Document:

exv10w3

 

Exhibit 10.3

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. A COPY OF THIS AGREEMENT WITH ALL SECTIONS INTACT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Third Amendment to

Exclusive License Agreement

for

Selected Applications of Coated Nanocrystalline Particles

between

The Regents of the University of California

and

BioSante Pharmaceuticals, Inc.

UC Case No. 1989-204

 

 

THIRD AMENDMENT TO THE EXCLUSIVE LICENSE AGREEMENT

FOR SELECTED APPLICATIONS OF COATED NANOCRYSTALLINE PARTICLES

     This third amendment (“Third Amendment”) is effective this 30th of June,
2004, by and between The Regents of the University of California (“The
Regents”), a California corporation, having its statewide administrative
offices at 1111 Franklin Street, 12th Floor, Oakland, California 94607-5200,
and BioSante Pharmaceuticals, Inc. (“Licensee”), a Delaware corporation, having
a principal place of business at 111 Barclay Boulevard, Lincolnshire, IL 60069.

RECITALS

     Whereas, Licensee (formerly known as Ben-Abraham Technologies, Inc.) and
The Regents entered into a license agreement entitled “Exclusive License
Agreement for Selected Applications of Coated Nanocrystalline Particles,”
effective on June 18, 1997, having UC Agreement Control Number 1997-04-0671
(“License Agreement”), covering licensure to Licensee by The Regents of rights
in certain inventions developed by Dr. Nir Kossovsky et al. at the University
of California, Los Angeles and covered by Patent Rights (as defined in the
License Agreement);

     Whereas, Licensee and The Regents amended the License Agreement effective
October 26, 1999, having UC Agreement Control No. 1997-04-0671A (“First
Amendment”), to include additional terms into the License Agreement and to
revise the minimum annual royalties to a more financial and time feasible
schedule;

     Whereas, Licensee and The Regents amended the License Agreement, effective
May 25, 2000, having UC Agreement Control No. 1997-04-0671B, to change the name
of the company’s name from Ben-Abraham Technologies to its current name;

-1-

 

     Whereas, Licensee and The Regents amended the License Agreement effective
May 7, 2001, having UC Agreement Control No. 1997-04-0671C (“Second
Amendment”), to amend certain provisions in the License Agreement that only
pertain to the field of Vaccine Adjuvant and a particular sublicensing
arrangement, defined below as “Adjuvant Sublicense Agreement,” between Licensee
and a third party called Corixa, Inc.;

     Whereas, Licensee has requested that the License Agreement be amended to
restructure the due diligence provisions by defining Vaccine Product and Drug
Delivery Product, and rescheduling milestone events that would permit the
commercialization of these products;

     Whereas, the License Agreement has been amended to require Licensee to pay
The Regents earned royalties on the Net Sales of a Vaccine Product and Drug
Delivery Product, and not on any intermediate products, such as a Vaccine
Adjuvant Product;

     Whereas, The Regents is willing to amend the License Agreement to reflect
such request.

     Now, Therefore, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties hereto agree as follows:

     1. Paragraphs 1.1 through 1.17 (Definitions) of the License Agreement are
deleted from the License Agreement in their entirety and replaced with the
following:

     “1.1 “Patent Rights” means all U.S. patents and patent applications and
foreign patents and patent applications assigned to The Regents, and in the
case of foreign patent and patent applications those requested under Paragraph
14.4 herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuation-in-part applications (only to the extent, however,
that claims in the continuation-in-part applications are supported in the
specification of the parent patent application) based on and including any
subject matter claimed in or covered by the following:

	 	 	 
	l.1a

	 	U.S. Patent No. 5,219,577, entitled “Biologically
Active Composition Having A Nanocrystalline Core,” issued June
15, 1993, by Nir Kossovsky, et al., and assigned to The
Regents; (1989-204-1)
	 
	 	 
	1.1b

	 	U.S. Patent No. 5,178,882, entitled “Viral Decoy
Vaccine,” issued January 12, 1993, by Nir Kossovsky, et al.,
and assigned to The Regents; (1989-204-2)

-2-

 

	 	 	 
	 
	 	 
	1.1c

	 	U.S. Patent No. 5,334,394, entitled “Human
Immunodeficiency Virus Decoy,” issued August 2, 1994, by Nir
Kossovsky, et al., and assigned to The Regents; (1989-204-3)
	 
	 	 
	l.1d

	 	U.S. Patent No. 5,460,830, entitled
“Biochemically Active Agents for Chemical Catalysis and Cell
Receptor Activation,” issued October 24, 1995, by Nir
Kossovsky, et al., and assigned to The Regents; (1989-204-6)
	 
	 	 
	l.1e

	 	U.S. Patent No. 5,462,751, entitled “Biological
and Pharmaceutical Agents Having A Nanomeric Biodegradable
Core,” issued October 31, 1995, by Nir Kossovsky, et al., and
assigned to The Regents; (1989-204-7)
	 
	 	 
	1.1f

	 	U.S. Patent No. 5,462,750, entitled “Biologically
Active Compositions Having A Nanocrystalline Core,” issued
October 31, 1995, by Nir Kossovsky, et al., and assigned to
The Regents; (1989-204-8)
	 
	 	 
	11g

	 	U.S. Patent No. 5,639,505, entitled “Reduced
and Controlled Surface Binding of Biologically Active
Molecules,” issued June 17, 1997, by Nir Kossovsky, et al.,
and assigned to The Regents; (1989-204-9)
	 
	 	 
	1.1j

	 	U.S. Patent No. 5,460,831, entitled “Targeted
Transfection Nanoparticles,” issued October 24, 1995, by Nir
Kossovsky, et al., and assigned to The Regents; (1993-191-1)

     1.2 “Licensed Products” means:

	i 	 	a kit, composition of matter, material, product, or Derived Product;
	 
	ii	 	a kit, composition of matter, material, product,
or Derived Product to be used in a manner requiring the
performance of the Patent Method; or
	 
	iii	 	a kit, composition of matter, material, product,
or Derived Product produced by the Patent Method;

	 	 	to the extent that the manufacture, use, or sale of such kit, composition
of matter, material, product, or Derived Product in a particular country,
would be covered by or infringed, but for the license granted to Licensee
pursuant to this Agreement, an unexpired claim of a patent or pending
claim of a patent application were said claim issued in a patent under
Patent Rights in that country. This definition of Patent Products also
includes a service either used by Licensee or provided by Licensee to its
customers when such service requires the practice of the Patent Method.
For the avoidance of doubt, any product or service is deemed to be a
Patent Product if such product or service contains a component that is a
kit, composition of matter, material, product, or Derived Product covered
under Subparagraphs 1.2 i through 1.2 iii.”

     1.3 “Drug Delivery Product” means a Licensed Product, which would, were it
used or sold in the United States, require marketing approval by an appropriate
regulatory agency for the use in pharmaceutical preparations to facilitate the
therapeutic delivery of drugs in humans.”

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     1.4 “Vaccine Adjuvant Product” means a Licensed Product that, when added
as part of a Vaccine Product, improves the immune response so that less of a
Vaccine Product is needed to produce more antibodies.

     1.5 “Vaccine Product” means a Licensed Product, which would, were it used
or sold in the United States, require marketing approval by an appropriate
regulatory agency for any preparation containing a suspension of dead,
attenuated, or otherwise modified microorganisms (e.g. viruses, bacteria, or
rickettsiae), or parts thereof, that is used to produce an immunity against a
disease in humans or other animals by stimulating the production of
antibodies.”

     1.6 “Derived Product” means any product that is made by using a
composition of matter claimed under Patent Rights or by practicing the Patent
Method to make a final product regardless of the number of steps in the process
or the number and types of compositions of matter (e.g., intermediate
compounds) that are involved in making the final product. A “Derived Product”
also means any product that is made by using a composition of matter claimed
under Patent Rights whether or not that composition of matter is directly
incorporated or a part of the final product.”

     1.7 “Patent Products” means a Vaccine Product and a Drug Delivery Product.

     1.8 “Patent Method” means any process or method covered by the claims of a
patent application or patent within Patent Rights or the use or practice of
which would constitute, in a particular country, but for the license granted to
Licensee pursuant to this Agreement, an infringement of an unexpired claim of a
patent or pending claim of a patent application were it issued as a claim in a
patent within Patent Rights in that country in which the Patent Method is used
or practiced.

     1.9 “Excluded Field” means any field other than a Vaccine Product, Drug
Delivery Product, and Vaccine Adjuvant Product.

     1.10 “Final Sale” means the point of sale or use of Patent Products, which
sale or use is the last infringing act (but for the licenses granted herein)
that is within the control of the Licensee or its sublicensee, whether or not
the Licensee or sublicensee had control over prior infringing act(s). For the
avoidance of doubt, this definition of Final Sale includes the sale of the
entire Patent Product in which a component, intermediate, or Derived Product
claimed under Patent Rights is used to make such Patent Product or is a part
thereof.

     1.11 “Net Sales” means the gross invoice prices from the Final Sale of
Patent Products by the Licensee or its sublicensee to one or more independent
third parties for cash or other forms of consideration in accordance with
generally accepted accounting principles, less only the following deductions
(if not already deducted from the gross invoice price and at rates customary
within the industry):

	 	 	 
	1.10a

	 	allowances (actually paid and limited to
rejections, returns, and prompt payment and volume discounts
granted to customers of Patent Products, whether in cash or
Patent Products in lieu of cash);

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	1.10b

	 	freight, transport packing, insurance charges
associated with transportation; and
	 
	 	 
	1.10c

	 	taxes, tariff, or import/export duties based on
sales when included in gross sales, but not value-added taxes
or taxes assessed on income derived from such sales.

If a Patent Product is distributed between Licensee and its sublicense for
commercial end use, then such distribution will be considered a Final Sale of
Patent Products based on the price normally charged to independent third
parties, and The Regents will be entitled to collect a royalty on such Final
Sale at the rates and bases set forth in Article 4 (Royalties). Moreover, if
Licensee or its sublicensee distributes a component between themselves that is
claimed under Patent Rights and the receiving party includes such component in
a Patent Product as defined in Paragraph 1.2, then the distribution of the
entire Patent Product by the receiving party to its customers constitutes a
Final Sale, and The Regents will be entitled to collect a royalty on such Final
Sale at the rates and bases set forth in Article 4 (Royalties).

     1.12 “Affiliate(s)” of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee (“Control” for these purposes being defined as the
actual, present capacity to elect a majority of the directors of such
affiliate, or if not, the capacity to elect the members that control forty
percent (40%) of the outstanding stock or other voting rights entitled to elect
directors) provided, however, that in any country where the local law will not
permit foreign equity participation of a majority, then an “Affiliate” will
include any company in which Licensee will own or control, directly or
indirectly, the maximum percentage of such outstanding stock or voting rights
permitted by local law. Each reference to Licensee herein will be meant to
include its Affiliates.

     1.13 “Joint Venture” means any separate entity established pursuant to an
agreement between a third party and Licensee to constitute a vehicle for a
joint venture, in which the separate entity manufactures, uses, purchases,
sells, or acquires Licensed Products from Licensee. Each reference to Licensee
herein will be meant to include its Joint Venture(s).

     1.14 “Third Party” means Corixa Corporation, having a principle place of
business at 1124 Columbia Street Suite 200, Seattle, Washington 98104-2040.
Any reference to sublicensee(s) under the terms of this Agreement is meant to
include the Third Party and other sublicensees, except when the terms of this
Agreement conflict with those of the Second Amendment. In which case, the
terms of the Second Amendment will control.

     1.15 “Adjuvant Sublicense Agreement” means a definitive agreement by and
between the Licensee and Third Party involving the grant by Licensee to Third
Party of a sublicense to make, use, sell, offer, for sale, or import Vaccine
Products or to practice the Patent Method. Any reference to a sublicense(s)
under the terms of this Agreement is meant to include the Adjuvant Sublicense
Agreement and other sublicense agreements, except when the terms of this
Agreement conflict with those of the Second Amendment. In which case, the
terms of the Second Amendment will control.

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     2. Paragraph 2.1 (Grant) of the License Agreement is deleted in its
entirety and replaced with the following:

     2.1 Subject to the limitations set forth in this Agreement, The Regents
hereby grants to Licensee exclusive licenses under Patent Rights to make, use,
sell, offer for sale, and import Patent Products and Vaccine Adjuvant Product
and to practice the Patent Method. Licensee is expressly prohibited from
selling a Derived Product or Vaccine Adjuvant Product to any third party,
except that Licensee may sell a Vaccine Adjuvant Product to the Third Party.

     3. Paragraphs 2.3 and 2.4 (Grant) of the License Agreement are deleted in
their entirety and replaced with the following:

     2.3 The manufacture of Patent Products and Vaccine Adjuvant Products and
the practice of the Patent Method will be subject to applicable government
importation laws and regulations of a particular country on Patent Products and
Vaccine Adjuvant Products made outside the particular country in which such
Patent Products and Vaccine Adjuvant Products are used or sold.

     2.4 The Regents also grants to Licensee the right to issue sublicenses to
third parties to make, use, sell, offer for sale, and import Patent Products
and practice the Patent Method, provided Licensee retains current exclusive
rights under this Agreement. The Regents also grants to Licensee the right to
issue sublicenses to the Third Party to make, use, sell, offer for sale, and
import Vaccine Adjuvant product and practice the Patent Method, provided
Licensee retains current exclusive rights under this Agreement. If the
exclusive licenses granted to Licensee are reduced to nonexclusive licenses for
any reason, then Licensee will be entitled to retain any sublicenses granted by
Licensee before the date on which the reduction to nonexclusive licenses became
effective. Licensee, however, is prohibited from granting any additional
sublicenses after the date on which the reduction to nonexclusive licenses
became effective. To the extent certain rights are granted to a third party or
the Third Party under a sublicense, such sublicense will include all of the
rights and obligations due to The Regents that are contained in this Agreement
including, but not limited to the following:

	 	 	 
	2.4a

	 	payment of royalties in sufficient amounts and at
the appropriate times to permit Licensee to satisfy its
royalty obligations owed The Regents at the rates, bases, and
times set forth in Article 4 (Royalties);
	 
	 	 
	2.4b

	 	disposition of Patent Products set forth in
Article 11 (Disposition of Patent Products on Hand Upon
Termination);
	 
	 	 
	2.4c

	 	restrictions for use of names and trademarks set
forth in Article 12 (Use of Names and Trademarks);
	 
	 	 
	2.4d

	 	patent marking set forth in Article 15 (Patent Marking); and
	 
	 	 
	2.4e

	 	indemnification set forth in Article 17 (Indemnification).

-6-

 

     4. Paragraph 4.1 (Royalties) of the License Agreement is deleted in its
entirety and replaced with the following:

     4.1 As further consideration for all the rights and licenses granted to
Licensee, Licensee and its sublicensees will pay to The Regents an earned
royalty at the following rates and bases:

	 	 	 
	4.1a

	 	An earned royalty rate of XXX percent (XXX%) on
the Net Sales of Drug Delivery Products sold by Licensee;
	 
	 	 
	4.1b

	 	An earned royalty rate of XXX percent (XXX%) on
the Net Sales of Drug Delivery Products sold by sublicensees,
plus XXX percent (XXX%) of all earned royalties received by
Licensee from its sublicensees in excess of XXX percent
(XXX%) with a maximum payable to The Regents of XXX percent
(XXX%);
	 
	 	 
	4.1c

	 	An earned royalty rate of XXX percent (XXX%) on
the Net Sales of Vaccine Products sold by Licensee;
	 
	 	 
	4.1d

	 	An earned royalty rate of XXX percent (XXX%) on
the Net Sales of Vaccine Products sold by sublicensees, plus
XXX percent (XXX%) of all earned royalties received by
Licensee from its sublicensees in excess of XXX percent (XXX%); and
	 
	 	 
	4.1e

	 	Notwithstanding the above, and with respect to
only the Adjuvant Sublicense Agreement, Licensee may pay to
The Regents an earned royalty of XXX percent (XXX%) based on
the Net Sales of a Vaccine Adjuvant Product.

[Portions of these sections have been omitted pursuant to a request for
confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. A copy of this Agreement with this section intact has been filed
separately with the Securities and Exchange Commission.]

     5. Paragraph 4.5 (Royalties) of the License Agreement is deleted in its
entirety and replaced with the following:

     4.5 Beginning in the year 2004, Licensee will pay to The Regents a minimum
annual royalty in the amounts and at the times set forth below:

	 	 	 	 	 	 	 	 	 
	2004
	 	 	—	 	 	$	25,000	 
	2005
	 	 	—	 	 	$	50,000	 
	2006
	 	 	—	 	 	$	75,000	 
	2007
	 	 	—	 	 	$	100,000	 
	2008
	 	 	—	 	 	$	200,000	 
	2009
	 	 	—	 	 	$	300,000	 
	2010
	 	 	—	 	 	$	400,000	 
	2011
	 	 	—	 	 	$	750,000	 

-7-

 

	 	 	In each succeeding calendar year after the year 2011, Licensee will pay a
minimum annual royalty of $750,000 and thereafter for the life of this
Agreement. This minimum annual royalty will be paid to The Regents by
February 28 of the year following accrual of the royalties and will be
credited against the earned royalty due and owing for the calendar year
in which the minimum payment was made.

     6. Paragraph 5.4 (Due Diligence) of the License Agreement is deleted in
its entirety and replaced with the following:

     5.4 Licensee will have available not less than $3.5 million per year for
development and commercialization of Patent Products for the first three years
that this Agreement is in effect and $1.75 million for every year thereafter
until a Patent Product is introduced to the market.

     7. Subparagraphs 5.9a through 5.9e (Due Diligence) of the License
Agreement is deleted in its entirety and replaced with the following:

     5.9a Vaccine Product:

	1)	 	Begin animal testing and antigen identification
of a Vaccine Product in the United States on or before January
1, 2003;
	 
	2)	 	Begin Phase I human clinical testing (safety and
dosage) of a Vaccine Product in the United States on or before
XXXXXXXXXX;
	 
	3)	 	Begin Phase II human clinical testing (efficacy)
of a Vaccine Product in the United States on or before
XXXXXXXXXX;
	 
	4)	 	Begin Phase III human clinical testing of a
Vaccine Product in the United States on or before XXXXXXXXXX;
	 
	5)	 	File for marketing approval of a Vaccine Product
with the appropriate United States government agency on or
before XXXXXXXXXX;
	 
	6)	 	Sell Vaccine Products in the United States within
6 months of receiving marketing approval from the appropriate
United States government agency as set forth in Subparagraph
5.9a(5);
	 
	7)	 	File for marketing approval of a Vaccine Product
in Germany, France, England, and Japan on or before three (3)
months after receiving marketing approval in the United States
from the appropriate government agency as set forth in
Subparagraph 5.9a(5);
	 
	8)	 	Sell Vaccine Products in Germany, France,
England, and Japan within 6 months of receiving marketing
approval from the appropriate government agency as set forth
in Subparagraph 5.9a(7); or

-8-

 

	9)	 	Fill the market demand for Vaccine Products
following commencement of marketing at any time during the
exclusive period of this Agreement.

[Portions of these sections have been omitted pursuant to a request for
confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. A copy of this Agreement with this section intact has been filed
separately with the Securities and Exchange Commission.]

     5.9b Drug Delivery Product

	1)	 	Begin animal testing of a Drug Delivery Product
in the United States on or before January 1, 2003;
	 
	2)	 	Begin Phase I human clinical testing (safety and
dosage) of a Drug Delivery Product in the United States on or
before XXXXXXXXXX;
	 
	3)	 	Begin Phase II human clinical testing (efficacy)
of a Drug Delivery Product in the United States on or before
XXXXXXXXXX;
	 
	4)	 	Begin Phase III human clinical testing of a Drug
Delivery Product with the appropriate United States government
agency on or before XXXXXXXXXX;
	 
	5)	 	File for marketing approval of a Drug Delivery
Product with the appropriate United States government agency
on or before XXXXXXXXXX;
	 
	6)	 	Sell Drug Delivery Products in the United States
within 6 months of receiving marketing approval from the
appropriate United States government agency as set forth in
Subparagraph 5.9b(5);
	 
	7)	 	File for marketing approval of a Drug Delivery
Product with the appropriate government agency in Germany,
France, England, and Japan within three (3) months after
receiving marketing approval in the United States as set forth
in Subparagraph 5.9b(5);
	 
	8)	 	Sell Drug Delivery Products in Germany, France,
England, and Japan within 6 months of receiving marketing
approval from the appropriate government agency as set forth
in Subparagraph 5.9b(7); or
	 
	9)	 	Fill the market demand for Drug Delivery Products
following commencement of marketing at any time during the
exclusive period of this Agreement.”

[Portions of these sections have been omitted pursuant to a request for
confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. A copy of this

-9-

 

Agreement with this section intact has been filed separately with the
Securities and Exchange Commission.]

     8. Except as expressly amended hereby, all terms of the License Agreement
and all subsequent amendments, shall continue in full force and effect.

-10-

 

     In Witness Whereof, both The Regents and the Licensee have executed this
Third Amendment, in duplicate originals, by their respective officers hereunto
duly authorized, on the day and year hereinafter written.

	 	 	 	 	 	 	 
	BIOSANTE PHARMACEUTICALS, INC.	 	THE REGENTS OF THE

UNIVERSITY OF CALIFORNIA

	 
	 	 	 	 	 	 
	By /s/ Phillip B. Donenberg	 	By /s/ Candace L. Voelker
	
 
	 	
 

	(Signature)
	 	(Signature)

	 
	 	 	 	 	 	 
	Name

	 	Phillip B. Donenberg
	 	Name
	 	Candace L. Voelker
	 
	 	 	 	 	 	 
	Title

	 	CFO
	 	Title
	 	Associate Director,

Research Administration
and
Technology Transfer
	 
	 	 	 	 	 	 
	Date

	 	6/16/04
	 	Date
	 	6/30/04

	 	 	 	 	 
	Approved as to legal form:

	 	/s/ P. Martin Simpson, Jr. (6/30/04)
	 	 
	

	 	
 	 	 
	

	 	P. Martin Simpson, Jr.	 	 
	

	 	University Counsel	 	 
	

	 	Office of General Counsel	 	 

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                                                                     Exhibit 4.1

NUMBER                              M-WAVE                                SHARES
MW2481

              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFICATE IS TRANSFERRABLE IN                                COMMON STOCK
CHICAGO, ILLINOIS OR NEW YORK, NEW YORK                        CUSIP 554034 10 8

--------------------------------------------------------------------------------
THIS CERTIFIES THAT

                                    SPECIMEN

Is the owner of
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  FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
                          $0.005 EACH, OF M-WAVE, Inc.

Transferable on the books of the Corporation by the holder hereof, in person, or
    by duly authorized attorney, upon surrender of this Certificate properly
  endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation
          and the facsimile signatures of its duly authorized officers.

SECRETARY                                               CHAIRMAN OF THE BOARD

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