giving written notice to
the defaulting party, provided, however, that if the said
defaulting party cures said default within thirty (30) days after
said notice shall have been given, this Agreement shall continue in
full force and effect. The failure on the part of either of the
parties hereto to exercise or enforce any right conferred upon it
hereunder shall not be deemed to be a waiver of any such right nor
operate to bar the exercise or enforcement thereof at any time or
times thereafter.

Section
9.03 Termination at
Will. Company shall have the right to terminate this
Agreement by giving three (3) months advance written notice to
Dartmouth to that effect and paying a termination fee of $5,000.
Upon termination, a final report shall be submitted and royalty and
other payments due under Article V, as well as unreimbursed patent
expenses per Section 2.03 due Dartmouth become immediately
payable.

Upon
receipt of the termination notice, Dartmouth should be free to
start negotiations with a Third Party for the rights granted
herein.

Section
9.04 Insolvency. In
the event that Company shall become insolvent, shall make an
assignment for the benefit of creditors, or shall file a petition
for bankruptcy, the Agreement shall terminate.

Section
9.05 Prior Obligations and
Survivability. Termination of this Agreement for any reason
shall not release either party from any obligation theretofore
accrued. Sections 3.01, 5.01 – 5.03, 7.01 – 7.03, 9.03,
10.01 – 10.09 shall survive the termination of this
Agreement.

 

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ARTICLE
X. Miscellaneous

Section
10.01 Governing
Law. This Agreement shall be construed, governed,
interpreted and enforced according to the laws of the State of New
York.

Section
10.02 Notices. Any
notice or communication required or permitted to be given by either
party hereunder, shall be deemed sufficiently given, if mailed by
certified mail, return receipt requested, and addressed to the
party to whom notice is given as follows:

If to
Company, to:

Frank
Jaksch, CEO

ChromaDex,
Inc.

10005
Muirlands Blvd Suite G

Irvine,
CA 92618

 

If to
Dartmouth, to:

Alla
Kan

Director

Technology Transfer
Office

Dartmouth
College

11 Rope
Ferry Road

Hanover, NH
03755

 

Section
10.03. Assignment.
Neither party shall assign or transfer this Agreement without the
express prior written consent of the other. For purposes of this
Agreement, an assignment or transfer of this Agreement by COMPANY
shall be deemed to occur in connection with (a) an express
assignment or transfer or (b) a general assignment for the benefit
of creditors or in connection with any bankruptcy or other debtor
relief law. This section will not be deemed to prohibit an
assignment or transfer of this Agreement in connection to a merger
or consolidation to which COMPANY is a party (regardless of whether
COMPANY is the surviving corporation) or to any other transaction
pursuant to which a change would occur in the "ultimate parent
entity" of COMPANY, applying the rules in effect from time to time
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

Section
10.04 Entire
Agreement. This Agreement represents the entire Agreement
between the parties as of the effective date hereof, and may only
be subsequently altered or modified by an instrument in writing.
This agreement cancels and supersedes any and all prior oral or
written agreements between the parties which relate to the subject
matter of this Agreement.

Section
10.05 Mediation and
Arbitration. Both parties agree that they shall attempt to
resolve any dispute arising from this Agreement through mediation.
Both parties agree that at least one employee, capable of
negotiating an agreement on behalf of his employer, shall, within
three weeks of receipt of written notification of a dispute, meet
with at least one employee of the other party who is also capable
of negotiating an agreement on behalf of his employer. If no
agreement can be reached, both parties agree to meet again within a
four week period after the initial meeting to negotiate in good
faith to resolve the dispute. If no agreement can be reached after
this second meeting, both parties agree to submit the
dispute to binding arbitration under the Rules of the American
Arbitration Association before a single arbitrator.

 

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Section
10.06 Waiver. A
failure by one of the parties to this Agreement to assert its
rights for or upon any breach or default of this Agreement shall
not be deemed a waiver of such rights nor shall any such waiver be
implied from acceptance of any payment. No such failure or waiver
in writing by any one of the parties hereto with respect to any
rights, shall extend to or affect any subsequent breach or impair
any right consequent thereon.

Section
10.07 Severability.
The parties agree that it is the intention of neither party to
violate any public policy, statutory or common laws, and
governmental or supranational regulations; that if any sentence,
paragraph, clause or combination of the same is in violation of any
applicable law or regulation, or is unenforceable or void for any
reason whatsoever, such sentence, paragraph, clause or combinations
of the same shall be inoperative and the remainder of the Agreement
shall remain binding upon the parties.

Section
10.08 Marking. Upon
Dartmouth's direction and consultation, Company agrees to mark the
Licensed Products with all applicable trademarks, and patent
numbers.

Section
10.09 Headings. The
headings of the paragraphs of this Agree-ment are inserted for
convenience only and shall not constitute a part
hereof.

 

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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate originals, by their respective officers hereunto duly
authorized, the day and year herein written.

	
 

	
THE TRUSTEES OF
DARTMOUTH COLLEGE

 

By:
/S/ Alla
Kan

Date: July 11,
2012

Name: Alla
Kan

Title: Director
Technology Transfer Office

 

CHROMADEX,
INC.

 

By:
/S/ Thomas C.
Varvaro

Date:
July 13, 2012

Name: Thomas C.
Varvaro

Title:
Chief Financial
Officer

 

 

-10-SEC Connect

 

Exhibit 10.4

EXCLUSIVE LICENSE AGREEMENT

 

PREAMBLE

 

This
Agreement is made and entered into, effective as of March 4, 2013,
(“Effective Date”) by and between: Washington
University, a corporation established by special act of the
Missouri General Assembly approved February 22, 1853 and acts
amendatory thereto, having its principal offices at One Brookings
Drive, St. Louis, Missouri 63130 (hereinafter referred to as "WU");
and Chromadex a corporation organized and existing under the laws
of the State of California, having its principal offices at 10005
Muirlands Blvd. Suite G Irvine CA 92618 (hereinafter referred to as
"Licensee") and the following correspondence
addresses:

 

	

Attn: Legal/C.F.O

Postal: 10005 Muirlands Blvd. #G

City, State, Zip: Irvine CA 92618

Fax:949-600-9597

Email:

tom.varvaro@chromadex.com

	

Attn: Accounting

Postal: 10005 Muirlands Blvd. #G

City, State, Zip: Irvine CA 92618

Fax:949-600-9597

Email:

jamesl@chromadex.com

	

Attn: Technical

Postal: 10005 Muirlands Blvd. #G

City, State, Zip: Irvine CA 92618

Fax:949-600-9597

Email:

tom.varvaro@chromadex.com

 

License
Issue Fee: $40,000

 

License
Maintenance Fee: $25,000

 

Options
for Improvement: 1 yr option; $20,000 additional licensing fee per
improvement.

 

Milestones
and Payments:

 

	

Market

	

Milestone

	

Timing

	

Payment

	

Field 1 (dietary supplement, sports
nutrition, functional foods, skin
care/cosmetic)

	

Commercial-scale
production

	

12
months

	

$2K

	

Cumulative
sales >3kg

	

18
months

	

$5K

	

$200K
cumulative sales

	

24
months

	

$10K

	

$1M
cumulative sales

	

36
months

	

$15K

	

Field 2 (food/beverage with FDA
approval)

	

Cumulative
sales >3kg

	

36
months

	

$5K

	

Cumulative
sales >20kg

	

48
months

	

$10K

	

Field 3 (consumer
foods)

	

Cumulative
sales >3kg

	

24
months

	

$5K

	

$100K
cumulative sales

	

36
months

	

$10K

	

$500K
cumulative sales

	

48
months

	

$15K

	

Field 4 (research
reagents)

	

$5K
cumulative sales

	

24
months

	

$500

	

$10K
cumulative sales

	

36
months

	

$1k

	

Field 5 (pharmaceutical)

	

IND

	

TBD

	

$20,000

	

Phase I
initiation

	

$20,000

	

Phase
II initiation

	

$25,000

	

Phase
III initiation

	

$50,000

	

NDA

	

$100,000

	
First
Commercial Sale

	

$250,000

 

 

 

 

-1-

 

 

Royalty
Rate:

 

	

a.Patent Royalty
Rate

	

4%

	

b.Non-Patent
Royalty Rate

	

2%

	

c.
Pass-through for sublicensee(s)

	

2%

 

Minimum
Royalty: $25,000

 

Sublicensee
Revenue percentage: 50% if technology is flipped, 25% if
significant value is added to the technology such as an IND filing
or additional enabling technology.

 

Patents:
Listed in Exhibit E herein, below; all patent expenses to be paid
by Licensee.

 

All
past patent expenses authorized by Chromadex.

 

Field:
dietary supplements, sports nutrition,
functional foods, skin care and cosmetics, food and beverage,
research reagents, medical foods, and pharmaceutical
uses.

 

Territory:
Worldwide.

 

Term:
The term of this Agreement shall commence on the Effective Date and
continue until the later of: a) the last day that at least one
Valid Claim exists; or b) the tenth anniversary of the day of the
First Commercial Sale whichever is longer.

 

RECITALS

 

A.           

WU possesses
certain Patent Rights (as defined below), Technical Information (as
defined below), and Tangible Research Property (as defined
below).

 

B.           

Licensee has
developed a plan to manufacture, promote, import, sell and/or
market products based on the Patent Rights, the Technical
Information, and/or the Tangible Research Property which plan is
attached hereto as Exhibit A (the “Development
Plan”).

 

C.           

Licensee WU
possesses the desire, knowledge, expertise, experience and
resources to carry out the Development Plan, to meet the milestones
set forth in Exhibit F hereto and to otherwise diligently
manufacture, market and to otherwise diligently commercialize
products based on the Patent Rights, Tangible Research Property
and/or the Technical Information.

 

D.           

Licensee desires to
obtain from WU certain licenses to the Tangible Research Property,
Technical Information and Patent Rights and WU desires to grant
such licenses to Licensee.

TERMS
AND CONDITIONS

NOW,
THEREFORE, in consideration of the premises, covenants and
agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.            

Definitions.

 

As used
in this Agreement, the following terms have the meaning ascribed to
them below:

 

1.1           “Agreement”
is defined in the Preamble above.

 

1.2           “Affiliate”
means an entity that now or hereafter, directly or indirectly,
controls or is controlled by or is under common control with a
party to this Agreement whether by beneficial ownership, contract,
or otherwise.

 

 

-2-

 

 

1.3           “Calendar
Half” means each six-month period of a calendar year,
or portion thereof, beginning on January 1 or July 1.

 

1.4           “Claims”
is defined in Section 11.1 below.

 

1.5           “Confidential
Information” is defined in Section 7.1
below.

 

1.6           “Development
Plan” is defined in Recital B above.

 

1.7           “Effective
Date” is defined in the Preamble above.

 

1.8           “Election
Notice” is defined in Section 9.3 below.

 

1.9           “Field”
is defined in the Preamble above.

 

1.10           “First
Commercial Sale” means the earlier to occur of (a) the
earliest date on which Licensee transfers a Licensed Product for
compensation (including equivalent cash value for trades or other
non-cash payments), or (b) the earliest date on which Licensee
offers a Licensed Service for compensation (including equivalent
cash value for trades or other non-cash payments).

 

1.11           “License
Issue Fee” is defined in the Preamble
above.

 

1.12           “Licensed
Product” means (a) any product made, made for, used,
sold or imported by Licensee and/or Sublicensee that (i) in the
absence of this Agreement would infringe at least one Valid Claim,
or (ii) uses a process covered by a Valid Claim, and/or (b) any
product made, and/or method or process used, in whole or in part,
using or otherwise derived from Technical Information and/or
Tangible Research Property., with the provisio that no product
shall be construed a "Licensed Product" pursuant to (a)(i) or
(a)(ii) of this section which would not infringe any claim of a
Patent Rights patent application pending in the United States as of
October 15, 2012, or any claim of an issued, unexpired, valid and
enforceable Patent Rights patent, in either the country of the
product's manufacture or sale or (3)does not contain nicotinamide
adenine dinucleotide (NAD) or its precursor NADH, an intermediate
of a de novo pathway for synthesizing NAD, an intermediate of a NAD
salvage pathway, an intermediate of a nicotinamide riboside kinase
pathway, or a combination thereof, such ingredients including but
not limited to nicotinamide mononucleotide, nicotinic acid
mononucleotide, and nicotinamide riboside." 

 

1.13           “Licensed
Service” means (a) any service performed by Licensee
and/or Sublicensee that (i) in the absence of this Agreement would
infringe at least one Valid Claim, or (ii) uses a process covered
by a Valid Claim, and/or (b) service performed by Licensee that
uses or is otherwise derived from Technical Information and/or
Tangible Research Property.

 

1.14           “Licensee”
is defined in the Preamble above.

 

1.15           “Minimum
Royalty” is defined in the Preamble
above.

 

1.16           “Net
Sales” means mean Net Sales for Licensed Products and
Net Sales for Licensed Services.

 

1.17           “Net
Sales for Licensed Products and Net Sales for Licensed
Services” means the gross value, compensation, and
payments, whether in cash or in kind, received by Licensee or its
Sublicensees for Sales of Licensed Products or Licensed Services,
respectively, less all Permissible Deductions.

 

1.18           “Patent
Rights” means, subject to Section 9.3 below, the
patents and patent applications, and all foreign counterparts,
continuations, divisions, extensions, reexaminations and reissues
thereof, which trace their earliest priority filing date by
unbroken lineage to any of such patent or patent applications, as
set forth in Exhibit E, herein below.

 

 

-3-

 

 

1.19           
“Permissible
Deductions” means, and shall be limited to, any (a)
trade, quantity and cash discounts on Licensed Products actually
provided to third parties in connection with arms length
transactions, (b) credits, allowances or refunds, not to exceed the
original invoice amount, for actual claims, damaged goods,
rejections or returns of Licensed Products, and (c) excise, sale,
use, value added or other taxes, other than income taxes, paid by
Licensee due to the Sale of Licensed Products.

 

1.20           “Sale”
means any transaction in which a Licensed Product or Licensed
Service is exchanged or transferred for any value, payment or
compensation of any type or kind. Notwithstanding the forgoing,
Sales of any kind shall not include and shall expressly exclude
transfers by Licensee: (a) to a Sublicensee of Affiliate for
distribution or their own internal testing of samples of any
Licensed Product or Licensed Service, provided that such testing is
not conducted for or on behalf of any end user and further provided
that Licensee receives no payment for such Licensed Product or
Licensed Service in excess of the fully burdened (i.e. direct and
indirect) costs of producing and transporting such materials; and
(b) for its and its Affiliates own non-commercial laboratory
research and development purposes, manufacturing,
marketing/promotional purposes, beta testing and/or clinical
testing, provided that the foregoing is not performed for or on
behalf of any end user and further provided that Licensee receives
no payment for such Licensed Product or Licensed Service in excess
of the fully burdened (i.e. direct and indirect) costs of producing
and transporting such materials and/or providing such Licensed
Product or License Service.

 

1.21         
“Royalty Rate”
is defined in the Preamble above and shall include both the
“Patent Royalty Rate” and the “Non-Patent Royalty
Rate.” “Patent Royalty Rate” means the Royalty
Rate that shall apply to licensed activities within Territory
countries in which there is at least one Valid Claim.
“Non-Patent Royalty Rate” means the Royalty Rate that
shall apply to licensed activities, including use of Tangible
Research Property and/or Technical Information, in Territory
countries in which there is no Valid Claim.

 

1.22           “Tangible
Research Property” means, subject to Section 9.3
below, any and all research tools and other personal property that
WU may provide to Licensee as specifically set forth in Exhibit B
hereto.

 

1.23           “Technical
Information” means, subject to Section 9.3 below,
research and development information, unpatented inventions,
know-how, data, methods, and technical data and information, in
each instance that are necessary to practice the Patent Rights
and/or to commercialize one or more Licensed Products, as
specifically set forth in Exhibit C hereto.

 

1.24           “Termination
Fee” is defined in Section 13.2 below.

 

1.25           “Territory”
is defined in the Preamble above, except that it shall exclude
those countries to which export of technology or goods is
prohibited by applicable U.S. export control laws or
regulations.

 

1.26           “WU”
is defined in the Preamble above.

 

1.27           “WU
Indemnitee” is defined in Section 11.1.

 

1.28           “Valid
Claim” means a claim (a) of a pending Patent Rights
patent application, or (b) of an issued and unexpired Patent Rights
patent that has not been (i) held invalid or unenforceable by a
court or other governmental agency of competent jurisdiction in a
decision or order that is not subject to appeal, (ii) canceled,
(iii) abandoned in accordance with, or as permitted by the terms of
this Agreement or by mutual written agreement of WU and
Licensee.

 

1.29          
“Sublicensing
Revenue” means all value, payment or compensation of
any type or kind, other than earned royalties on Net Sales,
received by Licensee from or through its Sublicensees for the
licensing, cross-licensing or other authorized use of any license
or right granted herein by WU. Sublicensing Revenue shall include,
without limitation, all fees, milestone payments, cash equivalents,
equities, securities, equipment, property, rights or anything else
of value received by Licensee as sublicensing consideration from or
for the benefit of any Sublicensee.

 

 

-4-

 

 

2.            

License Grants and Restrictions.

 

2.1   
    Patent
Rights. Subject to
the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a non-transferable,
exclusive (subject to Section 2.4 below) and royalty-bearing
license under the Patent Rights and for the Term of this Agreement,
to (a) make, have made, sell, offer for sale, use, and import
Licensed Products, and (b) perform Licensed Services, in each
instance solely in the Territory and in the Field. For the
avoidance of doubt, Licensee acknowledges and agrees that no
license is granted or implied under the Patent Rights outside the
Field or the Territory.

 

2.2   
    Technical
Information. Subject
to the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a non-transferable,
nonexclusive and royalty-bearing license for the Term of this
Agreement to use the Technical Information solely for the purpose
of exploiting the license granted to Licensee in Section 2.1 above.
For the avoidance of doubt, Licensee acknowledges and agrees that
no license is granted or implied under the Technical Information
outside the Field or the Territory.

 

2.3 
    Tangible Research
Property. Subject to
the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a nontransferable,
nonexclusive and royalty-bearing license, for the Term of this
Agreement, to use the Tangible Research Property solely for the
purpose of exploiting the licenses granted to Licensee in Sections
2.1 and 2.2 above. For the avoidance of doubt, Licensee
acknowledges and agrees that no license is granted or implied to
use the Tangible Research Property for any other
purpose.

 

2.4   
    Limitations on
Patent Rights License. WU retains its right to use the Patent
Rights to make, have made, use, and import Licensed Products and to
perform Licensed Services in the Territory and in the Field for
research and educational purposes including collaboration with
other nonprofit entities, which shall expressly exclude any
commercial purposes.

 

2.5     
  Clarifications.
For the avoidance of doubt, the license "to have made" granted in
Section 2.1 above means that the Licensee may contract with one or
more third parties to make Licensed Products for Licensee for Sale
or offer for Sale by Licensee within the scope of its sales
operations. In any such event, Licensee shall require all such
third parties to be bound to a written confidentiality agreement
that contains non-use and nondisclosure obligations that are at
least as restrictive as those that are contained in Article 7 below
before any Confidential Information is disclosed to such third
parties.

 

2.6       
Government
Rights. In accordance
with Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C.
§§ 200-212, the United States government retains certain
rights to inventions arising from federally supported research or
development. Under these laws and implementing regulations, the
government may impose requirements on such inventions. Licensed
Products embodying inventions subject to these laws and regulations
sold in the United States must be substantially manufactured in the
United States. The license rights granted in this Agreement are
expressly made subject to these laws and regulations as amended
from time to time. Licensee shall be required to abide by all such
laws and regulations.

 

 

-5-

 

 

2.7           Reservation
of Rights and Restrictions. Nothing in this Agreement provides
Licensee with any ownership rights of any kind in the Patent
Rights, the Technical Information and/or any Tangible Research
Property. All ownership rights in the Patent Rights, the Technical
Information and the Tangible Research Property shall remain the
sole and exclusive property of WU. The risk of loss of all Tangible
Research Property shall pass to Licensee upon delivery. For the
avoidance of doubt, Licensee’s rights in any Tangible
Research Property extend only to the specific Tangible Research
Property delivered by WU to Licensee. Accordingly, Licensee shall
have no right to any tangible research property retained by WU
including, without limitation, any original tangible research
property that may be retained by WU and on which the Tangible
Research Property delivered to Licensee may be based. No license or
right is granted by WU, by implication or otherwise, to any patent
other than the Patent Rights. Other than the licenses expressly
granted in Sections 2.1, 2.2 and 2.3 above, all rights in and to
the Patent Rights, the Tangible Research Property and any Technical
Information are hereby reserved by WU. Licensee agrees not to
practice or use the Patent Rights, the Tangible Research Property
and/or the Technical Information or do any act in respect thereof
outside the scope of the licenses expressly granted above
including, without limitation, providing any Tangible Research
Property to any third party. Licensee further agrees that it will
not do any act or thing which would in any way contest WU’s
ownership in, or otherwise derogate from the ownership by WU, of
any rights in the Patent Rights, the Tangible Research Property
and/or Technical Information. In furtherance of the foregoing but
without limiting the generality thereof, Licensee agrees not to
register or attempt to register in the Territory or elsewhere any
rights in the Patent Rights, the Tangible Research Property and/or
Technical Information or to assist any third party to do
so.

 

2.8      
   Markings.
Licensee shall ensure that appropriate markings, such as
“Patent Pending” or the Patent Rights patent numbers or
application serial numbers, appear, in accordance with each
country’s patent laws, on all Licensed Products (or their
packaging, as appropriate) sold by or on behalf of
Licensee.

 

2.9           Research
Cross-License. Licensee hereby grants to WU and WU hereby
accepts, a non-transferable, non-exclusive, perpetual, irrevocable,
fully paid up, license, for research and education purposes only,
under any and all applicable patents, copyright registrations or
other intellectual property rights, to make and use any and all
inventions, discoveries or improvements conceived of or reduced to
practice by Licensee during the Term of this Agreement and relating
to the Patent Rights, Tangible Research Property or Technical
Information. For the avoidance of doubt, the rights under this
Section 2.9 do not include any right to make, use, sell or offer to
sell any products or services for any commercial
purpose.

 

2.10         
Sublicensing.

 

2.10.1                      General.
Subject to the further provisions of this Section 2.10, Licensee
may grant sublicenses of the licenses granted to Licensee in
Sections 2.1, 2.2 and 2.3 above to third parties by entering into a
written agreement with any such third party (each such agreement
shall be referred to herein as a “Sublicense” and each
such third party shall be referred to herein as a
“Sublicensee”). Only Licensee (and not any Sublicensee)
may enter into a Sublicense, and each Sublicense shall expressly
prohibit the Sublicensee from granting further
sublicenses.

 

2.10.2                      Requirements
of each Sublicense Agreement. Licensee agrees that it will require
all Sublicensees to comply with the terms and conditions set forth
in this Agreement and applicable to Licensee. In furtherance of the
foregoing but without limiting the generality thereof, each
Sublicense shall, for the express benefit of WU, bind the
Sublicensee to terms and conditions no less favorable to WU than
those between WU and Licensee contained in this Agreement. To the
extent that any term, condition, or limitation of any Sublicense is
inconsistent with the terms, conditions and limitations contained
in this Agreement, such term, condition, and/or limitation shall be
null and void against WU. Without in any way narrowing or limiting
the scope of the foregoing provisions of this Section 2.10.2, all
Sublicenses shall contain the terms and conditions set forth in
Exhibit D hereto. Within thirty (30) days after the effective date
of any Sublicense, Licensee shall provide WU a complete copy of the
Sublicense including, without limitation, any and all exhibits
and/or attachments thereto. If the Sublicense is written in a
language other than English, the copy of the Sublicense shall be
accompanied by a complete translation written in
English.
Upon delivery of such translation to WU, Licensee shall be deemed
to represent and warrant to WU that such translation is a true and
accurate translation of the Sublicense.

 

 

-6-

 

 

2.10.3                      Primary
Liability. Licensee
will be primarily liable to WU for all acts, errors or omissions of
a Sublicensee. Any act, error or omission of a Sublicensee that
would be a breach of this Agreement if imputed to Licensee will be
deemed to be a breach of this Agreement by Licensee.

 

3.            

Development Plan.

 

3.1   
    Development
Plan. Licensee
represents and warrants that (a) the Development Plan contains
Licensee’s good faith, bona fide plans for commercializing
Licensed Products as rapidly and extensively as practicable, and
(b) Licensee has the knowledge, expertise, experience and resources
to fully carry out such plans.

 

3.2   
    Development Plan
Milestones. Licensee
agrees to use its best efforts to meet any and all milestones set
forth above and in the Development Plan on or before the times set
forth in the Development Plan including, without limitation, the
development milestones for each Licensed Product and any Licensed
Services.

 

3.3       
Progress
Reports. Licensee
will deliver to WU written reports on Licensee’s progress
against the Development Plan no later than January 31 and July 31
of the first two calendar years following the calendar year in
which the Effective Date falls, and no later than January 31 of
each calendar year thereafter. Each such report will set forth
Licensee’s progress against the Development Plan in
reasonable detail including, without limitation, the progress
achieved and any problems encountered in the development,
prototyping, evaluation, testing, manufacture, Sale, and/or
marketing of, as applicable, each Licensed Product and any Licensed
Services. Each such report will identify in detail any financial
investment, grant or other source of funding awarded or provided to
Licensee that is used in part or in while to develop, evaluate,
test, manufacture, sell and/or market a Licensed Product and/or
Licensed Service. Upon reasonable request by WU from time-to-time,
Licensee will meet with WU to consult with WU about
Licensee’s then-current progress against the Development
Plan.

 

3.4       
Changes
to Development Plan.
Licensee may not amend, change or otherwise modify the Development
Plan without the written consent of WU.

 

4.            

Diligence.

 

   
          
4.1        Licensee agrees to,
throughout the term of this Agreement, use its best efforts to
develop, manufacture, promote and sell Licensed Products and to
perform any Licensed Services, in each instance throughout the
Territory and in the Field in accordance with the milestones set
forth in Exhibit F.

 

   
          
4.2        Should WU
conclude in its reasonable judgment that Licensee fails to meet the
diligence requirements set out in Section 4.1 above, WU may notify
Licensee of its conclusions and the basis therefore. The parties
shall then undertake to resolve WU’s concerns through good
faith negotiations for a period of 90 days. Should such
negotiations fail to result in Licensee achieving a level of
diligence consistent with its obligations under Section 4.1 above,
in WU’s sole reasonable judgment, then WU may terminate the
license in each specific sub-field where there has been
insufficient best efforts or at WU option change the license in
each specific sub-field where there has been insufficient best
effort to a non-exclusive license.

 

5.            

Fees, Payments and Royalties.

 

5.1       
License
Issue Fee. Within
fifteen (15) days after the Effective Date, Licensee agrees to pay
the License Issue Fee to WU. Such License Issue Fee shall be
non-refundable and shall not be credited against any other payments
that may be due hereunder.

 

5.2   
    License Maintenance
Fee. On or before
every anniversary of the Effective Date and until and including the
anniversary following the First Commercial Sale of a Licensed
Product or Licensed Service occurs in a primary country designated
in the Development Plan, Licensee agrees to pay the License
Maintenance Fee to WU. All License Maintenance Fees shall be
non-refundable and shall not be credited against any other payments
that may be due hereunder. Following the first Sale of License
Product, Licensee’s obligations for this payment will
cease and transfer to the
Minimum Royalties per Section 5.4. Payments due under this section
will be made on a prorated annual basis.

 

 

-7-

 

 

5.3           Royalties.

 

5.3.1           Licensed
Products. For each Licensed Product made or sold by or for
Licensee and/or Sublicensee within the Territory, Licensee agrees
to pay WU an earned royalty equal to the Patent Royalty Rate of Net
Sales if there is a Valid Claim in at least one of the country of
manufacture or country of Sale or equal to the Non-Patent Royalty
Rate of Net Sales if there is no Valid Claim in both the countries
of manufacture and Sale. Such earned royalties shall be paid by
Licensee within thirty (30) days after the end of each Calendar
Half in which the Sale of the Licensed Products to which such
earned royalties occurs. If a Licensed Product is sold in
combination with another product (“Combination
Product”) on which licensee is obligated to pay royalties,
the Patent Royalty Rate used shall be the Patent Royalty Rate if
the Licensed Product were sold alone multiplied by the ratio
A/(A+B), where A = the cost of the Licensed Product if sold alone
and B = cost of the Combination Product if sold alone, such that
this ratio not be lower than 0.5, where B is an active ingredient
and not an excipient, carrier, diluents or filler.

 

5.3.2           Licensed
Services. Licensee
agrees to pay WU an earned royalty equal to the Patent Royalty Rate
of the total gross revenues generated, directly or indirectly, by
Licensee and/or Sublicensee from the performance of the Licensed
Services if there is a Valid Claim in the country in which the
Licensed Services were performed or equal to the Non-Patent Royalty
Rate of the total gross revenues generated, directly or indirectly,
by Licensee from the performance of the Licensed Services if there
is no Valid Claim in the country in which the Licensed Services
were performed. Such earned royalties shall be paid by Licensee
within thirty (30) days after the end of each Calendar Half in
which the performance of the Licensed Services occurs. if a
Licensed Service is sold in combination with another product
(“Combination Service”) on which licensee is obligated
to pay royalties, the Patent Royalty Rate used shall be the Patent
Royalty Rate if the Licensed Service were sold alone multiplied by
the ratio A/(A+B), where A = the cost of the Licensed Service if
sold alone and B = cost of the Combination Product if sold alone,
such that this ratio not be lower than 0.5.

 

5.4        
Minimum
Royalties. Commencing
with the Calendar Half in which the First Commercial Sale occurs
and continuing thereafter throughout the term of this Agreement,
Licensee agrees to pay WU a minimum royalty equal to the Minimum
Royalty for each Calendar Half as an advance against the royalties
due under Section 5.3.1 above. Such Minimum Royalties shall be due
on January 31 and July 31 of each Calendar Half.

 

5.5         
Milestone
Payments. Licensee
agrees to pay WU milestone payments in the amounts set forth in the
Preamble, herein above, within thirty (30) days after the date that
the applicable milestone is met

 

5.6     
   Clarifications.
For the avoidance of doubt, no multiple royalty will be required to
be paid because a Licensed Product or its manufacture, use, Sale or
importation is covered by more than one Valid Claim or patent or
patent application within the Patent Rights. A Sale of a Licensed
Product will be deemed to have been made at the time Licensee or a
Sublicensee (or anyone acting on behalf of or for the benefit of
Licensee or its Sublicensees) first invoices, ships, or receives
value for a Licensed Product. Similarly, the performance of a
Licensed Service shall be deemed to have been performed at the time
Licensee or a Sublicensee (or anyone acting on behalf of or for the
benefit of Licensee or its Sublicensees) first invoices or receives
value for a Licensed Service. In order to ensure that WU obtains
the full amount of royalty payments contemplated in this Agreement,
if any Licensed Product is sold or transferred internally within
Licensee or any Sublicensee or other third party with whom Licensee
has any agreement or arrangement regarding consideration (including
but not limited to an option to purchase stock, stock ownership,
division of profits, or special rebates or allowances), the amount
of the Sale shall be deemed to be the greater of (a) the price at
which the Licensed Product is resold to the end user or (b) the
fair market value of the Licensed Product. Similarly, if any
Licensed Service is performed internally within Licensee or any
Sublicensee or other third party with whom Licensee has any
agreement or arrangement regarding consideration (including but not
limited to an option to purchase stock, stock ownership, division
of profits, or special rebates or allowances), the amount of
revenue received by Licensee for such performance shall be deemed
to be the greater of (a) the price at which the Licensed Service is
resold to the end user or (b) the fair market value of the Licensed
Service.

 

 

-8-

 

 

5.7           Sublicensing
Revenue Obligations. Licensee shall pay to WU the percentage
of Sublicensing Revenue identified in the Preamble above within
thirty (30) days of the end of the Calendar Half in which Licensee
receives the Sublicensing Revenue.

 

6.            

Place and Method of Payment; Reports and Records; Audit;
Interest.

 

6.1           Method
of Payment. All
dollar ($) amounts referred to in this Agreement are expressed in
United States dollars. All payments to WU shall be made in United
States dollars by check or electronic transfer payable to
"Washington University." Any Sales revenues for Licensed Products
or revenue for Licensed Services in currency other than United
States dollars shall be converted to United States dollars at the
conversion rate for the foreign currency as published in the
Eastern edition of The Wall Street
Journal as of the last business day in the United States of
the applicable Calendar Half.

 

6.2           Place
of Payment. Checks
shall reference WU Contract Number 004446-0011and shall be sent
to:

 

Accounting
Department

Office
of Technology Management

Washington
University in St. Louis

660
South Euclid Avenue, CB 8013

St.
Louis, MO 63110

 

All
payments shall include the WU Contract Number to ensure accurate
crediting to Licensee’s account. Electronic transfers shall
be made to a bank account designated in writing by WU.

 

6.3           Reports.
Within forty-five (45) days after the end of each Calendar Half in
which a Licensed Product is Sold or made or in which a Licensed
Service is performed, Licensee shall deliver to WU, a written
report setting forth the calculation of all amounts due to Licensee
under Sections 5.3 and 5.5 above for such Calendar Half. For
Licensed Products, each such report shall show, at a minimum, (a)
the number of Licensed Products in inventory at the beginning of
such Calendar Half, (b) the number of Licensed Products Sold and
amount of Sales by country during such Calendar Half, (c) the
number of Licensed Products in inventory at the end of such
Calendar Half, (d) the gross receipts for Sales of Licensed
Products during such Calendar Half including total amounts invoiced
and received, (e) any Permissible Deductions giving totals by each
type for such Calendar Half, (f) Net Sales of Licensed Products by
country for such Calendar Half, (g) royalties, fees and payments
due to WU for such Calendar Half, giving totals for each category,
and (h) earned royalty amounts credited against minimum royalty
payments for such Calendar Half. For Licensed Services, each such
report shall show, at a minimum, (a) the number of Licensed
Services performed during such Calendar Half and a description of
such Licensed Services, (b) the total gross revenues by country for
Licensed Services during such Calendar Half including total amounts
invoiced and received, and (c) royalties due to WU for such
Calendar Half, giving totals for each category.

 

6.4         
Books
and Records. Licensee
shall maintain complete and accurate books of account and records
that would enable an independent auditor to verify the amounts paid
as royalties, fees and payments under this Agreement. The books and
records must be maintained for ten years following the Calendar
Half after submission of the reports required by this Agreement.
Upon reasonable notice by WU, Licensee must give WU (or auditors or
inspectors appointed by and representing WU) access to all books
and records relating to Sales of Licensed Products by Licensee and
the performance of Licensed Services by Licensee to conduct, at
WU’s expense, an audit or review of those books and records.
This access must be available at least once every six (6) months,
during regular business hours, during the term of this Agreement
and for the three calendar years following the year in which
termination or expiration of this Agreement occurs. If any such
audit or review determines that Licensee has underpaid royalties by
5% or more for any Calendar Half, Licensee shall (a) reimburse WU
for the costs and expenses of the accountants and auditors in
connection with the review and audit, and (b) immediately pay WU
the amount of such underpayment along with interest on the past due
amount as provided in Section 6.5 below.

 

 

-9-

 

 

6.5           Interest
and Collection. Any
amounts not paid by Licensee to WU when due shall accrue interest,
from the date thirty (30) days after the balance is due at an
interest rate of 1.5% per month or portion of a month. In addition,
Licensee will reimburse WU for all reasonable costs and expenses
incurred (including reasonable attorneys’ fees) in collecting
any overdue amounts.

 

6.6         
Foreign
Taxes. Payments shall
be paid to WU free and clear of all foreign taxes. If laws, rules
or regulations require withholding of income taxes of other rates
imposed upon payments set forth in this Agreement, Licensee shall
make such withholding payments as required and without subtracting
such withholding payments from such payments to WU. Licensee shall
submit appropriate proof of payment of the withholding rates to WU
within a reasonable period of time. Licensee shall use efforts
consistent with its usual business practices to minimize the extent
of any withholding taxes imposed under the provisions of the
current or any future double taxation treaties or agreement between
foreign countries, and the parties shall cooperate with each other
with respect thereto, with the appropriate party under the
circumstances providing the documentation required under such
treaty or agreement to claim benefits thereunder.

 

7.            

Confidentiality.

 

7.1         
Definition of
Confidential Information. The parties acknowledge that, prior to
and during the Term of this Agreement, the parties may disclose to
one another scientific, technical, trade secret, business, or other
information which is treated by the disclosing Party as
confidential or proprietary, including but not limited to
unpublished Patent Rights patent applications, Technical
Information, and Tangible Research Property. (hereinafter referred
to as “Confidential Information”). Both parties agree
that in order to ensure that each party understands which
information is deemed to be confidential, all Confidential
Information will be in written form and clearly marked as
“Confidential,” and if the Confidential Information is
initially disclosed in oral or some other non-written form, it will
be confirmed and summarized in writing and clearly marked as
“Confidential” within thirty (30) days of disclosure.
The receiving party shall hold such Confidential Information in
confidence and shall treat such information in the same manner as
it treats its own confidential information but not less than with a
reasonable degree of care. In recognition that WU is a
non-commercial, academic institution, Licensee agrees to limit to
the extent possible the delivery of Licensee Confidential
Information to WU. WU retains the right to refuse to accept any
such information or data from Licensee which it does not consider
to be essential to this Agreement or which it believes to be
improperly designated, for any reason, but such refusal shall not
eliminate the obligation of the individual making such a
determination from treating such information as confidential
hereunder where such information has been read by such individual.
The Confidential Information provided to the receiving party will
remain the property of the disclosing party, and will be disclosed
only to those persons necessary for the performance of this
Agreement. No indirect or consequential damages or damages based on
loss of profits or market share are contemplated or recoverable for
breach of confidentiality.

 

7.2         
Exclusions.
Confidential Information does not include information that (a) was
known to the receiving party prior to receipt from the disclosing
party as evidenced by the receiving party’s records; (b) is
or becomes part of the public domain through no act by or on behalf
of the receiving party; (c) is lawfully received by the receiving
party from a third party without any restrictions, and/or (d)
comprises identical subject matter to that which had been
originally and independently developed by the receiving party
personnel without knowledge or use of any Confidential Information
as evidenced by the receiving party’s records.

 

7.3           General
Obligations. Subject
to Section 2.5 above and to Sections 7.5 and 7.6 below, the
receiving party agrees that during the term of this Agreement and
forever thereafter it will (a) refrain from disclosing any
Confidential Information to third parties, (b) disclose
Confidential Information to only those employees of the receiving
party necessary for the receiving party to use the Confidential
Information in accordance with this Agreement and who are subject
to restrictions on use and disclosure at least as restrictive as
those set forth in this Agreement, (c) keep confidential the
Confidential Information, and (d) except for use in accordance with
the licenses which are expressly granted in this Agreement, refrain
from using Confidential Information.

 

 

-10-

 

 

7.4   
     No
License. By
disclosing the WU Confidential Information to Licensee, WU does not
grant any express or implied rights to Licensee under any patents,
copyrights, trademarks, or trade secrets. WU reserves, without
prejudice, the ability to protect its rights under any such
patents, copyrights, trademarks, or trade secrets.

 

7.5       
Judicial
Procedures. The
receiving party may, to the extent necessary, disclose the
disclosing party’s Confidential Information in accordance
with a judicial or other governmental order, provided that the
receiving party either (a) gives the disclosing party reasonable
notice prior to such disclosure to allow the disclosing party a
reasonable opportunity to seek a protective order or equivalent, or
(b) obtains written assurance from the applicable judicial or
governmental entity that it will afford the Confidential
Information the highest level of protection afforded under
applicable law or regulation.

 

7.6     
  Governmental
Approvals. Licensee
may, to the extent necessary, use and disclose the Confidential
Information to secure governmental approval to clinically test or
market a Licensed Product or Licensed Service, or, if applicable,
to secure patent protection for an invention within the Patent
Rights. Licensee will, in any such event, take all reasonably
available steps to maintain the confidentiality of the disclosed
Confidential Information and to guard against any further
disclosure.

 

8.            

Representations and Warranties.

 

8.1       
Authority.
Each of WU and Licensee represents and warrants to the other of
them that (a) this Agreement has been duly executed and
delivered and constitutes a valid and binding agreement enforceable
against such party in accordance with its terms, (b) no
authorization or approval from any third party is required in
connection with such party’s execution, delivery, or
performance of this Agreement, and (c) the execution,
delivery, and performance of this Agreement does not violate the
laws of any jurisdiction or the terms or conditions of any other
agreement to which it is a party or by which it is otherwise
bound.

 

8.2       
Compliance with
Laws. Licensee
represents and warrants that it will (a) use the Patent Rights,
Tangible Research Property and Technical Information only to
exploit the license rights granted in Sections 2.1, 2.2 and 2.3 in
accordance with the provisions of this Agreement and with such
laws, rules, regulations, government permissions and standards as
may be applicable thereto in the Territory and in the Field, and
(b) otherwise comply with all laws, rules, regulations, government
permissions and standards as may be applicable to Licensee in the
Territory with respect to the performance by Licensee of its
obligations hereunder.

 

8.3   
   Reports
and Statements. Licensee warrants that all reports
and/or statements provided by Licensee hereunder are true and
correct and are certified true and correct by Licensee upon
delivery to WU.

 

8.4   
   Additional
Warranties of Licensee. Licensee represents and warrants that
(a) it has obtained the insurance coverage required by Article 11
below, and (b) there is no pending litigation and no threatened
claims against it that could impair its ability or capacity to
perform and fulfill its duties and obligations under this
Agreement.

 

8.5   
   Additional
Warranties of WU. WU represents and warrants that (a) it has
in place an intellectual property policy that provides for its
ownership (subject to any rights retained by the U.S. government by
operation of law) of the Patent Rights, Technical Information and
Tangible Research Property; (b) as of the Effective Date, it has
received no notice of any third party claims against WU challenging
WU’s ownership or control of the Patent Rights, Technical
Information and Tangible Research Property; and (c) it has obtained
assignments from all WU inventors named in patent applications
within the Patent Rights assigning to WU all their right, title and
interest in and to the Patent Rights.

 

 

-11-

 

 

9.            

Application, Prosecution and Maintenance of Patent
Rights.

 

9.1           Patent
Applications. WU has
the sole right to control the preparation, filing, prosecution,
issue and maintenance of Patent Rights patents and applications.
Subject to compliance by Licensee of the terms and conditions of
this Agreement (including, without limitation, Section 9.2
below),WU will (a) prosecute and maintain the applications and
patents within the Patent Rights, and (b) prepare, file and
prosecute additional applications within the Patent Rights as
Licensee may reasonably request, in WU's name at Licensee’s
sole cost and expense. WU will select qualified outside patent
counsel and corresponding foreign associates reasonably acceptable
to Licensee to prepare, file, prosecute and maintain U.S.
patents/applications and foreign counterparts within the Patent
Rights. WU will consult with Licensee regarding the prosecution of
Patent Rights patent applications including, without limitation,
providing Licensee a reasonable opportunity to review and comment
on proposed submissions to any patent office before the submission
is filed. WU will keep Licensee reasonably informed of the status
of Patent Rights patents and applications by timely giving Licensee
copies of significant communications relating to such Patent Rights
that are received from any patent office or outside patent counsel
of record or foreign associate.

 

9.2           Costs
and Expenses. Subject
to Section 9.3 below, Licensee agrees to reimburse WU for all
reasonable costs and expenses incurred by WU in connection with the
preparation, filing, prosecution, issue and/or maintenance of
patents and applications within the Patent Rights both prior to the
Effective Date on patent actions authorized by Licensee and anytime
thereafter during the term of this Agreement provided WU provides
Licensee notice of such fees before the date on which the
applicable cost or expense is to be incurred by WU. Licensee agrees
to pay WU the amount of any such reimbursement within thirty (30)
days after receipt by Licensee of documentation for any such costs
and expenses, which WU may provide to Licensee from
time-to-time.

 

9.3          
Failure
to Reimburse.
Licensee may elect not to reimburse WU for amounts due under
Section 9.2 in respect to one or more Patent Rights patent and/or
applications only by giving WU notice of such election at least
thirty (30) days before the date on which the applicable cost or
expense is to be incurred by WU (each an “Election
Notice”). For purposes of this Section 9.3, a cost or expense
shall be deemed to be incurred by WU on the earlier of (a) the date
WU actually pays the cost or expense, or (b) the date WU becomes
obligated to pay the cost or expense (which, for example, shall be
the date WU engages a third party to perform any service which
gives rise to any such cost or expense). Any such Election Notice
shall specify the Patent Rights patents and/or applications to
which such Election Notice relates (“Elected Patent
Rights”). In the event any Election Notice is given by
Licensee, (a) the term “Patent Rights” shall be
modified to exclude, as applicable, such Elected Patent Rights, (b)
the term “Technical Information” shall be modified to
exclude any research and development information, unpatented
inventions, know-how, data, methods, and technical data and
information no longer necessary for the exploitation of the license
granted to the remaining Patent Rights, and (c) the term
“Tangible Research Property” shall be modified to
exclude any and all research tools and other personal property that
WU may have provided to Licensee that is no longer necessary for
the exploitation of the license granted to the remaining Patent
Rights, in each instance as of the date the Election Notice is
given. Accordingly, and for the avoidance of doubt, as of the date
the Election Notice is given, the license to the Elected Patent
Rights, the applicable Technical Information and the applicable
Tangible Research Property granted to Licensee under Sections 2.1,
2.2 and 2.3 above shall terminate, and WU shall be free, without
any further obligation to Licensee whatsoever, to abandon the
applications or patents subject to the Election Notice, or to
continue prosecution or maintenance, for WU’s sole use and
benefit, including a license to unrelated third parties, at
WU’s option. Licensee agrees to deliver to WU, along with any
Election Notice, all Technical Information and Tangible Research
Property to which such Election Notice relates. For the avoidance
of doubt, WU will not refund any amounts paid under Section 9.2 to
WU prior to WU’s receipt of an Election Notice.

 

 

-12-

 

 

9.4           Community
of Interest. The Parties desire to avail themselves to the
maximum extent possible of all applicable legal privileges. The
Parties intend that information regarding the preparation, filing,
prosecution and maintenance of the applications and patents within
the Patent Rights (“Shared Information”) that would
otherwise be subject to one or more legal privileges or protections
is and shall be subject to those same privileges and protections
despite the fact that it has been developed by or exchanged between
or among them and/or their joint or independent counsel. The
Parties further intend that Shared Information is and shall be
subject to the joint defense doctrine and common interest/community
of interest doctrine as recognized in such cases as Hunydee v.
United States, 355 F.2d 183 (9th Cir. 1965), Continental Oil
Company v. United States, 330 F.2d 347 (9th Cir. 1964), In re
University of California, 101 F.3d 1386 (Fed. Cir. 1996), and In re
Spalding Sports Worldwide, Inc., 203 F.3d 800 (Fed. Cir. 2000),
including the cases cited therein. The Parties acknowledge that the
legal privileges and protections pertaining to Shared Information
are held jointly by all Parties, and that no individual Party is
authorized to waive any such privilege or protection. Further, this
Agreement shall not affect the ethical, fiduciary or other
obligations inherent in those attorney-client relationships other
than to extend the cloak of confidentiality and privilege to the
Shared Information as provided herein. Each Party agrees that
Shared Information obtained from another Party or developed jointly
shall be used only for the preparation and prosecution of the
Licensed Patents and for no other purpose. Each Party agrees to
keep Shared Information confidential, disclose Shared Information
within each Party only to those individuals who have a business
need to know the information and not to disclose Shared Information
to any person or firm not a Party to this License
Agreement.

 

10.            

Infringement, Enforcement, and Defense.

 

10.1      
   Notice of
Infringement.
Throughout the term of this Agreement, each of WU and Licensee
agree to give the other prompt notice of (a) any known or suspected
infringement of the Patent Rights or unauthorized use or disclosure
of the Technical Information and/or Tangible Research Property in
the Territory, and (b) any claim that a Licensed Product or
Licensed Service infringes the intellectual property rights of a
third party.

 

10.2             
Patent
Rights.

 

10.2.1                    
Enforcement.
Licensee, at its sole expense, will attempt to stop promptly any
infringement of the Patent Rights in the Territory. Upon receipt of
WU’s written consent, such consent not to be unreasonably
withheld, Licensee may initiate and prosecute actions in its own
name or, if required by law, in WU’s name against third
parties for infringement of the Patent Rights in the Territory
through outside counsel of Licensee’s choice who are
reasonably acceptable to WU. Licensee shall consult with WU prior
to and in conjunction with all significant issues, shall keep WU
informed of all proceedings, and shall provide copies to WU of all
pleadings, legal analyses, and other papers related to such
actions. WU will provide reasonable assistance to Licensee in
prosecuting any such actions. If Licensee fails or declines to take
any action under this Section 10.2.1 within a reasonable time after
learning of the infringement of the Patent Rights, WU shall have
the right (but not the obligation) to take appropriate actions
including, without limitation, filing a lawsuit. Licensee will
provide reasonable assistance to WU in prosecuting, resolving
and/or settling any such actions In the event a third party alleged
to have infringed the Patent Rights brings a declaratory judgment
action against Licensee, Licensee may at its sole discretion
decline to litigate the declaratory judgment action or initiate
action for the alleged infringement in question.  Should
Licensee decline to litigate a declaratory judgment action, WU
shall have the right (but not the obligation) to defend Licensee
and the Patent Rights at WU's sole expense and direction. 
Licensee will provide reasonable assistance to WU in prosecuting,
defending, resolving and/or settling such action. Nothing under
this Section 10.2.1 shall be construed to require Licensee to
initiate or prosecute an action for patent infringement against
third parties.

 

10.2.2                      Restrictions
on Settlement.
Notwithstanding anything in this Agreement to the contrary,
Licensee may not, without the advanced written consent of WU,
settle, compromise, or otherwise enter into any form of settlement
(or other similar agreement) regarding any claim of action brought
under Section 10.2.1 above that either (a) admits liability on the
part of WU, (b) otherwise negatively affects the rights of WU or
imposes any liability, restrictions or obligation upon WU, (c)
requires any financial payment by WU, (d) concedes or otherwise
portions the Territory and/or (e) grants rights or concessions to a
third party to the Patent Rights, any Licensed Products, any
Licensed Services.

 

 

-13-

 

 

10.2.3                      Proceeds.
If Licensee obtains any value, payment or compensation of any type
or kind as a result of any claim brought pursuant to Section 10.2.1
above, such proceeds shall be distributed in accordance with the
further provisions of this Section 10.2.3. Licensee shall pay to WU
a percentage of any and all proceeds equal to the Patent Royalty
Rate.

 

10.3           Technical
Information. WU shall
have the exclusive right (but not the obligation) to institute
legal action against any third party arising out of such third
party’s actual or threatened infringement or misappropriation
of the Technical Information, and WU shall retain any and all
proceeds from any such actions. Licensee shall have no right to
make any demands or claims, bring suit, effect any settlements or
take any other action with respect to any such infringement or
misappropriation without the prior written consent of
WU.

 

11.            

Indemnification.

 

11.1           Notwithstanding
anything else in this Agreement, Licensee agrees to indemnify,
reimburse and hold harmless WU, WU personnel, the principal
investigator, WU’s Affiliates, and each of their respective
present trustees, faculty, staff, employees, students, directors,
officers, agents, successors and assigns (altogether the “WU
Indemnitees”) from, for and against any and all judgments,
settlements, losses, expenses, damages and/or liabilities (the
“Losses”) and any and all court costs, attorneys’
fees, and expert witness fees and expenses (“Fees”)
that a WU Indemnitee may incur from any and all allegations,
claims, suits, actions or proceedings (the “Claims”)
arising out of, relating to, or incidental to Licensee’s
breach of this Agreement or its use, commercialization, or other
exploitation of WU deliverables, whether by or through Licensee,
and including all Claims for infringement, injury to business,
personal injury and product liability, but excluding Losses, not
Fees, to the extent they are adjudicated by a Court of competent
jurisdiction to be caused by the gross negligence or willful
misconduct of a WU Indemnitee.

 

11.2          
WU agrees to indemnify,
reimburse and hold harmless Licensee, Licensee personnel,
Licensee’s Affiliates, and its present staff, employees,
directors, officers, agents, successors and assigns (together the
“Licensee Indemnitees”) from, for and against any and
all Losses and Fees that a Licensee Indemnitee may incur from any
and all Claims by WU Indemnitees arising out of, relating to, or
incidental to WU’s activities pursuant to this Agreement,
including, without limitation, WU’s use, storage or handling
of company property at WU.

 

11.3           Obligations
set forth in this section shall survive termination of this
Agreement, shall continue even after assignment of rights and
responsibilities, and shall not be limited by any provision of this
Agreement outside this section. A party seeking indemnification
under this Agreement shall: (a) give the indemnifying party prompt
written notice of the Claim; (b) cooperate with the indemnifying
party, at the indemnifying party’s expense, in connection
with the defense and settlement of the Claim; and (c) not settle or
compromise the Claim without the written consent of the
indemnifying party, which shall not be unreasonably withheld. An
indemnifying party may satisfy its duty to indemnify for Fees by
accepting an irrevocable duty to defend the Claim on behalf of the
Indemnitees without a reservation of rights, at which time the
indemnifying party shall be entitled to conduct and direct the
defense of Indemnitees against such Claim using attorneys of its
own selection; for all other Claims, the Indemnitee shall be
entitled to conduct and direct its own defense and that of other
Indemnitees using attorneys of its own selection with Fees subject
to the indemnifying party’s ongoing obligation to indemnify
for Fees. 

 

12.            

Insurance.

 

 

Throughout
the Term of this Agreement and for a period of five (5) years
thereafter, Licensee shall obtain and maintain comprehensive
general liability and product liability insurance, naming WU as an
additional insured, with carrier(s) having at least A.M. Best
ratings/class sizes of A/VII and in the following minimum annual
limits: From the Effective Date until the date at least one day
prior to the First Commercial Sale or clinical study: $2,000,000
per occurrence and $5,000,000 in the aggregate; and from the date
at least one day prior to the First Commercial Sale or clinical
study: $5,000,000 per occurrence and $10,000,000 in the
aggregate.

 

Licensee
will provide WU with a certificate of insurance within thirty days
of execution of this Agreement and annually thereafter. The
certificates must provide that Licensee’s insurer will notify
WU in writing at least thirty (30) days prior to cancellation or
material change in coverage. The specified minimum insurance
coverage and limits do not
constitute a limitation on Licensee’s liability or obligation
to indemnify or defend under this Agreement.

 

 

-14-

 

 

13.            

Term and Termination.

 

13.1   
    Term. The
Term of this Agreement is defined in the Preamble and is subject to
earlier termination as provided herein.

 

13.2   
    Termination By
Licensee. Licensee may terminate this
Agreement without cause by (a) giving notice thereof to WU, and (b)
paying WU, along with such notice, all amounts due and owing to WU
under this Agreement as of the date of termination and a
termination fee (“Termination Fee”). Any such
termination shall be effective on the date such notice is given
along with the Termination Fee. The Termination Fee shall be an
amount equal to all amounts that would have come due under this
Agreement (absent termination) under Sections 5.2, 5.4 and 5.5
above in the one hundred twenty (120) day period after the
effective date of termination.

 

13.3   
    Termination by
WU. WU may terminate
this Agreement by giving notice thereof to Licensee upon the
occurrence of any one or more of the following events (in which
event this Agreement shall terminate on the date such notice is
given): (a) Licensee fails to meet any of the milestones set forth
in the Development Plan and/or in Exhibit F on or before the times
set forth in the Development Plan (regardless of whether Licensee
has used its best efforts to do so) and fails to remedy such
failure within sixty (60) days after WU gives Licensee notice of
such failure, (b) Licensee breaches any other written agreement
between Licensee and WU (and/or defaults in any obligation to WU
outside the scope of this Agreement) and Licensee fails to remedy
such breach (or default) within sixty (60) days after WU gives
Licensee notice of, as applicable, such breach or default, (c)
 Licensee exercises, or
attempts or offers to exercise, any rights with respect to the
Patent Rights and/or the Technical Information outside the scope of
the licenses granted to Licensee in Article 2 above, (d) Licensee
breaches any provision of Article 6 above, and/or (e) Licensee (i)
becomes insolvent, bankrupt, or is otherwise unable to pay its
debt(s) to WU by the due date(s), or (ii) Licensee suffers the
appointment of a receiver, receiver and manager, or administrative
receiver of the whole or any part of its assets or undertaking,
(iii) a resolution is passed, for its winding up (other than for
the purpose of amalgamation or reconstruction),.

 

13.4       
Breach
and Failure to Cure.
WU may terminate this Agreement by giving notice thereof to
Licensee in the event Licensee commits a breach of any provision of
this Agreement (other than a breach of the type contemplated by
Section 13.3 above) and fails to cure such breach within sixty (60)
days after the day that WU gives Licensee notice of such breach.
Such termination shall be effective on the date such notice of
termination is given. Licensee may terminate this Agreement by
giving notice thereof to WU in the event WU commits a breach of any
provision of this Agreement and fails to cure such breach within
thirty (30) days after the day that Licensee gives notice to WU of
such breach, and such termination shall be effective on the date
such notice of termination is given.

 

13.5   
    Duties Upon
Expiration or Earlier Termination. For the avoidance of doubt, on the
date of expiration or earlier termination of this Agreement, all
license rights granted to Licensee under Article 2 above shall
terminate. Licensee agrees to, promptly upon the expiration or
earlier termination of this Agreement, deliver to WU all originals,
copies, reproductions and summaries of all Tangible Research
Property, Technical Information and Confidential Information, in
each instance in the format in which it exists at the time of
expiration or earlier termination of this Agreement, or in another
mutually agreed format. Within ten (10) days after the expiration
or earlier termination of this Agreement for any reason whatsoever,
Licensee agrees to deliver a written report to WU of all Licensed
Products in inventory. If this Agreement terminates before the
expiration of the last-to-expire Patent Rights, then, upon the
termination of this Agreement, Licensee agrees (a) to immediately
discontinue the exportation of Licensed Products that were made in
the Territory, (b) to immediately discontinue the manufacture, Sale
and distribution of the Licensed Products in the Territory and the
performance of Licensed Services in the Territory, (c) to
immediately destroy all Licensed Products in inventory, and (d) not
to manufacture, sell and/or distribute Licensed Products in the
Territory until the expiration of applicable last-to-expire Patent
Rights. If this Agreement expires, Licensee agrees to, within ten
(10) days after the expiration of this Agreement, pay WU a royalty
for the Licensed Products in inventory equal to the Royalty Rate of
the then current market value of the Licensed Products in
inventory.

 

 

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13.6         
   Effect of
Expiration or Earlier Termination. For the avoidance of doubt, the
expiration or earlier termination of this Agreement shall not
relieve Licensee of its obligation to account for and make payment
to WU of any amount due hereunder including, without limitation,
any royalties accrued during the Term of this Agreement and amounts
under Section 9.2 and 13.2 above.

 

14.            

Disclaimer and
Limitation of Liability. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, EVERYTHING PROVIDED BY WU UNDER THIS AGREEMENT IS
UNDERSTOOD TO BE EXPERIMENTAL IN NATURE, MAY HAVE HAZARDOUS
PROPERTIES, AND IS PROVIDED WITHOUT ANY WARRANTY OF ANY KIND,
EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR
NON-INFRINGEMENT OF ANY THIRD-PARTY PATENT, TRADEMARK, COPYRIGHT OR
ANY OTHER THIRD-PARTY RIGHT. WU MAKES NO WARRANTIES REGARDING THE
QUALITY, ACCURACY, COMMERCIAL VIABILITY OR ANY OTHER ASPECT OF ITS
PERFORMANCE PURSUANT TO THIS AGREEMENT OR REGARDING THE
PERFORMANCE, VALIDITY, SAFETY, EFFICACY OR COMMERCIAL VIABILITY OF
ANYTHING PROVIDED BY WU UNDER THIS AGREEMENT. IN NO EVENT SHALL WU
OR LICENSEE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT,
WHETHER IN BREACH OF CONTRACT, TORT OR OTHERWISE, EVEN IF THE PARTY
IS ADVISED OF THE POSSIBLITY OF SUCH DAMAGES. EXCEPT FOR THEIR
RESPECTIVE INDEMNITY OBLIGATIONS, EACH OF WU’S AND
LICENSEE’S AGGREGATE LIABILITY TO THE OTHER UNDER THIS
AGREEMENT SHALL NOT EXCEED THE PAYMENTS MADE OR PAYMENTS DUE UNDER
THIS AGREEMENT, RESPECTIVELY.

 

15.            

General Provisions.

 

15.1        
Import/Export
Controls. In performing their respective obligations under
the Agreement, the Parties will comply with United States export
control and asset control laws, regulations, and orders, as they
may be amended from time to time, applicable to the export or
re-export of goods or services, including software, processes, or
technical data. Such regulations include without limitation the
Export Administration Regulations (“EAR”),
International Traffic in Arms Regulations (“ITAR”), and
regulations and orders administered by the Treasury
Department’s Office of Foreign Assets Control (collectively,
“Export Control Laws”). WU is not transferring any
information or material outside of the United States under this
Agreement and is providing no representation regarding the export
control status or classification of any information or materials
provided hereunder.

 

15.2        
Entire
Agreement; Amendment.
This Agreement embodies the entire understanding of the parties and
supersedes all other past and present communications and agreements
relating to the subject matter. No amendment or modification of
this Agreement shall be valid unless made in writing and signed by
authorized representatives of both parties.

 

15.3         Governing
Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State
Missouri, without regard to its rules or procedures involving
conflicts of laws. All actions relating to this Agreement shall be
brought exclusively in the United States District Court for the
Eastern District of Missouri or the Circuit Court of St. Louis
County, Missouri, if no federal subject matter jurisdiction exists.
The Parties irrevocably waive all present and future objections to
personal jurisdiction, forum or venue in such courts.

 

15.4       
Survival.
Each provision of this Agreement that would by its nature or terms
survive, shall survive any termination or expiration of this
Agreement, regardless of the cause. Such provisions include,
without limitation, Sections 7, 8, 10, 11, 12, and 14.

 

 

-16-

 

 

15.5   
      Notices.
Notices pursuant to this Agreement shall be to the following
contacts and are effective when sent if sent by a commercial
carrier’s overnight delivery service or when received if sent
otherwise:

 

    Office of
Technology Management

    Attention:
Director

    Washington
University in St. Louis

    660 South Euclid
Avenue, CB 8013

    St. Louis, MO
63110

 

15.6    
   Assignment.
This Agreement is binding upon and inures to the benefit of the
Parties and their successors, but this Agreement may not be
assigned by either party without the prior written consent of the
other party.

 

15.7      
  Construction.
The recitals and preamble to this Agreement, if any, are hereby
incorporated as an integral part of this Agreement as if restated
herein in full. Headings are included for convenience and reference
only and are not incorporated as an integral part of this
Agreement. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and as
executed shall constitute one agreement, binding on both parties,
even though both parties do not sign the same
counterpart.

 

15.8      
  Relationship of the
Parties. Each Party
is an independent contractor and not a partner or agent of the
other Party. This Agreement will not be interpreted or construed as
creating or evidencing any partnership or agency between the
Parties or as imposing any partnership or agency obligation or
liability upon either Party. Further, neither Party is authorized
to, and will not, enter into or incur any agreement, contract,
commitment, obligation or liability in the name of or otherwise on
behalf of the other Party.

 

15.9       
Severability. If any
provision in this Agreement is held invalid, illegal, or
unenforceable in any respect, such holding shall not affect any
other provisions of this Agreement, and this Agreement shall be
construed as if it had never contained the invalid, illegal, or
unenforceable provisions.

 

15.10      
Remedies.
The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement,
or to exercise any right or remedy under this Agreement will not be
interpreted or construed as a waiver or relinquishment of that
Party's right to assert or rely upon any such provision, right or
remedy in that or any other instance; rather, the same will be and
remain in full force and effect. All rights and remedies under this
Agreement are cumulative of every other such right or remedy and
may be exercised concurrently or separately from
time-to-time.

 

15.11   
    Use of
Names. Neither Party
may use the trademarks or name of the other Party or its employees
for any commercial, advertisement, or promotional purposes without
the prior written consent of the other with WU acting through an
authorized corporate officer. If either party is required by law,
governmental regulation, or its own authorship or conflict of
interest policies to disclose its relationship with the other
Party, including, but not limited to, in SEC filings, scientific
publications or grant submissions, it shall provide the other Party
with a copy of the disclosure.

 

15.12     
  Force
Majeure. Neither WU
nor Licensee will be liable for failure of or delay in performing
obligations set forth in this Agreement, and neither will be deemed
in breach of its obligations, other than for Payments, if such
failure or delay is due to natural disasters or other causes
reasonably beyond the control of a Party and reasonable notice of
the delay is provided to the other Party.

 

15.13   
   WU
Personnel. Licensee
agrees that for all WU faculty or staff members who serve Licensee
in the capacity of consultant, officer, employee, board member,
advisor, or otherwise through a personal relationship with Licensee
(a “Consultant”) (i) such Consultant shall serve the
Licensee in his or her individual capacity, as an independent
contractor, and not as an agent, employee or representative of WU;
(ii) WU exercises no authority or control over such Consultant
while acting in such capacity; (iii) WU receives no benefit from
such activity; (iv) neither Licensee nor the Consultant may use WU
resources in the course of such service; (v) WU makes no
representations or warranties regarding such service and otherwise
assumes no liability or obligation in connection
with
any such work or service undertaken by such Consultant; and (vi)
any breach, error, or omission by a Consultant acting in the
capacity set forth in this paragraph shall not be imputed or
otherwise attributed to WU, and shall not constitute a breach of
this Agreement by WU.

 

 

-17-

 

 

15.14            
Further
Acts. Each party shall, at the reasonable request of the
other, execute and deliver to the other such instruments and/or
documents and shall take such actions as may be required to more
effectively carry out the terms of this Agreement.

 

15.15           
Impact
on Tax-Exempt Status.  WU advises (a) that it is exempt
from federal income tax under Section 501(c) (3) of the Internal
Revenue Code, (b) that maintenance of such exempt status is of
critical importance to WU and to its members, and (c) that WU has
entered into this Agreement with the expectation that there will be
no adverse impact on its tax exempt status. As such, and if it
becomes necessary, the parties agree to amend, modify or reform
this Agreement as necessary (i) in order to ensure that there is no
material adverse impact on WU's tax exempt status, and (ii) in a
manner that preserves the economic terms of the Agreement as such
are set forth in this Agreement.

 

The
signatures of the undersigned indicate that they have read,
understand and agree with the terms of this Agreement and have the
authority to execute this Agreement on behalf of their represented
Party and to bind their Party to all the terms of this
Agreement.

 

WASHINGTON
UNIVERSITY

 

 

By:
/s/ Bradley J. Castanho,
Ph.D.

 

Title:      

Assistant Vice
Chancellor for Research

 

Office of
Technology Management

 

Washington
University in St. Louis

 

 

LICENSEE

 

 

By: 
/s/ Tom
Varvaro

Title:
CFO

 

 

 

-18-

 

 

Exhibit A

Initial Development Plan

 

 

(a) a
definition and/or specification of each Licensed Product/Service
planned for development,

 

	

Field
1

	

Dietary
supplement, sports nutrition, foods with health claims,
skincare/cosmetics

	

Field
2

	

food
or drink products requiring FDA approval

	

Field
3

	

Consumer foods,
such as dairy products, formulas, cereal

	

Field
4

	

Research (ref
standard at $3000/gram)

	

Field
5

	

Pharmaceuticals

 

(b) the
tasks to be performed by Licensee, its contractors to develop each
Licensed Product to the point of commercialization, including
estimated time schedules for specific tasks such as prototype
development, beta testing, trials, product development, and market
surveys and testing;

Product
Development

ChromaDex embarked
on an ambitious NR product development program to yield a
commercially viable product. After careful review of the patent
literature surrounding the synthesis of NR and 9 months of
continuous experimentation, ChromaDex scientists have arrived at an
improved synthetic chemistry approach that yields a high purity NR
product with very good recoveries. While the methodolgy is sound
and reproducible, the resultant material is not a commercially
viable product. ChromaDex has contracted with two commercial
partners to refine the methodology, generate a commericially viable
product and scale up the resultant process to commercial production
levels. Our expected availability of product is anticipated to be
mid Q3 of 2013.

Product
Profile, Commercial Viability and Impact on Plan

The
business plan will be contigent upon having cost effective
commercially viable product, therefore the timeline for commercial
and clinical events will be represented at L + or -. L will
represent the date ChromaDex has the availability of commercially
viable product. Commercial viability is dependent on profile and
cost.

Clinical
Plan

	

Nicotinamide
Riboside

	

PK

	

L +
3mos

	

Initial
data to support dosing and safety

	

Nicotinamide
Riboside

	

comparison
to niacin in optimization of NAD pathway and its
effects

	

L +
3mos

	

For
cholesterol mainly, but other minor niacin comparisons
(anti-oxidant, anti-inflammatory)

	

Nicotinamide
Riboside

	

Weight
loss, metabolism, and associated molecular markers

	

L +
6mos

	

This is
based on NR conversion to NAD, and NAD's role in activating histone
deacetylases (HDACs) which are used to control
metabolism

	

Nicotinamide
Riboside

	

Endurance
and sports nutrition

	

L + 9
mos

	

Based
on NR's position in the NAD recycling pathway following use in ATP
production

	

Nicotinamide
Riboside

	

Joint
health

	

L + 15
mos

	

Based
on a comparison to niacin's ability to increase range of motion,
decrease pain, and act as an anti-inflammatory

	

Nicotinamide
Riboside

	

Chemotherapy-induced
neuropathy

	

L +
21mos

	

This
ican be an OTC and ulitimatley a pharma inquiry

 

 

-19-

 

 

(c) the
tasks to be performed to achieve regulatory approval or other
certification of each Licensed Product/Service, including estimated
time schedules for each;

Regulatory
Plan

Self
affirmed GRAS L+18 mos

 

(d) the
identification of the primary country(ies) in which the Licensed
Product(s)Service(s) will be sold and a good faith estimate of time
of First Commercial Sale in the primary country(ies);
and

 

	

Country Roll out

	
 

	
 

	

USA

	

Q3

	

2013

	

Canada

	

Q2

	

2015

	

Australia

	

Q2

	

2016

	

EU

	

Q4

	

2016

	

Asia

	

Q4

	

2017

	

 

(e)
good faith estimates of Sales and income by Calendar Half for the
next five calendar years including the first calendar year or
partial calendar year following the Effective Date.]

 

	
 

	
 

 

	
Company Sales
(USD)

	
  Q3
2013 

	
  Q4
2013 

	
  1H
2014 

	
  2H
2014 

	
  1H
2015 

	
Field
1

	
Dietary supplement,
sports nutrition, foods with health claims

	
 $125,000 

	
 $187,500 

	
 $437,500 

	
 $500,000 

	
 $625,000 

	
Field
2

	
food or drink
products requiring FDA approval

	
 $0 

	
 $0 

	
 $0 

	
 $0 

	
 $0 

	
Field
3

	
Consumer foods,
such as dairy products, formulas, cereal

	
 $0 

	
 $0 

	
 $0 

	
 $8,000 

	
 $20,000 

	
Field
4

	
Research

	
 $750 

	
 $750 

	
 $1,500 

	
 $1,500 

	
 $2,250 

	

Total

	
 $125,750 

	
 $188,250 

	
 $439,000 

	
 $509,500 

	
 $647,250 

	
 

	
    

	
    

	
    

	
    

	
    

	
Company Sales
(USD)

	
  2H
2015 

	
  1H
2016 

	
  2H
2016 

	
  1H
2017 

	
  2H
2017 

	
Field
1

	
Dietary supplement,
sports nutrition, foods with health claims

	
 $812,500 

	
 $1,000,000 

	
 $1,125,000 

	
 $1,250,000 

	
 $1,312,500 

	
Field
2

	
food or drink
products requiring FDA approval

	
 $0 

	
 $10,000 

	
 $20,000 

	
 $30,000 

	
 $40,000 

	
Field Field
3

	
Consumer foods,
such as dairy products, formulas, cereal

	
 $50,000 

	
 $60,000 

	
 $100,000 

	
 $150,000 

	
 $150,000 

	
Field
4

	
Research

	
 $2,250 

	
 $3,000 

	
 $3,000 

	
 $4,500 

	
 $4,500 

	

Total

	
 $864,750 

	
 $1,073,000 

	
 $1,248,000 

	
 $1,434,500 

	
 $1,507,000 

 

 

 

-20-

 

 

Exhibit B

Tangible Research Properties

 

NAD biosynthetic pathway carboxy His-tag murine cDNAs that
encode:

 

Nmnat1

Nmnat2

Nmnat3

Nrk1

Nrk2

Nampt

 

 

 

-21-

 

 

Exhibit C

Technical Information

 

Specific
protocols from the laboratory of Jeffrey Milbrandt outlining
experimental details of the prevention of axonal degradation by
increased activity of NAD salvage pathway via NMNAT and
Sir2

 

 

 

 

-22-

 

 

Exhibit D

Sublicense Agreement Provisions

 

 

Sublicensee agrees
to indemnify and hold harmless WU Indemnitees to the same extent
and under terms no less favorable to WU Indemnitees as
Licensee’s obligations under Article 11 of this
Agreement.

 

Sublicensee agrees
to maintain insurance for WU’s benefit to the same extent and
under terms no less favorable to WU as Licensee’s obligations
under Article 12 of this Agreement.

 

Sublicensee agrees
to maintain books and records and allow audits for WU’s
benefit to the same extent and under terms no less favorable to WU
as Licensee’s obligations under this Agreement.

 

If
Licensee enters bankruptcy or receivership, voluntarily or
involuntarily, sublicensing revenue then or thereafter due to
Licensee will, upon notice from WU to any Sublicensee, become
directly due and owing to WU for the account of Licensee. WU will
remit to Licensee any amounts received that exceed the sum actually
owed by Licensee to WU.

 

Washington
University is a third party beneficiary of this Sublicense
Agreement. Accordingly, Washington University may enforce this
Agreement against Sublicensee to the same extent as the
Sublicensor.

 

 

-23-

 

 

 

Exhibit E

Patent Rights

 

	

Application Type

	

Country

	

Application Number

	

Patent Number

	

Status

	

 

	

 

	

 

	

 

	

 

	

PCT

	

PCT

	

PCT/US2005/019524

	
 

	

Converted

	

Provisional

	

United States

	

60/577,233

	
 

	

Converted

	

Provisional

	

United States

	

60/641,330

	
 

	

Converted

	

Non-provisional application

	

United States

	

11/144,358

	

7,776,326

	

Granted

	

FOR - Foreign

	

EPO

	

5790283.5

	
 

	

Pending

	

FOR - Foreign

	

China

	

China
200580018114.8

	

ZL200580018114.8

	

Granted

	

Provisional

	

United States

	

60/886,854

	
 

	

Converted

	

PCT

	

PCT

	

PCT/US08/01085

	
 

	

Converted

	

FOR - Foreign

	

Canada

	

2676609

	
 

	

Pending

	

FOR - Foreign

	

Mexico

	

MX/A/2009/008022

	
 

	

Pending

	

Non-provisional application

	

United States

	

12/524,718

	
 

	

Pending

	

Divisional

	

United States

	

12/790,722

	
 

	

Pending

 

 

-24-

 

 

Exhibit F

Diligence Milestones

 

	

Market

	

Milestone

	

Timing

	

Field 1 (dietary supplement, sports
nutrition, functional foods, skin
care/cosmetic)

	

Commercial-scale
production

	

12
months

	

Cumulative
sales >3kg

	

18
months

	

$200K
cumulative sales

	

24
months

	

$1M
cumulative sales

	

36
months

	

Field 2 (food/beverage with FDA
approval)

	

Cumulative
sales >3kg

	

36
months

	

Cumulative
sales >20kg

	

48
months

	

Field 3 (consumer
foods)

	

Cumulative
sales >3kg

	

24months

	

$100K
cumulative sales

	

36
months

	

$500K
cumulative sales

	

48months

	

Field 4 (research)

	

$5K
cumulative sales

	

24
months

	

$10K
cumulative sales

	

36
months

	

Field 5 (pharmaceutical)

	

TBD

	

TBD

	
 

	
 

 

 

 

 

 

-25-

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