Model Patent License Agreement

Exclusive Patent License Agreement

Between Mississippi State University Research and Technology Corporation

And

_________________________________________TABLE OF CONTENTS 5.17.12 Edition (MURA C Corp)

ARTICLES:

I. Definitions

II. Grant

III. Due Diligence

IV. Royalties and Fees

V. Reports and Records

VI. Patent Prosecution

VII. Infringement

VIII. Indemnification

IX. Assignment

X. Termination

XI. Payments, Notices and Other Communications

XII. Miscellaneous Provisions

APPENDICES (Attached hereto and incorporated herein by reference)

A. Description of Patents and Patent Applications

Shareholders Agreement

Preamble

This Agreement, effective as of the date of execution by both parties, is made by and between Mississippi State University Research and Technology Corporation, a not for profit corporation organized and existing under the laws of the State of Mississippi and having its principal office at Allen Hall, Mississippi State, MS, 39762, U.S.A. (hereinafter referred to as RTC), and MURA C Corp________, a corporation duly organized under the laws of the state of Mississippi and having its principal office at _, ___________________ (hereinafter referred to as LICENSEE).

WHEREAS, RTC is the assignee of certain "Patent Rights," as defined in Paragraph 1.3 below, relating to ____________________________________ invented by __________________________________, (the Inventors) employees of Mississippi State University (hereinafter referred to as MSU) in the performance of their MSU employment;

WHEREAS, RTC desires to have the Patent Rights developed and utilized in the public interest;

WHEREAS, RTC desires to grant licenses under said Patent Rights, subject to any royalty-free, nonexclusive license heretofore granted to the United States Government;

WHEREAS, LICENSEE desires to obtain a license from RTC upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein the parties hereto agree as follows:

ARTICLE I – DEFINITIONS

For purposes of this Agreement, the following words and phrases shall have the following meanings:

1.0 “EFFECTIVE DATE” shall mean the date executed by the last party as reflected on the signature page hereof.

1.1 “FIELD OF USE" shall mean

1.2 "LICENSEE" shall include the party identified in the Preamble of this Agreement as the LICENSEE and:

(a) any related company of LICENSEE, the voting stock of which is directly or indirectly at least fifty percent (50%) owned or controlled by LICENSEE; and

(b) any organization which directly or indirectly controls more than fifty percent (50%) of the voting stock of LICENSEE; and

1.3 "PATENT RIGHTS" shall mean:

(a) the United States and foreign patents and/or patent applications listed in Appendix A; and

(b) United States and foreign patents issued from the applications listed in Appendix
A and from divisionals and continuations of these applications; and

(c) claims of U.S. and foreign continuation-in-part applications, and of the resulting patents, which are directed to subject matter specifically described in the U.S. and foreign applications listed in Appendix A; and

(d) claims of all foreign patent applications, and of the resulting patents, which are directed to subject matter specifically described in the United States patents/or patent applications described in (a), (b), or (c) above; and

(e) any reissues of United States patents described in (a), (b), (c) or (d) above.

1.4 A "LICENSED PRODUCT" shall mean any product or part thereof which:

(a) is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights in the country in which any Licensed Product is made, used, or sold; or

(b) is manufactured by using a process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights in the country in which any Licensed Process is used or in which such product or part thereof is used or sold; or

(d) is sold, manufactured or used in any country under this Agreement.

1.5 A "LICENSED PROCESS" shall mean:

(a) any process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights; or

(b) is derived from Patent Rights and/or Know-how as hereinafter defined; and

1.6 "NET SALES" shall mean LICENSEE's (and its sublicensees') billings for Licensed Products and Licensed Processes produced hereunder less the sum of the following:

(a) discounts allowed in amounts customary in the trade; and

(b) sales taxes, tariff duties, and/or use taxes which are directly imposed and are with reference to particular sales; and

(d) amounts allowed or credited on returns.

(e) In the event that a Licensed Product is sold in combination with another product and/or service (Combination Product), Net Sales, for purposes of royalty payments on the Combination Product, shall be calculated by multiplying the Net Sales on sale of that combination by the fraction A/B, where A is the gross selling price of the Licensed Product sold separately and B is the gross selling price of the Combination Product. In the event that no such separate sales are made by the Company, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination by the fraction C/(C+D) where C is the fully allocated cost of the Licensed Product and D is the fully allocated cost of other components, such standard costs being determined using LICENSEE’s standard accounting procedures.

1.7 “KNOW-HOW" shall mean the ideas, methods, characterization and techniques developed by the Inventor(s) before the Effective Date, which are necessary for practicing Patent Rights.

1.8 “NON-ROYALTY SUBLICENSE INCOME” shall mean sublicense issue fees, sublicense maintenance fees, sublicense milestone payments, and similar non-royalty payments made by sublicensees to LICENSEE on account of sublicenses pursuant to this Agreement.

1.9 “TERRITORY” shall mean __________________.

1.10 “RTC” shall include the party identified in the Preamble of this Agreement as RTC and Agents acting on its behalf.

1.11 “LICENSEE IMPROVEMENTS” shall mean any technical advance related to the LICENSED PRODUCT and/or LICENSED PROCESS developed by the LICENSEE.

1.12 "EQUITY" shall mean fully-diluted capital stock, membership interests, partnership interests or such other ownership rights (including options, warrants and other forms of convertible securities) to the net assets of Licensee as may be in existence or issued from time to time by Licensee and its successors and/or assigns.

1.13 “NON-ROYALTY SUBLICENSE INCOME” shall mean sublicense issue fees, sublicense maintenance fees, sublicense milestone payments, and similar non-royalty payments made by sublicensees to LICENSEE on account of sublicenses pursuant to this Agreement.

ARTICLE II – GRANT

2.1 License. RTC hereby grants to LICENSEE an exclusive license in the Territory and for the Field of Use, to the extent not prohibited by other patents, to make, to have made, to use, lease and to sell Licensed Products and to practice the Licensed Processes to the end of the term for which the Patent Rights are granted unless sooner terminated in accordance with the terms hereof. In order to establish such exclusivity, RTC shall not grant to third parties a further license under Patent Rights in the Field, within the Territory and during the Term.

2.2 Sublicense. LICENSEE shall not have the right to enter into sublicensing agreements for the rights, privileges and licenses granted hereunder without the prior written approval of RTC. Upon such approval, all such sublicense agreements shall:

(a) contain a statement setting forth the date upon which LICENSEE's exclusive rights, privileges, and license hereunder shall terminate; and

(b) provide that the obligations to RTC of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. LICENSEE further agrees to attach copies of this Agreement to sublicense agreements, except that Paragraph 4.1 to this Agreement, Royalties and Fees, may be redacted from the aforesaid copies to be attached to the sublicensee agreements if LICENSEE determines it must do so for business purposes.

(c) LICENSEE agrees to forward to RTC a copy of any and all sublicense agreements within thirty (30) days of the execution of each such sublicense agreement and further agrees to require and to forward to RTC annually a copy of reports received by LICENSEE from its sublicensees during the preceding twelve (12) month period under the sublicenses as shall be pertinent to a royalty accounting under said sublicense agreements.

(d) LICENSEE shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement without the express, prior written permission of RTC.

(e) Upon termination of this Agreement for any reason, RTC, at its sole discretion, shall determine whether LICENSEE shall cancel or assign to RTC any and all such sublicenses.2.3

2.3 Government Rights. The LICENSED PRODUCTS are subject to all applicable laws and regulations, including Public Laws 96-517 and 98-620, and implementing regulations including 35 USC §§200-211. RTC and/or LICENSEE agree to include a statement in any patent application fully identifying such government right; and LICENSEE acknowledges that the United States Government has the right to a worldwide, non-exclusive, royalty-free license to practice any Patent notwithstanding anything in this Agreement to the contrary. LICENSEE agrees that for LICENSED PRODUCTS that are subject to a non-exclusive royalty-free license to the United States government, said LICENSED PRODUCTS will be manufactured substantially in the United States.

2.4 University Rights. RTC reserves for itself and MSU, the right to practice under the Patent Rights, and to have practiced by other not-for-profit entities for purposes of collaborative research with MSU, for research and educational purposes and to publish the results thereof.

ARTICLE III – DUE DILIGENCE

3.1 Best Efforts. LICENSEE shall use its best efforts to commercialize one or more Licensed Products and Licensed Processes through a thorough, vigorous, and diligent program for exploitation of the Patent Rights to attain maximum commercialization of Licensed Products and Licensed Processes and shall thereafter continue such efforts throughout the life of this Agreement. As used herein:

(a) "commercialize" means having Net Sales of Licensed Products in the Territory; and

(b) "efforts to commercialize" (“Efforts to Commercialize, or “Efforts”) means an effective, ongoing and active research, development, manufacturing, marketing or sales program, and/or other activities which are appropriate and necessary to make Licensed Products and Licensed Processes available for sale in the commercial marketplace.

3.2 Milestones. In addition, LICENSEE shall adhere to the following milestones:

(a) Business Plan. LICENSEE shall deliver to RTC on or before ___________ a business plan satisfactory to RTC including the planned Efforts to Commercialize and the amount of money, number and kind of personnel, and time budgeted and planned for such Efforts; and a financial plan.

(b) Annual Progress Report. Licensee shall deliver to RTC an annual progress report satisfactory to RTC as to Licensee's (and any sublicensee's) Efforts during the preceding year, accomplishments, timeline, and material changes to the business plan. The report shall be due on or before each anniversary of the Effective Date until the lowest Net Sales level specified in paragraph 3.2 (d) is achieved and shall summarize in writing the Efforts and activities as described below. Allow 1-3 paragraphs for each of the following:

1) Efforts. Efforts in progress i.e., ongoing activities including objectives and parameters of such activities, when initiated, and projected date of completion. Efforts to be undertaken before the next annual progress report including, but not limited to, the type and objective of any necessary Efforts and their projected starting and completion dates.

2) Accomplishments. Efforts completed since last report including the objectives and parameters of the development, when initiated, when completed and the results.

3) Timeline. Estimated total time remaining before Licensed Products will be commercialized.

4) Changes to plan. Describe any material changes to the initial business plan described in paragraph 3.2 (a) with reasons for the change.

(c) Prototype. LICENSEE shall develop a on or before ___________ and permit inspection by RTC. As used herein, a production prototype will look exactly like the production material; function exactly as the production material; and can function in the operational environment for which it was designed.

(d) LICENSEE shall make Net Sales according to the following schedule:

December 31, 20-- $---,000 USD

Additional 10% for each subsequent calendar year up to a minimum of $---- USD.

3.3 General Performance Requirement. RTC reserves the right to audit Licensee's records relating to the development of Licensed Products and Licensed Processes as required hereunder subject to the procedures and restrictions set forth for audit of the financial records of Licensee in Article V. RTC's review of Licensee's activities is solely to verify Licensee's commitment to comply with Licensee's obligations to commercialize Licensed Products and Licensed Processes. If LICENSEE fails to perform in accordance with Paragraphs 3.1 and 3.2 above, then RTC shall have the right and option to either terminate this Agreement pursuant to Paragraph 10.3 hereof or change LICENSEE’s exclusive license to a nonexclusive license. This right if exercised by RTC shall supercede the rights granted in Paragraphs 2.1 and 2.2.

3.4 Performance Requirements within Territory or Field of Use. Beginning three (3) years from the effective date of this Agreement, RTC shall have the right at any time and from time to time, to terminate or limit the scope of the exclusive license granted herein with respect to any field of use or any national political jurisdiction in which LICENSEE fails to use its best efforts to commercialize the Patent Rights. In order to limit the scope of the license pursuant to this Paragraph 3.4:

(a) RTC shall provide LICENSEE with ninety (90) days prior written notice specifying the field of use or geographic area in which it intends to terminate or limit the scope of the license of the Patent Rights;

(b) the license shall be terminated or limited in scope as specified in the notice unless LICENSEE provides reasonable evidence satisfactory to RTC, within the said ninety-day period, that LICENSEE is exercising its best efforts to commercialize the Patent Rights in the identified field of use or national political jurisdiction.

ARTICLE IV – ROYALTIES AND FEES