MATERIALS TRANSFER, EVALUATION AND OPTION AGREEMENT

This Materials Transfer, Evaluation and Option Agreement (the “Agreement”) is made as of __________ , 2002 (the “Effective Date”) between Prolume Ltd., a Delaware corporation, (“Prolume”), and _____________, a [state and type of entity], having its address at __________ _________________________________ (hereinafter “Recipient").  Certain capitalized terms used in this Agreement are defined in Article VII hereof. 

BACKGROUND

            WHEREAS, Prolume has certain patent rights and related technology relating to novel genes (collectively, the "Rights").  Recipient believes that the Rights may have commercial application in the field described on Appendix A (the "Field"). 

            WHEREAS, Recipient wishes to evaluate the Rights (and to obtain certain materials from Prolume in order to conduct such evaluation), in order to determine whether it desires to enter into a non-exclusive license agreement with Prolume regarding the use, sale and manufacture of certain products within the Field.

            WHEREAS, Recipient desires to obtain from Prolume an option to enter into such a license agreement in the event that it is satisfied with the results of its evaluation.

            WHEREAS, Prolume is willing (i) to provide Recipient with a limited license under the Rights to conduct such evaluation, (ii) to provide certain materials to Recipient in connection with such evaluation, and (iii) to provide Recipient with an option to enter into a non-exclusive, nontransferable license agreement, in each case upon the terms and conditions set forth herein.  

            Therefore, the parties agree as follows, intending to be legally bound:

AGREEMENT

ARTICLE I

MATERIALS TRANSFER

 

1.1            Transfer of Materials.  Within five (5) days following the Effective Date, Prolume shall transfer to Recipient the materials listed on Appendix B attached hereto and made a part hereof (the “Materials”).

1.2       Evaluation License.  Prolume hereby grants to Recipient a limited, nontransferable, non-exclusive license (the "Evaluation License") to use the materials only for the purpose of testing and evaluating the Materials for use in the Field during the Evaluation Period.  The Evaluation License will terminate upon the expiration or termination of this Agreement.

1.3            Evaluation; Limitation on Use.   During the 95-day period following the Effective Date (the "Evaluation Period"), Recipient shall use commercially reasonable efforts to evaluate the Materials to determine whether Recipient desires to enter into a License Agreement (the "Evaluation").  Prolume agrees to provide reasonable and prompt assistance to Recipient in conducting the Evaluation.  Recipient agrees that it shall use the Materials only for purposes of the Evaluation and shall not use the Materials for any other purpose whatsoever without Prolume's prior written consent.

1.4            Ownership and Control of Materials.  Title to all Materials, including, but not limited to, materials containing any portion of the Materials or materials derived from the Materials, shall remain in Prolume.  Notwithstanding the foregoing, during the Term (as defined below), Recipient shall be responsible for the care and control of the Materials and shall not distribute, transfer or otherwise provide access to, the Materials, or any component, or modification thereof or the results of its Evaluation, to any third party without prior written approval of Prolume. 

1.5            Care in Use of Materials.  Recipient acknowledges that the Materials are experimental in nature and may have unknown characteristics.  Recipient therefore agrees to use prudence and reasonable care in the use, handling, storage, transportation and disposition and containment of the Materials, and agrees to indemnify Prolume for any damages, costs or losses resulting from Recipient's failure to do so.  The materials are being provided “AS IS” and Recipient assumes the risk of handling the Materials.

ARTICLE II

LICENSE OPTION

            2.1            License Option; License Agreement.  Prolume hereby grants to Recipient the option (the “License Option”), which shall be exercisable only in the manner set forth in Section 3.2, to negotiate and enter into a license agreement with Prolume containing the terms and conditions set forth on Appendix C hereto, together with such other reasonable and customary terms as are mutually agreed to by the parties (the "License Agreement").

            2.2            Exercise of License Option.  Recipient may exercise the License Option at any time prior to the expiration of the Evaluation Period by providing written notice thereof to Prolume (the "Go Notice") along with a $10,000 deposit to be credited towards the first annual minimum royalty payment.  If Recipient fails to timely deliver the Go Notice, the License Option shall expire.  In the event that Recipient timely delivers the Go Notice, the parties shall promptly begin negotiating the final form of the License Agreement with the goal of executing such License Agreement within 15 days of Prolume's receipt of the Go Notice (the "Target Date").  It is expressly understood and agreed that no license shall be granted, or deemed to have been granted, to Recipient unless and until the mutual execution of the License Agreement. 

 

 

ARTICLE III

EVALUATION FEE

3.1            Evaluation Fee.  In consideration of the Evaluation License, the License Option and the other rights granted hereunder, Recipient agrees to pay to Prolume a non-refundable, one-time fee of three thousand five dollars ($3,500) (the “Evaluation Fee”) within ten (10) days of the Effective Date.

 

ARTICLE IV

CONFIDENTIAL INFORMATION

            4.1             Definition of "Confidential Information".  

(a)              Subject to Section 4.1(b), the term "Confidential Information" means any information disclosed or provided by either Prolume or Recipient (each, a “Discloser”) to the other party (the "Receiving Party") in connection with this Agreement, including, without limitation, any formula, pattern, compilation, program, method, technique, process, biological material, gene sequence, data test, model, result or analysis that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to the other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  Without limiting the generality of the foregoing, the Materials, all Related Technology, and the terms of this Agreement and of the License Agreement shall be deemed to constitute "Confidential Information" of Prolume.

(b)            Notwithstanding Section 4.1(a), "Confidential Information" shall not include information that:  (1) is now or subsequently becomes generally available to the public through no wrongful act or omission of the Receiving Party; (2) Receiving Party can demonstrate to have had rightfully in its possession prior to disclosure to Receiving Party by Discloser; (3) is independently developed by Receiving Party without use, directly or indirectly, of any Confidential Information; (4) Receiving Party rightfully obtains from a third party who has the right to transfer or disclose it; or (5) becomes publicly available through no wrongful act or omission of the Receiving Party after it is first disclosed by the Discloser.

4.2            Non-use; Nondisclosure.   Neither party shall reproduce, use, distribute, disclose or otherwise disseminate any Confidential Information of the other party without the written consent of such other party and shall not take any action causing, or fail to take any reasonable action necessary to prevent any such Confidential Information to lose its character as Confidential Information. 

4.3             Ownership.  All Confidential Information disclosed by one party shall remain the property of such party.

4.4            Access to Confidential Information.  Each party agrees that access to Confidential Information of the other party shall be limited to those employees or other authorized representatives of the first party who:  (1) need access to such Confidential Information in order to perform the Evaluation or otherwise to perform its obligations under this Agreement, and (2) have signed agreements with such first party obligating them to maintain the confidentiality of information disclosed to them and designated or defined as confidential on terms no less onerous than those provided for herein.  Each party further agrees to inform its employees or authorized representatives of the confidential nature of the other party's Confidential Information and agrees to take all reasonably necessary steps to ensure that the terms of this Agreement are not violated by them.

4.5            Equitable Relief.  Both parties agree that monetary damages would be inadequate to remedy any breach of the obligations set forth in this Article IV, and that, in the event of any unauthorized disclosure or use of the Confidential Information of either party, such party will have the right to seek injunctive relief, without posting a bond, in addition to any other rights and remedies it may have.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1            By Prolume.  

(a)            Subject to the limitations set forth in Section 5.1(a), Prolume hereby represents and warrants to Recipient that (i) it has the right to enter into this Agreement and grant the rights granted therein, (ii) it has not granted and will not grant during the Term hereof rights in or to any Patent Rights and Related Technology that would prevent Prolume from entering into the License Agreement; (iii) to its knowledge, there are no claims of third parties that would call into question the rights of Prolume to grant to Recipient the rights contemplated hereunder; and (iv) to its knowledge, practice of the Patent Rights for purposes of the Evaluation will not infringe intellectual property rights of third parties.

            5.2            By Recipient.  Recipient hereby represents and warrants to Prolume that (i) it has the right to enter into this Agreement, and (ii) to its knowledge, there are no claims of third parties that would call into question Recipient’s ability to perform its obligations under this Agreement.

5.3         Disclaimer of Implied Warranties.   EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS ARTICLE V, NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND PROLUME SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE MATERIALS OR OTHERWISE HEREUNDER.

 

 

ARTICLE VI

INTELLECTUAL PROPERTY RIGHTS

 

6.1            Intellectual Property Rights.  Prolume shall have sole and exclusive ownership of, and all intellectual property rights in or related to, the Materials and Related Technology, and no such rights, whether in the nature of patent, trademark, copyright or trade secret rights, are being granted to Recipient hereunder other than the Research License.  Recipient agrees that Prolume retains all such rights and that Recipient has no proprietary rights or interest in the Materials or Related Technology except as specified in the Research License.

6.2            Derivatives/Improvements.  It is not anticipated that Recipient will develop any new intellectual property or invention of a product, device, process or method, whether patentable or unpatentable, based on the Materials, Patent Rights, Related Technology and/or any of Prolume’s Confidential Information during the Term hereof; provided, that in the event that it does develop any such intellectual property or invention, Recipient shall promptly notify Prolume of any such development and all rights to the intellectual property or invention resulting from such development shall become the property of Prolume.  Upon the request of Prolume, Recipient shall promptly execute all such documents as are necessary to effectuate the transfer of the foregoing to Prolume.

 

ARTICLE VII

TERM AND TERMINATION

            7.1            Term.  The term of this Agreement (the "Term") will commence on the Effective Date and, unless terminated earlier pursuant to Section 7.2, will continue in full force and effect until the expiration of the Evaluation Period or, in the event that Recipient timely delivers the "Go Notice," until the Target Date.

            7.2            Early Termination. 

                        (a)             Prolume may terminate this Agreement at any time upon written notice to Recipient in the event that Recipient materially breaches any provision hereof. 

(b)            Recipient may terminate this Agreement at any time upon written notice to Prolume for any reason or no reason.

            7.3            Effect of Termination.  Upon the termination or expiration of this Agreement:

(a)         each party shall promptly deliver to the other party all Confidential Information of such other party and all embodiments thereof then in its custody, control or possession and shall deliver within ten (10) days after such expiration or termination or request a written statement to the other party certifying to such action; and

(b)            Recipient shall discontinue its use of the Materials and shall promptly return any unused Materials to Prolume, as well as any products made from the Materials accompanied by a description of the method of such product’s synthesis or manufacture.

7.4            Survival.  Articles IV (Confidentiality), VI (Intellectual Property), VII (Term and Termination), and IX (General Provisions) shall survive the expiration or termination of this Agreement and remain in full force and effect. 

ARTICLE VIII

DEFINITIONS

8.1            Definitions.  As used in this Agreement, the following capitalized terms have the following meanings:

             “Affiliate” means any corporation or other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the designated party but only for so long as such relationship exists.  For purposes of this definition, control means ownership of at least fifty percent (50%) of the shares of stock entitled to vote for directors in the case of a corporation, and of at least fifty percent (50%) of the interests in profits of a business entity other than a corporation.

            “Luciferase Gene” means a polynucleotide encoding a Gaussia princeps Luciferase, or Pleuromma Luciferase : (g Luc or pLUC) that is owned or controlled by Prolume as of the Effective Date.

            “Licensed Product” means any product the manufacture, use or sale of which would, but for the license granted under the License Agreement, infringe a Valid Claim in the country where it is manufactured, used or sold, or any product containing or encompassing Related Technology or other Confidential Information of Prolume, which is not the subject of any patent application or patent, or any issued patents covering such subject matter which have not been abandoned or declared invalid in a non-appealable order.

            “Patent Rights” means the rights owned or licensed by Prolume involving the patent applications and patents and any and all non-U.S. counterparts thereof listed on Appendix D attached hereto and made a part hereof, claiming, disclosing or relating to:  (a) Gaussia princeps Luciferase (b) Pleuromamma Luciferase (marine copepod); and any continuations, divisions, continuations-in-part, confirmations, substitutions, registrations, revalidations, additions, extensions, re-examination certificates, supplementary protection certificates and reissues thereof.

            “Related Technology” means any and all know-how and trade secrets which Prolume owns or controls as of the Effective Date, which are necessary or useful for the commercialization of Licensed Products in the Field.

            “Valid Claim” means any claim contained in any patent application or in any issued and unexpired patent included within the Patent Rights which has not been abandoned or held unenforceable or invalid by a court of last resort and which has become unappealable, or other governmental agency of competent jurisdiction in a non-appealable order, and which has not been disclaimed or admitted to be invalid or unenforceable; provided that, in the case of a patent application that has not issued, not more than six (6) years have elapsed from the earliest priority filing date to which the claim is entitled.

 

ARTICLE IX

GENERAL PROVISIONS

            9.1            Independent Contractors.  The relationship of Prolume and Recipient established by this Agreement is that of independent contractors.  Nothing in this Agreement will be construed to create any other relationship between Prolume and Recipient.  Neither party will have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other.

9.2            Assignment.  This Agreement will not be assignable by either party to any third party hereto without the written consent of the other party hereto; provided, that Prolume may assign this Agreement without the consent of Recipient to any of Prolume's subsidiaries or Affiliates.

9.3            Notices.  Any notice or other communication required by this Agreement will be made in writing and given by prepaid, first class, certified mail, return receipt requested, and will be deemed to have been served on the date received by the addressee at the following address or such other address as may from time to time be designated to the other party in writing:

If to Prolume:

Prolume Ltd. 163 W. White Mountain Blvd. Suite D, Pinetop, AZ 85935, USA. Attn:  Gene Finley, M.D.

If to Recipient:            Recipient

_________________

_________________

_________________

_________________

 

 

9.4            Compliance with Law; Export Controls.  Both parties will comply with all applicable federal, state and local laws and regulations in connection with its activities pursuant to this Agreement.  Without limiting the generality of the foregoing, the parties acknowledge that certain Confidential Information or other information disclosed in connection with the Materials may be considered technical data that is subject to compliance with the export control laws and regulations of the United States, Israel or other countries and hereby agree to comply with such laws.

9.5            Governing Law.  This Agreement will be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania, without reference to its conflicts of law principles.

9.6            No Waiver.  A waiver, express or implied, by either Prolume or Recipient of any right under this Agreement or of any failure to perform or breach hereof by the other party hereto will not constitute or be deemed to be a waiver of any other right hereunder or of any other failure to perform or breach hereof by such other party, whether of a similar or dissimilar nature thereto.

9.7            Severability.  If any provision of this Agreement is found by a court to be void, invalid or unenforceable, the same will be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the validity or enforceability of the remainder of this Agreement.

9.7            Entire Agreement.  This Agreement (including the Appendices hereto) constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, representations, agreements, and understandings, written or oral, that the parties may have reached with respect to the subject matter hereof.  No agreements altering or supplementing the terms hereof may be made except by means of a written document signed by the duly authorized representatives of each of the parties hereto.

9.8            Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but both of which together will constitute one and the same instrument.  Facsimile signatures of the parties shall have the same effect as original signatures.

9.9            Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Agreement.

 

PROLUME LTD.	RECIPIENT
By:	By:
Name:	Name:
Title:	Title:

 

543499_1

APPENDIX A

The Field

[INSERT APPROPRIATE FIELD, for example:  The life science research market for non-commercial research uses only (e.g., the sale of vectors containing the Luciferase Genes to universities for non-commercial life-science research purposes).  Without limiting the foregoing, the “Field” does not include the research or development of commercial products (e.g., high throughput screening) or the research market for such products.]

 

APPENDIX B

The Materials

[INSERT the biological materials to be transferred.]

 

APPENDIX C

LICENSE AGREEMENT
TERM SHEET

Parties:	Recipient and Prolume Ltd.(“Prolume”)
Licenses:	Prolume would grant to Recipient (i) a non-exclusive worldwide license with respect to the Gaussia princeps Luciferase and Pleuromamma Luciferase, including rights and licenses under the Patent Rights and to the Related Technology, without the right to grant sublicenses, to make, have made, use, sell, offer to sell and import Licensed Products, practice any method, process or procedure and otherwise exploit the Licensed Products, within the life sciences field, and (ii) a non-exclusive worldwide license with respect to the Gaussia princeps Luciferase and Pleuromamma Luciferase including rights and licenses under the Patent Rights and to the Related Technology, without the right to grant sublicenses, to make, have made, use, sell, offer to sell and import Licensed Products, practice any method, process or procedure and otherwise exploit the Licensed Products, within other fields except for the life sciences.
Royalties:	Recipient will pay to Prolume a royalty of 15 percent (15%) of Net Sales by Recipient of Licensed Products.  The Minimum Annual Payment shall be thirty-five thousand dollars ($35,000.00) for both Luciferase Genes on sales of a non-exclusively Licensed Product, fully creditable against earned royalties, to be paid in advance.
	“Net Sales” shall mean the gross amount received by Recipient from the sale of Licensed Products, less (i)  credits for returned products; (ii) freight and insurance; and (iii) governmental charges and taxes imposed with respect to such sales.
Grant Back:	Recipient will grant Prolume an exclusive worldwide license to use, manufacture and sell, with the right to sublicense, intellectual property related to improvements, new inventions and discoveries based on the licensed technology within the life sciences field for a royalty of 3% on Net Sales by Prolume, with no minimum annual fee or payment; and Recipient will grant Prolume an-exclusive worldwide royalty-free license to use, manufacture and sell, with the right to sublicense, intellectual property related to improvements, new inventions and discoveries based on the licensed technology within fields other than the life sciences field.
Terms:	The initial term of the License Agreement will commence on the effective date of the License Agreement and will continue in full force and effect until the earliest to occur of: (i) the expiration, revocation or invalidation of the last patent within the Patent Rights; or (ii) the abandonment of the last application within the Patent Rights.
	Either party may terminate the License Agreement on 90 days prior written notice if the other party materially breaches the License Agreement and fails to cure, after written notice thereof, within such 90 day period; provided that if the party alleged to be in breach disputes the same in good faith within such 90 day period, the right to terminate will be stayed until it has been determined by the applicable dispute resolution mechanism that such party is in material breach and thereafter fails to promptly cure.
	In the event of the insolvency or bankruptcy of either party, the other party may, at its option, terminate the License Agreement or elect to keep the License Agreement in place, including with respect to intellectual property created after the filing of a bankruptcy petition.
Warranties:	The License Agreement will include normal and customary representations and warranties; provided that Prolume will not make any representations concerning the Excluded Matters.
Labeling Requirement:	Recipient agrees that appropriate package license statements will be incorporated in the distribution of Licensed Products to indicate that such Licensed Product contains certain material under license and that the recipient’s use of the Licensed Product is restricted to non-commercial research uses only.  The label will indicate that commercial use and/or use to further research and development of a commercial product will require a commercial license from Prolume.  Recipient agrees to use its reasonable efforts to appropriately label all advertising, promotional, and packaging materials, and products with the U.S. patent number(s) of Licensed Product(s) in accord with 35 U.S.C. § 287, or by providing the words "patent pending," whichever is applicable at the time, and with appropriate copyright notices and/or marks in the style, manner, design and form as may be specified by Prolume.