HSCS Heart Test Laboratories Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 20, 2023

 

 

Heart Test Laboratories, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Texas			001-41422	26-1344466
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
550 Reserve Street, Suite 360
Southlake, Texas				76092
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 682 237-7781

 

n/a

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HSCS		The Nasdaq Stock Market LLC
Warrants		HSCSW		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 1.01. Entry into a Material Definitive Agreement.

License Agreements

On September 20, 2023, Heart Test Laboratories, Inc. (the “Company”) entered into several definitive license agreements (each a “License Agreement” and collectively, the “License Agreements”) with Icahn School of Medicine at Mount Sinai (“Mount Sinai”). The License Agreements, of which there are eleven in total, cover rights to thirteen algorithms, two data science methods for use with electrocardiograph (“ECG”) waveforms and three filed patents. Closing under the License Agreements (the “Closing”) is subject to certain closing conditions set forth in the License Agreements and the Securities Purchase Agreement (as defined below).

Certain License Agreements apply to (i) deep learning on ECGs to derive left and right ventricular function; (ii) pulmonary embolism detection from the electrocardiogram using deep learning; (iii) diagnosis of STEMI using a model derived from a foundational vision transformer; (iv) derivation of low left ventricular ejection fraction based on a foundational vision transformer, and (v) diagnosis of hypertrophic cardiomyopathy using a model derived from a foundational vision transformer. Upon Closing, among other things, Mount Sinai will grant the Company a worldwide, exclusive, sublicensable license to certain of Mount Sinai’s technical information to develop and commercialize products and services (the “Licensed Products”) related to such applications in the field of screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

Certain License Agreements apply to (i) prediction of right ventricular size and systolic function from the 12-lead ECG; (ii) deep learning algorithm to predict premature ventricular contractions (“PVC”) related cardiomyopathy; and (iii) electrocardiogram deep learning interpretability toolbox. Upon Closing, among other things, Mount Sinai will grant the Company a worldwide, exclusive, sublicensable license to certain of Mount Sinai’s technical information and patent rights to develop and commercialize related licensed products in the field of screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

Certain License Agreements apply to (i) deep learning for electrocardiograms to identify left heart valvular dysfunction - aortic stenosis; and (ii) deep learning for electrocardiograms to identify left heart valvular dysfunction – mitral regurgitation. Upon Closing, among other things, Mount Sinai will grant the Company a worldwide, non-exclusive, sublicensable license to certain of Mount Sinai’s technical information to develop and commercialize related Licensed Products in the field of screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

Lastly, a License Agreement applies to HeartBEiT: vision transformers to improve diagnostic performance for electrocardiograms. Upon Closing, among other things, Mount Sinai will grant the Company a worldwide, non-exclusive, license to certain of Mount Sinai’s technical information and patent rights to develop and commercialize related Licensed Products in the field of screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

Contemporaneously with the execution of the License Agreements, the Company and Mount Sinai entered into a non-binding memorandum of understanding for ongoing cooperation encompassing de-identified data access, on-going research, and the evaluation of HeartSciences’ MyoVista® wavECGTM.

Each License Agreement contains obligations for the Company to use commercially reasonable efforts to exploit the respective Licensed Products. The Company shall also pay Mount Sinai royalties in low-single digit percentages of annual net sales of Licensed Products sold by the Company and a share of any sublicense revenue received by the Company from sublicensees of the Licensed Products. In connection with the License Agreements, the Company and Mount Sinai also entered into a Securities Purchase Agreement as set forth below.

The foregoing summary of the License Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of each License Agreement filed as Exhibit 10.2 through 10.12, respectively, with this Current Report on Form 8-K (this “Current Report”). Certain terms of the License Agreements have been omitted from this Current Report and from the version of the License Agreements filed as exhibits to this Current Report pursuant to Item 601(b)(10) of Regulation S-K because such terms are both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

Securities Purchase Agreement

In connection with securing the rights to the License Agreements, on September 20, 2023, the Company and Mount Sinai entered into a Securities Purchase Agreement (the “ Securities Purchase Agreement”), pursuant to which the Company agreed to sell to Mount Sinai as of the Closing Date (as defined below) the following:

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Mount Sinai shall have the right to terminate each License Agreement pursuant to the terms set forth in such respective License Agreement and in the event that the Company has not completed the Additional Financing or such requirement has been waived by Mount Sinai.

Pursuant to the Securities Purchase Agreement, and under applicable rules of The Nasdaq Stock Market, in no event may the Company issue or sell to Mount Sinai shares of Common Stock in excess of 19.99% of the shares of Common Stock outstanding immediately prior to the execution of the Securities Purchase Agreement (the “Exchange Cap”), unless the Company obtains shareholder approval to issue shares of Common Stock in excess of the Exchange Cap.

Pursuant to the Securities Purchase Agreement, the Company is required to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 (the “Registration Statement”) covering the resale under the Securities Act of 1933, as amended, (the “Securities Act”), of the Consideration Shares, the Common Stock Warrants and the Pre-Funded Warrants, and is required to meet certain obligations with respect to, among other things, the timeliness of the filing and effectiveness of the Registration Statement. The Company is obligated to file the Registration Statement no later than 150 days after the Closing Date and to have it declared effective by the SEC no later than 120 days after filing of the Registration Statement.

The representations, warranties and covenants contained in the License Agreements and Securities Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the License Agreements and Securities Purchase Agreement, and may be subject to limitations agreed upon by the contracting parties. Accordingly, the License Agreements and Securities Purchase Agreement are incorporated herein by reference only to provide investors with information regarding the terms of the License Agreements and Purchase Agreement, and not to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the SEC.

The foregoing summary of the Securities Purchase Agreement, the Common Stock Warrants and the Pre-Funded Warrants do not purport to be complete and qualified in their entirety by, the agreements and instruments attached hereto as Exhibits 4.1, 4.2 and 10.1, respectively, which are incorporated by reference herein.

Item 3.02 Unregistered Sales of Equity Securities.

The Shares, Common Stock Warrants and Pre-Funded Warrants issued in connection with the Purchase Agreement, as provided in Item 1.01 of this Current Report on Form 8-K, are exempt from the registration requirements of the Securities Act, in accordance with Section 4(2) of the Securities Act and Regulation D thereunder, as a transaction by an issuer not involving a public offering.

The information set forth in Item 1.01 above in this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

Item 8.01. Other Events.

On September 21, 2023, the Company issued a press release announcing its entry into the License Agreements. A copy of the press release is filed herewith as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.		Description
4.1*		Form of Pre-Funded Warrant, dated as of September 20, 2023.
4.2*		Form of Common Stock Warrant, dated as of September 20, 2023.
10.1*		Securities Purchase Agreement, dated as of September 20, 2023, by and between the Company and Icahn School of Medicine at Mount Sinai.
10.2£*		License: Pulmonary Embolism Detection From the Electrocardiogram Using Deep Learning

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10.3£*		License: Deep Learning Algorithm to Predict PVC-Related Cardiomyopathy
10.4£*		License: Deep Learning on ECGs to Derive Left and Right Ventricular Function
10.5£*		License: Prediction of right ventricular size and systolic function from the 12-lead ECG
10.6£*		License: Deep learning for electrocardiograms to identify left heart valvular dysfunction - aortic stenosis
10.7£*		License: Deep learning for electrocardiograms to identify left heart valvular dysfunction – mitral regurgitation
10.8£*		License: HeartBEiT: Vision Transformers improve diagnostic performance for electrocardiograms
10.9£*		License: Derivation of low Left Ventricular Ejection fraction based on a foundational vision transformer (HeartBEiT)
10.10£*		License: Diagnosis of Hypertrophic Cardiomyopathy using a model derived from a foundational vision transformer (HeartBEiT)
10.11£*		License: Diagnosis of STEMI using a model derived from a foundational vision transformer (HeartBEiT)
10.12£*		License: Electrocardiogram Deep Learning Interpretability Toolbox
99.1		Press Release dated September 21, 2023
Exhibit 104*		Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Filed herewith.

£ Certain confidential information has been omitted or redacted from these exhibits that is not material and would likely cause competitive harm to the Company if publicly disclosed.

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			HEART TEST LABORATORIES, INC.
Date:	September 21, 2023	By:	/s/ Andrew Simpson
		Name: Title:	Andrew Simpson President, Chief Executive Officer, and Chairman of the Board of Directors

 

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Exhibit 4.1

PREFUNDED COMMON STOCK PURCHASE WARRANT

HEART TEST LABORATORIES, INC.

Warrant Shares: [_____] Issue Date: , 2023

 

THIS PREFUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Closing Date (the “Initial Exercise Date”) until this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Heart Test Laboratories, Inc., a Texas corporation (the “Company”), up to [________] shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock (the “Common Stock”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated September 20, 2023, among the Company and the purchaser signatory thereto.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) three (3) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section

2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree

 

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that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b) Exercise Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of $0.00001 per Warrant Share, was pre-funded to the Company on or prior to the Initial Exercise Date and, consequently, no additional consideration (other than the nominal exercise price of $0.00001 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever, including in the event this Warrant shall not have been exercised prior to the Termination Date. The remaining unpaid exercise price per Common Stock under this Warrant shall be $0.00001, subject to adjustment hereunder (such remaining unpaid exercise price, the “Exercise Price”).

 

c) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder the Warrant Shares on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions and other fees, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either (x) reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded), (y) deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder, or (z) pay in cash to the Holder the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.

 

d) Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both

 

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executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock are then listed or quoted on a Trading Market, the bid price of the shares of Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the shares of Common Stock are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the shares of Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock are then listed or quoted on a Trading Market, the daily volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on the Trading Market on which the shares of Common Stock are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the shares of

 

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Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the shares of Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of the Shares as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(d).

 

E) Mechanics of Exercise.

 

the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (A) the earlier of (i) two (2) Trading Days and (ii) the number of days comprising the Standard Settlement Period, in each case after the delivery to the Company of the Notice of Exercise; provided that payment of the aggregate Exercise Price (other than in the instance of a cashless exercise) is received by the Company by such date, and (B) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company (such date, the “Warrant Share Delivery Date”), provided that payment of the aggregate Exercise Price (other than in the instance of a cashless exercise) is received by the Company by such date. Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this

 

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Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

 

iii. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

iv. Nasdaq Rule. Holder shall, in the aggregate, not be entitled to exercise this Warrant into such total number of Warrant Shares which would exceed Holders’ ownership (inclusive of all other Common Stock, warrants and other convertible instruments as may otherwise be held by Holder) of 19.99% of the Company’s Common Stock issued and outstanding, which number shall be subject to readjustment for any stock split, stock dividend or reclassification of the Common Stock (hereinafter the "20% CAP"), unless such issuance has been duly approved by the shareholders of the Company. In the event that, due to the 20% Cap, the Holder may not exercise all of its Warrant Shares, then the Company shall utilize its best efforts to receive shareholder approval to authorize and issue all shares of Common Stock issuable upon exercise of the Warrants.

 

v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expenses in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

f) Holder’s Exercise Limitation. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance

 

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after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(f) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(f), in determining the number of outstanding shares of Common Stock , a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(f), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the

 

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number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(f) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

Section 3 Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on its shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

 

(b) Fundamental Transactions. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions, effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another company or Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property, (iv) the Company, directly or indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization or recapitalization) with

 

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another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Stock (each, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Common Stock then issuable upon exercise in full of this Warrant, without regard to any limitation in Section 2(e)(iv) or 2(f) on the exercise of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s sole discretion and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a New Warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this Section 3(b) and shall insure that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate Event had this Warrant been exercised for cash immediately prior to such Corporate Event without regard to any limitation in Section 2(e)(iv) or 2(f) on the exercise of this Warrant. Any provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.

 

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme

 

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of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

e) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment; provided, however, that the Company may satisfy this notice requirement in this Section 3(e) by filing such notice with the Commission pursuant to a Report on Form 8-K or Quarterly or Annual Report.

 

ii. Notice to allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the shares of Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights (excluding any granting or issuance of rights to all of the Company’s shareholders pursuant to a shareholder rights plan), (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the shares of Common Stock are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then,

 

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in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified (unless such information is filed with the Commission on its EDGAR system in which case a notice shall not be required), a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the shares of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Company’s subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

iii. Voluntary Adjustment By Company. The Company may, at any time during the term of this Warrant, reduce the then current Exercise Price to any amount for any period of time deemed appropriate by the Board of Directors of the Company, with the consent of the Holder.

 

Section 4. Transfer of Warrant.

 

a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such

instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company

 

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within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section

4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(e)(i), except as expressly set forth in Section 3. Without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash settle an exercise of this Warrant.

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

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c) Saturdays, Sundays, Holidays, etc. If the last or appropriate day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

d) Authorized Shares.

 

The Company covenants that, at all times during the period the Warrant is outstanding, it will reserve from its authorized and unissued shares of Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the shares of Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents

 

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thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any shares of Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

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l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder of this Warrant, on the other hand.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 

 

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(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

HEART TEST LABORATORIES, INC.

 

 

 

By:

Name: Andrew Simpson

Title: CEO

 

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NOTICE OF EXERCISE

 

TO: HEART TEST LABORATORIES, INC.

 

 

 

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(1) The undersigned hereby elects to purchase

 

 

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Warrant Shares of the

 

 

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Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box): [ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(d), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_________________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

_______________________________

_______________________________

 

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

 

 

 

 

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

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EXHIBIT B

 

 

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please Print)
Address:
Phone Number: Email Address:	(Please Print) ______________________________________ ______________________________________
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:

 

 

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Exhibit 4.2

 

COMMON STOCK PURCHASE WARRANT

 

HEART TEST LABORATORIES, INC.

Warrant Shares: 914,148 Issue Date: , 2023

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the completion of the Additional Financing or Holder’s affirmative waiver of the requirement for the Company to complete the Additional Financing (the “Initial Exercise Date”) and on or prior to the five (5) year anniversary following the completion of the Additional Financing or Holder’s affirmative waiver of the requirement for the Company to complete the Additional Financing (the “Termination Date”), which shall be automatically extended in six (6) month increments (not to exceed forty-eight (48) months) should the Holder reach the Beneficial Ownership Limitation and cannot exercise the Warrant, but not thereafter, to subscribe for and purchase from Heart Test Laboratories, Inc., a Texas corporation (the “Company”), up to 914,148 shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock (the “Common Stock”). The purchase price of one Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated September 20, 2023, among the Company and the purchaser signatory thereto.

Section 2. Exercise.

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(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock are then listed or quoted on a Trading Market, the bid price of the shares of Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the shares of Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair

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market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock are then listed or quoted on a Trading Market, the daily volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the shares of Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the shares of Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of the Shares as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(d).

 

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f) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(f) applies, the determination of whether this Warrant is exercisable (in

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relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(f), in determining the number of outstanding Common Stock, a Holder may rely on the number of outstanding Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of Common Stock then outstanding. In any case, the number of outstanding Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise of this Warrant. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments.

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Section 4. Transfer of Warrant.

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Section 5. Miscellaneous.

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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(Signature Page Follows)

 

14

 

 

 

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

HEART TEST LABORATORIES, INC.

By:__________________________________________      Name: Andrew Simpson      Title: CEO

 

15

 

 

 

 

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NOTICE OF EXERCISE

 

To: HEART TEST LABORATORIES, INC.

 

[ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

_______________________________

_______________________________

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

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EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please Print)
Address:
Phone Number: Email Address:	(Please Print) ______________________________________ ______________________________________
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:

 

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Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of September 20, 2023, between Heart Test Laboratories, Inc. (d/b/a HeartSciences), a Texas corporation (the “Company”), and Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation (the “Purchaser”). The Company and the Purchaser are each referred to herein as a “Party” and collectively as the “Parties.”

 

WHEREAS, pursuant to the contemplated License Agreements, by and between the Parties, and upon the Closing Date, the Purchaser wishes to grant to the Company licenses for certain technologies (the “License Agreements”), pursuant to the terms and conditions set forth in each of the License Agreements in the form forth in Exhibit A annexed hereto;

 

WHEREAS, in consideration for entering into the License Agreements the Company wishes to issue to the Purchaser certain equity securities of the Company as set forth in this Agreement; and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to the rules and regulations (the “Rules and Regulations”) of the U.S. Securities and Exchange Commission (the “Commission”) thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, restricted securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

 

“Additional Financing” means aggregate gross proceeds of at least Ten Million U.S. Dollars ($10,000,000) raised by the Company from the period commencing August 1, 2023 and ending on or prior to June 30, 2024, from Financing(s).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close; provided, however, for

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clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” shall have the meaning ascribed to such term in Section 2.1(a).

 

“Common Stock” means shares of the Company’s common stock, par value $0.001 per share.

 

“Common Stock Warrants” means the warrants to purchase 914,148 shares of Common Stock of the Company, having an exercise price equal to the closing share price of the Common Stock on the date of execution of this Agreement plus $0.125, which warrants shall be exercisable immediately upon (x) completion of the Additional Financing or (y) waiver by Purchaser of the Company’s requirement to complete the Additional Financing.

 

“Consideration Shares” means such number of shares of Common Stock as of the Closing Date, such that the Purchaser would thereafter hold fifteen percent (15.0%) of the then-issued and outstanding shares of Common Stock of the Company (inclusive of the Consideration Shares being issued and Common Stock Warrants) based on the following: (a) the number of shares of Common Stock issued and outstanding as at July 31, 2023; plus (b) shares of Common Stock issued by the Company between July 31, 2023 and the Closing Date, other than in connection with any Financing(s); plus (c) the Financing Securities.

 

“Convertible Debt” shall mean debt issued by the Company, which debt shall (i) convert on or prior to the Closing Date, (ii) include the right for the Company to convert such debt at any time; or (iii) have a maturity date no less than two-years from the date of issuance.

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Financing(s)” means the issuance of shares of Common Stock or Preferred Stock or Convertible Debt (collectively, the “Convertible Securities”) in exchange for cash, on or after August 1, 2023. Any Financing(s) prior to the Closing Date will be deemed to be a series of related Financings.

 

“Financing Securities” shall mean the number of shares of Common Stock issued by the Company or issuable by the Company in respect of Convertible Securities, in any Financings (excluding any warrants issued that do not have nominal exercise prices) through the date that the Company has raised the Threshold Amount. If, prior to the Closing Date, the Company raises more than $5 million in gross proceeds in connection with one or a series of Financings, the number of “Financing Securities” shall be equal to the product of (x) the number of Financing Securities

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determined under the first sentence above and (y) the quotient obtained by dividing $5 million by the amount of gross proceeds received in such Financing(s).

 

“Knowledge” including the phrase “to the Company’s knowledge” shall mean the actual knowledge after reasonable investigation and assuming such knowledge as the individual would have as a result of the reasonable performance of his or her duties in the ordinary course of the following officers: Andrew Simpson, Danielle Watson.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(a).

 

“Nasdaq Rule” shall mean that Purchaser shall, in the aggregate, not be entitled to exercise the Warrants into such total number of Warrant Shares which would exceed Purchaser’s ownership (inclusive of all other Common Stock, warrants and other convertible instruments as may otherwise be held by Purchaser) of 19.99% of the Company’s Common Stock issued and outstanding, which number shall be subject to readjustment for any stock split, stock dividend or reclassification of the Common Stock, unless such issuance has been duly approved by the shareholders of the Company.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Pre-Funded Warrants” means the Pre-Funded Common Stock Warrants delivered to the Purchaser at the Closing in accordance with Section 2.2(a) hereof, in the form of Exhibit C attached hereto.

 

“Pre-Funded Warrant Shares” means the Common Stock issuable upon exercise of the Pre-Funded Warrants.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.4.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(c).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

“Shares” means the shares of Common Stock issued or issuable to the Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include locating and/or borrowing Common Stock).

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“Threshold Amount” means the aggregate gross proceeds to the Company from Financing(s) of at least five million U.S. Dollars ($5,000,000).

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Pre-Funded Warrants, the Warrants, the License Agreements and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company and any successor transfer agent of the Company.

 

“Warrants” means collectively, the (i) Common Stock Warrants to purchase 914,148 shares of Common Stock and, as applicable, (ii) the Pre-Funded Warrants.

 

“Warrant Shares” means the 914,148 shares of Common Stock issuable upon exercise of the (i) Warrant Shares and, as applicable, (ii) the Pre- Funded Warrant Shares.

 

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Closing.

 

(a) The Closing shall occur within two Trading Days following (i) the Company completing one or a series of Financings on or after August 1, 2023 and prior to December 31, 2023 in which the Company receives gross proceeds of at least $5 million (the “Threshold Amount”) and (ii) all other conditions precedent to the Purchaser’s obligations herein, and the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived (the date of Closing, the “Closing Date”).

 

(b) Notwithstanding anything herein to the contrary, to the extent that the Purchaser determines, in its sole discretion, that such Purchaser (together with such Purchaser’s Affiliates, and any Person acting as a group together with such purchaser or any of such Purchaser’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation, or as the Purchaser may otherwise choose, the Purchaser may elect to purchase Pre-Funded Warrants in lieu of the Shares as determined pursuant to Section 2.2(a) in such manner as to result in the same aggregate purchase price being paid by the Purchaser to the Company. The “Beneficial Ownership Limitation” shall be 9.99% of the number of Common Stock outstanding immediately after giving effect to the issuance of the Securities on the Closing Date. The Company shall deliver to the Purchaser its Shares and a Warrant as

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determined pursuant to Section 2.2(a), and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of the Company or such other location as the parties shall mutually agree. Unless otherwise directed by the Company, with Purchaser’s written consent, settlement of the Shares shall occur via DVP (i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchaser’s name and address and such Shares shall be released by the Transfer Agent directly to the account(s) identified by the Purchaser.

 

2.2 Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following):

 

 

 

 

(b) On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

 

 

 

2.3 Closing Conditions.

 

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(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed;

 

(iii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement; and

 

(iv) the Company’s compliance with all rules and regulations of the Trading Market, including but not limited to the NASDAQ Rule as defined in the Warrants.

 

(b) The obligations of the Purchaser in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and

 

(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof.

 

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in SEC Reports, the Company hereby makes the following representations and warranties to the Purchaser:

 

(a) Organization and Good Standing. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of

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incorporation. The Company has full corporate power and authority to own its properties and conduct its business as currently being carried on and as described in the SEC Reports, and is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business makes such qualification necessary and in which the failure to have such power and authority or so qualify would have (a) a material adverse effect upon the business, properties, operations, condition (financial or otherwise), prospects or results of operations of the Company, taken as a whole, or (b) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under the Transaction Documents (“Material Adverse Effect”).

 

(b) No Violations or Defaults. The Company is not (A) in violation of its respective charters, bylaws or other organizational documents, (B) in breach of or otherwise in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the performance or observance of any term, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it is bound or to which any of its material property or assets is subject, (C) in violation in any respect of any law, ordinance, governmental rule, regulation or court order, decree or judgment to which it or its property or assets may be subject, including the Sarbanes–Oxley Act; or (D) in violation of any applicable requirements set forth in the rules of the Exchange Act; except, in the case of clauses (B), (C) and (D) of this paragraph (b), for any breaches, violations or defaults which, singularly or in the aggregate, would not have a Material Adverse Effect.

 

(c) Authorization; No Conflicts; Authority. This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal and binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. The Warrants have been duly authorized, and when executed and delivered by the Company, shall constitute a valid, legal and binding obligation of the Company, enforceable in accordance with their terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. The execution, delivery and performance of the Transaction Documents and the consummation of the transactions herein and therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, (B) result in any violation of the provisions of the Company’s charter or by-laws or (C) subject to the Required Approvals,

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result in the violation of any law or statute or any judgment, order, rule, regulation or decree of any court or arbitrator or federal, state, local or foreign governmental agency or regulatory authority having jurisdiction over the Company or any of its properties or assets (each, a “Governmental Authority”), except in the case of clause (A) or (C) as would not result in a Material Adverse Effect. No consent, approval, authorization or order of, or registration or filing with any Governmental Authority is required for the execution, delivery and performance of this Agreement or for the consummation of the transactions contemplated hereby, including the issuance or sale of the Shares by the Company, other than (i) application(s) to each applicable Trading Market for the listing of the Shares, Pre-Funded Warrants and Pre-Funded Warrant Shares for trading thereon in the time and manner required thereby, (ii) the filing of Form D with the Commission, and (iii) such as may be required under the Act, the rules of the Financial Industry Regulatory Authority (“FINRA”) or state securities or blue-sky laws (collectively, the “Required Approvals”); and the Company has full power and authority to enter into this the Transaction Documents and to consummate the transactions contemplated hereby and thereby, including the authorization, issuance and sale of the Securities as contemplated by this Agreement.

 

(d) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. When paid for and issued in accordance with this Agreement, the Warrants will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of Shares issuable pursuant to this Agreement and shall reserve from its duly authorized capital stock the maximum number of Warrant Shares issuable pursuant to the Warrants.

 

(e) Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(e). All of the issued and outstanding shares of Common Stock of the Company, are duly authorized and validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state and foreign securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities that have not been waived in writing, and the holders thereof are not subject to personal liability by reason of being such holders; the capital stock of the Company, including the Common Stock and the Warrants, conforms in all material respects to the description thereof in the SEC Reports. Except as set forth on Schedule 3.1(e), there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any Common Stock pursuant to the Company’s charter, by-laws or any agreement or other instrument to which the Company is a party or by which the Company is bound. Except as a result of the purchase and sale of the Securities or as set forth on Schedule 3.1(e),

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there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Common Stock, or contracts, commitments, understandings or arrangements by which the Company may become bound to issue additional shares of Common Stock. Except as set forth on Schedule 3.1(e), there are no outstanding securities or instruments of the Company with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the best of the Company’s Knowledge, between or among any of the Company’s stockholders.

 

(f) SEC Reports. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(g) Financial Statements. The financial statements of the Company, together with the related notes, set forth or incorporated by reference in the SEC Reports comply in all material respects with the requirements of the Securities Act and the Exchange Act and fairly present the financial condition of the Company as of the dates indicated and the results of operations and changes in cash flows for the periods therein; and, except as disclosed in the SEC Reports, there are no material off-balance sheet arrangements (as defined in Regulation S-K under the Act, Item 303(a)(4)(ii)) or any other relationships with unconsolidated entities or other persons, that may have a material current effect or, to the best of the Company’s Knowledge, material future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenue or expenses. No other financial statements or schedules are required to be included in the SEC Reports. To the Company’s Knowledge, Haskell & White LLP, Certified Public Accountant, which has expressed its opinion with respect to the financial statements and schedules filed as a part of the Company’s Annual Report on Form 10-K is (x) an independent public accounting firm within the meaning of the Act and the Rules and Regulations, (y) a registered public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)) and (z) not in violation of the auditor independence requirements of the Sarbanes-Oxley Act.

 

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(h) Absence of Certain Events; Undisclosed Events, Liabilities or Developments. Except as set forth in the SEC Reports the Company has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there has not been any change in the capital stock (other than a change in the number of outstanding shares of due to the issuance of shares upon the exercise of outstanding options or warrants, settlement of restricted stock units or conversion of convertible securities), or any material change in the short-term or long-term debt (other than as a result of the conversion of convertible securities), or any issuance of options, warrants, restricted stock units, convertible securities or other rights to purchase the capital stock, of the Company, or any event or development that has had a Material Adverse Effect or any development which could reasonably be expected to result in any Material Adverse Effect. Except for (i) the issuance of the Securities contemplated by this Agreement, or (ii) as set forth on Schedule 3.1(h), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made

 

(i) Absence of Proceedings. Except as set forth in the SEC Reports, there is not pending or, to the best of the Company’s Knowledge , threatened or contemplated, any action, suit or proceeding (a) to which the Company is a party or (b) which has as the subject thereof any officer or director of the Company, any employee benefit plan sponsored by the Company or any property or assets owned or leased by the Company before or by any court or Governmental Authority, or any arbitrator. There are no current or, to the best of the Company’s Knowledge, pending, legal, governmental or regulatory actions, suits or proceedings (x) to which the Company is subject or (y) which has as the subject thereof any officer or director of the Company, any employee plan sponsored by the Company or any property or assets owned or leased by the Company, that are required to be described in the SEC Reports by the Securities Act or by the Rules and Regulations and that have not been so described.

 

(j) Labor Relations. No labor dispute with the employees of the Company exists or, to the best of the Company’s Knowledge, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers, contractors or customers, that could have a Material Adverse Effect.

 

(k) Compliance with Laws. The Company holds, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses, permits, easements, consents, certificates and orders of any Governmental Authority or self-regulatory body required for the conduct of its business and all such franchises, grants, authorizations, licenses, permits, easements, consents, certifications and orders are valid and in full force and effect; and the Company has not received notice of any revocation or modification of any such franchise, grant, authorization, license, permit, easement, consent, certification or order or has reason to believe that any such franchise, grant, authorization, license, permit,

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easement, consent, certification or order will not be renewed in the ordinary course; and the Company is in compliance in all material respects with all applicable federal, state, local and foreign laws, regulations, orders and decrees, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(l) Compliance with Environmental Laws. Except as otherwise disclosed in the SEC Reports, the Company is not in violation of any statute, any rule, regulation, decision or order of any Governmental Authority or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate, have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim. The Company does not anticipate incurring any material capital expenditures relating to compliance with Environmental Laws.

 

(m) Ownership of Assets. Except as otherwise set forth in the SEC Reports, the Company has good and marketable title to all property (whether real or personal) as being owned by them, in each case free and clear of all liens, claims, security interests, other encumbrances or defects or as would not, individually or in the aggregate, result in a Material Adverse Effect. The property held under lease by the Company is held by it under a valid, subsisting and enforceable lease with only such exceptions with respect to any particular lease as do not interfere in any material respect with the conduct of the business of the Company.

 

(n) Intellectual Property The Company owns, possesses, or can acquire on reasonable terms, all Intellectual Property (as defined below) necessary for the conduct of the Company’s business as now conducted or as described in the SEC Reports to be conducted, except as such failure to own, possess, or acquire such rights would not result in a Material Adverse Effect. Furthermore, except as described in the SEC Reports, (A) to the best of the Company’s Knowledge, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property; (B) there is no pending or, to the best of the Company’s Knowledge, threatened, action, suit, proceeding or claim by others challenging the Company’s rights in or to any such Intellectual Property, and the Company is unaware of any objective facts which would form a reasonable basis for any such claim; (C) the Intellectual Property owned by the Company, and to the best of the Company’s Knowledge, the Intellectual Property licensed to the Company, has not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or, to the best of the Company’s Knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property; (D) there is no pending or, to the best of the Company’s Knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others, and the Company has not received any written notice of such claim ; and (E) to the best of the Company’s Knowledge, no employee of the Company is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation

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agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or actions undertaken by the employee while employed with the Company, except as such violation would not result in a Material Adverse Effect. “Intellectual Property” shall mean all patents, patent applications, trademarks, trademark registrations, service marks, service mark registrations, trade names, copyrights, copyright registrations, licenses, inventions, trade secrets, Internet domain names, Internet domain name registrations, technology, registrations, trade secret rights, know-how and other intellectual property.

 

(o) Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which the Company is engaged, including, but not limited to, directors and officers insurance coverage. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(p) Internal Accounting Controls. Except as set forth in the SEC Reports, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the SEC Reports, the Company’s internal control over financial reporting is effective and none of the Company, its board of directors and audit committee is aware of any “significant deficiencies” or “material weaknesses” (each as defined by the Public Company Accounting Oversight Board) in its internal control over financial reporting, or any fraud, whether or not material, that involves management or other employees of the Company who has a significant role in the Company’s internal controls; and since the end of the latest audited fiscal year, there has been no change in the Company’s internal control over financial reporting (whether or not remediated) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s board of directors has, subject to the exceptions, cure periods and the phase in periods specified in the applicable stock exchange rules (“Exchange Rules”), validly appointed an audit committee to oversee internal accounting controls whose composition satisfies the applicable requirements of the Exchange Rules and the Company’s board of directors and/or the audit committee has adopted a charter that satisfies the requirements of the Exchange Rules.

 

(q) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other

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Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(r) Investment Company. The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended.

 

(s) Listing and Maintenance Requirements. Except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Shares are or have been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Shares are currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

 

(t) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided to the Purchaser or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in its SEC Reports. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company, its businesses and the transactions contemplated hereby, when taken together as a whole, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(u) No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Warrants or Warrant Shares under the Securities Act or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

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(v) Tax Status. The Company (A) has timely filed all federal, state, local and foreign income and franchise tax returns required to be filed and (B) is not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company is contesting in good faith; except those, in each of the cases described in clauses (A) and (B) of this paragraph (x), that would not, singularly or in the aggregate, have a Material Adverse Effect. There is no pending dispute with any taxing authority relating to any of such returns, and to the best of the Company’s Knowledge, no proposed liability for any tax to be imposed upon the properties or assets of the Company for which there is not an adequate reserve reflected in the Company’s financial statements included in the SEC Reports.

 

(w) Regulatory Matters. The Company possesses all licenses, certificates, authorizations and permits issued by, and have made all declarations and filings with, the appropriate local, state, federal or foreign governmental or regulatory agencies or bodies that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the SEC Reports (collectively, the “Governmental Permits”), except where any failures to possess or make the same would not, singularly or in the aggregate, have a Material Adverse Effect. The Company is in compliance with all such Governmental Permits and all such Governmental Permits are valid and in full force and effect, except where the noncompliance, validity or failure to be in full force and effect would not, singularly or in the aggregate, have a Material Adverse Effect. The Company has not received notification of any revocation, modification, suspension, termination or invalidation (or proceedings related thereto) of any such Governmental Permit and to the best of the Company’s Knowledge, no event has occurred that allows or results in, or after notice or lapse of time or both would allow or result in, revocation, modification, suspension, termination or invalidation (or proceedings related thereto) of any such Governmental Permit and the Company has no reason to believe that any such Governmental Permit will not be renewed, except where such revocation, modification, suspension, termination, invalidation or nonrenewal would not, singularly or in the aggregate, have a Material Adverse Effect.

 

3.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):

 

(a) Organization; Authority. The Purchaser is or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws

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of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b) Understandings or Arrangements. The Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser understands that the Shares, Warrants and Warrants Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring such Securities as principal for his, her or its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell such Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws).

 

(c) Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(d) Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e) Access to Information. The Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto), the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

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(f) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other Persons party to this Agreement or to the Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

(g) General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or general advertisement.

 

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Legends. The Purchaser acknowledges that until such time as the Shares have been registered under the Securities Act of 1933, as amended, the Shares shall bear a restrictive legend. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall

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not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws).

 

4.2 Furnishing of Information. Until the earlier of the time that (i) the Purchaser owns no Securities and (ii) the Warrants have expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Warrants or Warrant Shares or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.4 Indemnification of the Purchaser. Subject to the provisions of this Section 4.4, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized by the Company in writing, (y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (z) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the

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position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by Section 4.4 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

4.5 Reservation of Shares. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and the Warrant Shares pursuant to any exercise of the Warrants.

 

4.6 Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

 

4.7 Certain Transactions and Confidentiality. The Purchaser covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to an initial press release prepared by the Company. The Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to an initial press release prepared by the Company, the Purchaser will maintain the confidentiality of the existence and terms of this transaction. Notwithstanding the requirements as set forth by Section 4.8 below or any of the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) the Purchaser makes no representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to an initial press release prepared by the Company, (ii) the Purchaser shall not be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to an initial press release prepared by the Company, and (iii) the Purchaser shall not have any duty of confidentiality or duty not to trade in the securities of the Company to the Company after the issuance of an initial press release prepared by the Company.

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4.8 Exercise Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Purchaser in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required of the Purchaser to exercise its Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.9. Lock Up. During the Lock-up Period (as defined below), the Purchaser irrevocably agrees that it, he or she will not offer, sell, contract to sell, or otherwise transfer or dispose of, directly or indirectly, any of the Shares or Warrant Shares, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Shares or Warrant Shares, whether any of these transactions are to be settled by delivery of any Shares, or otherwise, publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, or engage in any short sales with respect to any securities of the Company. “Lock-Up Period” shall mean the period commencing on the date hereof and ending 180 days after the Closing Date.

 

4.10. Registration Rights. On or prior to the date that is one hundred and fifty days (150) days after the Closing Date, the Company shall prepare and file with the SEC a Registration Statement on Form S-1 (or such other form as applicable) covering the resale under the Securities Act of all the Consideration Shares and the Pre-Funded Warrant Shares (the “Registrable Securities”) issued to the Purchaser (the “Registration Statement”), subject to any limitations imposed by the Nasdaq Rule. The Company shall use its commercially reasonable best efforts to cause the Registration Statement to be declared effective (the “Effective Filing Date”) promptly thereafter on or before ninety (90) days after the filing of the Registration Statement (or if the SEC issues any comments with respect to the Registration Statement, on or before one hundred twenty (120) days after the filing of the Registration Statement). Notwithstanding the foregoing, if the SEC prevents the Company from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act of 1933, as amended, for the resale of the Registrable Securities by Purchaser, such Registration Statement shall register for resale such number of Registrable Securities which is equal to the maximum number of Registrable Securities as is permitted by the Commission). The Company shall utilize its commercially reasonable best efforts to cause the Registration Statement to remain effective for a period of thirty six (36) months from the Effective Filing Date.

 

4.11 Purchaser’s Right of Termination. The Purchaser shall have the right to terminate each License Agreement pursuant to the terms set forth in each respective License Agreement in the event that the Company has not completed the Additional Financing.

 

 

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4.12 Non-Issuance of Equity. The Company shall not issue equity (i.e. Shares of Common Stock, Share Options, Warrants, etc.) to any employee of the Purchaser without the prior written consent of the Purchaser.

 

4.13 Board of Director Rights. (a) For so long as the Purchaser holds shares of Common Stock and Pre-Funded Warrants in excess of 10% of the shares of Common Stock outstanding as of such date, the Purchaser shall have the right to appoint Erik Lium, or such other Purchaser designee, to have a board observer seat on the Company’s board of directors without board voting rights (the “Board Observer Seat”). For so long as the Purchaser has the option to exercise its Board Observer Right, the Purchaser shall have the right convert the Board Observer Seat into the right to nominate one (1) director to the Company’s Board of Directors (the “Board”) with board voting rights (the “Board Membership Position”).

 

(b) In the event of conversion to a Board Membership Position the Purchaser shall be entitled to nominate one person to the Board (the “Mount Sinai Nominee”). Upon nomination of the Mount Sinai Nominee, the Board will appoint the Mount Sinai Nominee to the Board at the Company’s next Annual Shareholder Meeting, or as soon as reasonably practicable thereafter, for election and shall use all reasonable efforts to cause the Mount Sinai Nominee to be elected to the Board.

 

(c) None of the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) under the Securities Act of 1933, as amended will be applicable to any Mount Sinai Nominee, and such nominee must comply with the applicable rules and regulations of the U.S. Securities and Exchange Commission, and the applicable Trading Market where the Company securities as listed.

 

ARTICLE V.

MISCELLANEOUS

 

5.1 Termination. The Purchaser shall have the right to terminate this Agreement if the Closing has not occurred by December 31, 2023.

 

5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by the Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile

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at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchaser.”

 

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.4 and this Section 5.8.

 

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,

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that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.4, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.

 

5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations

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contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.16 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.17 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Shares in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Shares that occur after the date of this Agreement.

 

5.18 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

HEART TEST LABORATORIES, INC.	Address for Notice: 550 Reserve Street, Suite 360 Southlake, TX 76092
By:__________________________________      Name: Andrew Simpson      Title: CEO With a copy to (which shall not constitute notice):	Tel: (682) 237-7781 E-Mail: andrew.simpson@heartsciences.com
Foley Shechter Ablovatskiy LLP 1180 Avenue of the Americas, 8th Fl. New York, NY 10036 Attention: Jonathan Shechter, Partner
ICAHN SCHOOL OF MEDICINE AT MOUNT SINAI	Address for Notice: One Gustave L. Levy Place New York, NY 10029
By:__________________________________      Name: Erik Lium, PhD      Title: President With a copy to (which shall not constitute notice):	Tel: [______] E-Mail: [______]

 

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

[TO BE COMPLETED UPON CLOSING]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: ________________________________________________________

 

Signature of Authorized Signatory of Purchaser: _________________________________

 

Name of Authorized Signatory: _______________________________________________

 

Title of Authorized Signatory: ________________________________________________

 

Email Address of Authorized Signatory:_________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice to Purchaser:

 

 

Address for Delivery of Warrants to Purchaser (if not same as address for notice):

 

 

 

 

 

Consideration Shares: _________________

 

Pre-Funded Warrant Shares: _____________ Beneficial Ownership Blocker  4.99% or  9.99%

 

Warrant Shares: __________________ Beneficial Ownership Blocker  4.99% or  9.99%

 

EIN Number: _______________________

 

 Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the Company to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded, (ii) the Closing shall occur on the first (1st) Trading Day following the date of this Agreement and (iii) any condition to Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the Closing Date.

 

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EXHIBIT A

 

LICENSE AGREEMENTS

 

 

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EXHIBIT B

 

WARRANT

 

 

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EXHIBIT C

 

PRE-FUNDED WARRANT

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.2

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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TABLE OF CONTENTS
1.	DEFINITIONS	2
2.	LICENSE GRANT	11
3.	DUE DILIGENCE	14
4.	FEES, ROYALTIES, AND PAYMENTS	15
5.	INTENTIONALLY RESERVED	16
6.	REPORTS	16
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	19
8.	PATENT PROSECUTION AND REIMBURSEMENT	21
9.	INFRINGEMENT	22
10.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	23
11.	INDEMNIFICATION	25
12.	INSURANCE	26
13.	TERM AND TERMINATION	27
14.	EFFECT OF TERMINATION	28
15.	ADDITIONAL PROVISIONS	29

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Licensed Patents

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

Exhibit F: Client and Billing Agreement

 

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who

 

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controlled a majority of the outstanding voting securities prior to the transaction are the holders of a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Licensed Patents and Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

 

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1.8. “Control” or “Controlled” shall mean, with respect to any Patent, Know-How, or other intellectual property right or other intangible property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Patent, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein. For clarity, Exclusively Licensed Technical Information includes any information contained within Licensed Patents.

 

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1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products

 

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(including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding (other than oppositions, cancellations, interferences, reissue proceedings,

 

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or reexaminations), respecting any Licensed Patent and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement.

1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Licensed Patents or Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Patents” means the Patents owned or Controlled by Mount Sinai as of the Effective Date and listed on Exhibit B hereto. Notwithstanding the preceding definition, Licensed Patents shall not include any Patent based in whole or part on research conducted after the Effective Date, except as otherwise agreed in a separate writing executed by the Parties.

1.33. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which (a) is covered by at least one Valid Claim or (b) arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.34. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.35. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

 

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1.36. “Mount Sinai Technology” means the Licensed Patents, Exclusively Licensed Technical Information, and Know-How.

1.37. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test

 

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marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.38. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.39. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.40. “Patent Costs” has the meaning assigned in Section 8.2.

1.41. “Patents” means (a) United States and foreign patents and/or patent applications; (b) any and all patents issuing from the foregoing; (c) any and all claims of continuation-in-part applications that claim priority to the United States patent applications, but only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. § 112 in such United States patent applications, and such claims in any patents issuing from such continuation-in-part applications; (d) any and all foreign patent applications, foreign patents, or related foreign patent documents that claim priority to the patents and/or patent applications; and

 

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(e) any and all divisionals, continuations, reissues, re-examinations, renewals, substitutions, and extensions of the foregoing.

1.42. “Prosecution” means the filing, preparation, prosecution (including any interferences, reissue proceedings, reexaminations, and oppositions), extension, term adjustment, and maintenance of Licensed Patents. When used as a verb, “Prosecute” means to engage in Prosecution.

1.43. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.44. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.45. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.46. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.47. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.49. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property,

 

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consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.50. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Licensed Patents, Exclusively Licensed Technical Information, or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.51. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.52. “Territory” means worldwide.

1.53. “Third Party” means any Entity other than a Party.

1.54. “Valid Claim” means (a) an unexpired claim of an issued Patent within the Licensed Patents that has not been ruled unpatentable, invalid or unenforceable by a final and unappealable decision of a court or other competent authority in the subject Jurisdiction; or (b) a pending claim of a Patent application within the Licensed Patents.

 

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive license to the Licensed Patents and Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

 

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2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) cause the Sublicensee to comply with the provisions of Section 13.1(e) to the same extent as Licensee is required to comply and include a provision providing for the termination of the Sublicense, upon written request by Mount Sinai, in the event that the Sublicensee does not so comply;

(vii) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(viii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(ix) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(x) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that

 

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entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 13.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States. In addition, Licensee agrees that, to the extent required by Law including under 35 U.S.C. § 202(c)(4), the United States government is granted a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any Licensed Patent throughout the world.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product exploiting a Valid Claim	[***]%
For Net Sales of a Licensed Product not exploiting a Valid Claim	[***]%

For the avoidance of doubt, the running royalties outlined in Section 4.1 above are payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed

 

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Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

 

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(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will

 

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reference Agreement [AGR-31518]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data

 

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shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this

 

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Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any

 

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disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. PATENT PROSECUTION AND REIMBURSEMENT

8.1. Patent Prosecution. Mount Sinai shall control the Prosecution of Licensed Patents and the selection of patent counsel. Mount Sinai will request that copies of all documents prepared by patent counsel be provided to Licensee for review and comment prior to filing, to the extent practicable under the circumstances. Mount Sinai will consider any comments from Licensee in good faith; provided, however, that Mount Sinai shall have final authority regarding all Prosecution decisions. All Licensed Patents will be in Mount Sinai’s name, and Licensee acknowledges that Mount Sinai shall remain the sole client of such patent counsel and in every case shall retain the right to make the final decision with respect to any Prosecution matter.

8.2. Patent Reimbursement. Within thirty (30) days of the Effective Date, Licensee shall reimburse Mount Sinai for all expenses in connection with the preparation, filing, prosecution, and maintenance of all Licensed Patents, including, without limitation, attorneys’ fees, transactions expenses, official fees, and all other charges (e.g. taxes, annuities or maintenance fees on such Licensed Patents) (collectively, “Patent Costs”) accrued prior to the Effective Date, which amount is currently estimated at Thirteen-Thousand Three-Hundred Forty-Nine ($13,349.00) U.S. Dollars and is subject to change. In addition, Licensee shall pay, within thirty (30) days of receipt of invoice, all Patent Costs that accrue from the Effective Date through the end of the Term. Licensee agrees to receive invoices directly from patent counsel, with Mount Sinai receiving a copy of such invoice. Licensee shall pay such invoices directly to patent counsel with written confirmation of payment to Mount Sinai. Further, the Parties agree to enter into a Client and Billing Agreement with patent counsel substantially in the form of Exhibit F.

8.3. Patent Extension. Licensee shall, within three (3) days of the triggering event, notify Mount Sinai of any Regulatory Approval for any Licensed Product for which an application for Patent term extension may be based, including with respect to any Third Party product, or any other event in any Jurisdiction that would enable Mount Sinai or Licensee as appropriate to apply

 

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for Patent term extension or other regulatory or marketing exclusivity or extension thereof in any Jurisdiction. The Parties agree to cooperate fully with each other to provide any information or documentation necessary to support an application for Patent term extension or other regulatory or marketing exclusivity.

8.4. Abandonment. Licensee will have the right to discontinue its obligation to pay for the Prosecution of any Licensed Patent hereunder in a particular Jurisdiction (“Abandoned Patent”). In each such instance, Licensee will provide Mount Sinai with written notice at least sixty (60) days prior to any office action to enable Mount Sinai to take appropriate action (“Abandon Notice”). Licensee shall be released from its obligation to reimburse Mount Sinai for the expenses incurred after sixty (60) days from receipt of an Abandon Notice; provided, however, that expenses incurred or authorized prior to the receipt by Mount Sinai of such Abandon Notice shall be deemed incurred prior to the notice. If any Licensed Patent becomes an Abandoned Patent hereunder, any license granted by Mount Sinai to Licensee hereunder with respect to such Abandoned Patent will immediately and automatically terminate, and Licensee will have no rights whatsoever to Exploit such Abandoned Patent. For clarity, Mount Sinai will then be free, without further notice or obligation to Licensee, to dispose of such Abandoned Patent in any manner.

8.5. Failure to Timely Pay Patent Expenses. Should Licensee decline or fail to pay by the deadlines set forth herein the costs and legal fees for the Prosecution any Licensed Patent licensed hereunder and payable under this Agreement, Mount Sinai may, at its sole discretion, elect to (a) exclude by written notice the particular Licensed Patent from this Agreement, without terminating the Agreement in its entirety, and such Licensed Patent shall be deemed an Abandoned Patent under this Agreement upon such notice, or (b) Mount Sinai may terminate this Agreement in full pursuant to Article 13 hereof.

9. INFRINGEMENT

9.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Patent or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

9.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 9.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party

 

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regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable. Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Patents related to a Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

9.3. Recoveries.

Any recovery obtained by Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

10. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

10.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

10.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

 

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(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

10.3. DISCLAIMER OF WARRANTIES. THE LICENSED PATENTS, EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

10.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE MOUNT SINAI TECHNOLOGY, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

10.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 10, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR

 

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OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

11. INDEMNIFICATION

11.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 11 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

 

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11.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 11, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Licensed Patents, Exclusively Licensed Technical Information, Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 11 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

12. INSURANCE

12.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 12, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

12.2. Other Requirements. Any policies of insurance required by Section 12.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

12.3. For clarity, the insurance coverage required by this Article 12 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

 

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13. TERM AND TERMINATION

13.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

(e) Challenge of Patents. Licensee acknowledges and agrees that nothing herein shall be construed as preventing it from challenging the validity or enforceability of the Licensed Patents at any time. In the event that Licensee or its Sublicensee shall, however, challenge the validity or enforceability of any of the Licensed Patents in any forum through any means, or

 

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otherwise indicate the remittance of any payment due under this Agreement is made under protest or with any objection, Licensee agrees that Mount Sinai shall have the right, but not the obligation, in addition to any other remedy it may have available to it at law and/or in equity, to terminate this Agreement immediately upon providing written notice of the same to Licensee. Mount Sinai in response to such challenge by Licensee or following termination by Mount Sinai under this subsection may seek redress in any court of competent jurisdiction in its sole discretion notwithstanding any other provision of this Agreement.

13.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

14. EFFECT OF TERMINATION

14.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

14.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 9 (Infringement), 10 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 11 (Indemnification), 12 (Insurance), 14 (Effect of Termination), and 15 (Additional Provisions).

14.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Licensed Patents, Exclusively Licensed Technology, and Know-How).

 

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15. ADDITIONAL PROVISIONS

15.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

15.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

15.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

15.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by

 

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sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

15.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

15.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

15.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

15.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

 

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if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

15.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

15.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

15.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

15.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

15.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 15.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

15.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other

 

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circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

15.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

15.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

15.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Licensed Patents

 

 

 

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Tech ID	Title	Serial Number	File Date
211112	SYSTEM AND METHOD FOR PULMONARY EMBOLISM DETECTION FROM THE ELECTROCARDIOGRAM USING DEEP LEARNING	17/746,463	5/17/2022

 

 

 

Exclusively Licensed Technical Information

 

 

[***] Pulmonary Embolism Detection From the Electrocardiogram Using Deep Learning

 

Inventors

 

• [***]

 

Description

 

• Three machine learning models to predict Pulmonary Embolism likelihood: an ECG model using only ECG waveform data, an EHR model using tabular clinical data, and a Fusion model integrating clinical data and an embedded representation of the ECG waveform, along with the associated software.

 

Publication

 

• [***]

 

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary

 

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Exhibit F

Client and Billing Agreement

 

 

 

 

 

 

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.3

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	INFRINGEMENT	19
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	20
10.	INDEMNIFICATION	22
11.	INSURANCE	23
12.	TERM AND TERMINATION	24
13.	EFFECT OF TERMINATION	25
14.	ADDITIONAL PROVISIONS	25

 

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-0

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

i

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible

 

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property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or

 

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(ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

 

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1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding respecting any Exclusively Licensed Technical Information and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

 

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1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.33. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.34. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.35. “Mount Sinai Technology” means the Exclusively Licensed Technical Information, and Know-How.

1.36. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

 

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(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

 

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In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.37. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.38. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.39. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.40. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.41. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.42. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.43. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such

 

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Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.44. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.45. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.46. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.47. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Territory” means worldwide.

1.49. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive

 

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license to the Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-Exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 12.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Exclusively Licensed Technical Information, and permit other Entities to practice the Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar

 

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Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

 

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(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31519]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

 

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By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement.

 

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Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted

 

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hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being

 

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fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. INFRINGEMENT

8.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Product or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

8.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 8.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable, the Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

 

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(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Exclusively Licensed Technical Information or related Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

8.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT,

 

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MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Exclusively Licensed Technical Information,

 

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Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to

 

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undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.4 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

 

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13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Infringement), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Exclusively Licensed Technical Information and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

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14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

 

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14.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

 

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14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

 

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or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Exclusively Licensed Technical Information

 

[***] Deep Learning Algorithm to Predict PVC-Related Cardiomyopathy

 

Inventors

 

• [***]

 

Description

 

• A software based on a deep learning algorithm to prognosticate which patients are most at risk of Premature Ventricular Contractions (PVCs) from analysis of electrocardiogram (ECG) data

 

Publication

 

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.4

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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TABLE OF CONTENTS
1.	DEFINITIONS	2
2.	LICENSE GRANT	11
3.	DUE DILIGENCE	14
4.	FEES, ROYALTIES, AND PAYMENTS	15
5.	INTENTIONALLY RESERVED	16
6.	REPORTS	16
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	19
8.	PATENT PROSECUTION AND REIMBURSEMENT	21
9.	INFRINGEMENT	22
10.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	23
11.	INDEMNIFICATION	25
12.	INSURANCE	26
13.	TERM AND TERMINATION	27
14.	EFFECT OF TERMINATION	28
15.	ADDITIONAL PROVISIONS	29

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Licensed Patents

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

Exhibit F: Client and Billing Agreement

 

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who

 

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controlled a majority of the outstanding voting securities prior to the transaction are the holders of a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Licensed Patents and Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

 

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1.8. “Control” or “Controlled” shall mean, with respect to any Patent, Know-How, or other intellectual property right or other intangible property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Patent, Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein. For clarity, Exclusively Licensed Technical Information includes any information contained within Licensed Patents.

 

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1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products

 

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(including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding (other than oppositions, cancellations, interferences, reissue proceedings,

 

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or reexaminations), respecting any Licensed Patent and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement.

1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Licensed Patents or Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information or Non-Exclusively Licensed Technical Information, or any Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Patents” means the Patents owned or Controlled by Mount Sinai as of the Effective Date and listed on Exhibit B hereto. Notwithstanding the preceding definition, Licensed Patents shall not include any Patent based in whole or part on research conducted after the Effective Date, except as otherwise agreed in a separate writing executed by the Parties.

1.33. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which (a) is covered by at least one Valid Claim or (b) arises from the use of, involves the use of, or incorporates, in whole or in part, any Know-How, Licensed Patent or Exclusively Licensed Technical Information.

1.34. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.35. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

 

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1.36. “Mount Sinai Technology” means the Licensed Patents, Exclusively Licensed Technical Information, and Know-How.

1.37. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test

 

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marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.38. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.39. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.40. “Patent Costs” has the meaning assigned in Section 8.2.

1.41. “Patents” means (a) United States and foreign patents and/or patent applications; (b) any and all patents issuing from the foregoing; (c) any and all claims of continuation-in-part applications that claim priority to the United States patent applications, but only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. § 112 in such United States patent applications, and such claims in any patents issuing from such continuation-in-part applications; (d) any and all foreign patent applications, foreign patents, or related foreign patent documents that claim priority to the patents and/or patent applications; and

 

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(e) any and all divisionals, continuations, reissues, re-examinations, renewals, substitutions, and extensions of the foregoing.

1.42. “Prosecution” means the filing, preparation, prosecution (including any interferences, reissue proceedings, reexaminations, and oppositions), extension, term adjustment, and maintenance of Licensed Patents. When used as a verb, “Prosecute” means to engage in Prosecution.

1.43. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.44. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.45. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.46. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.47. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.49. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property,

 

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consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.50. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Licensed Patents, Exclusively Licensed Technical Information, or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.51. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.52. “Territory” means worldwide.

1.53. “Third Party” means any Entity other than a Party.

1.54. “Valid Claim” means (a) an unexpired claim of an issued Patent within the Licensed Patents that has not been ruled unpatentable, invalid or unenforceable by a final and unappealable decision of a court or other competent authority in the subject Jurisdiction; or (b) a pending claim of a Patent application within the Licensed Patents.

 

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive license to the Licensed Patents and Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

 

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2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) cause the Sublicensee to comply with the provisions of Section 13.1(e) to the same extent as Licensee is required to comply and include a provision providing for the termination of the Sublicense, upon written request by Mount Sinai, in the event that the Sublicensee does not so comply;

(vii) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(viii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(ix) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(x) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that

 

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entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 13.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States. In addition, Licensee agrees that, to the extent required by Law including under 35 U.S.C. § 202(c)(4), the United States government is granted a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any Licensed Patent throughout the world.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product exploiting a Valid Claim	[***]%
For Net Sales of a Licensed Product not exploiting a Valid Claim	[***]%

For the avoidance of doubt, the running royalties outlined in Section 4.1 above are payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed

 

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Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

 

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(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will

 

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reference Agreement [AGR-31521]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data

 

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shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this

 

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Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any

 

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disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. PATENT PROSECUTION AND REIMBURSEMENT

8.1. Patent Prosecution. Mount Sinai shall control the Prosecution of Licensed Patents and the selection of patent counsel. Mount Sinai will request that copies of all documents prepared by patent counsel be provided to Licensee for review and comment prior to filing, to the extent practicable under the circumstances. Mount Sinai will consider any comments from Licensee in good faith; provided, however, that Mount Sinai shall have final authority regarding all Prosecution decisions. All Licensed Patents will be in Mount Sinai’s name, and Licensee acknowledges that Mount Sinai shall remain the sole client of such patent counsel and in every case shall retain the right to make the final decision with respect to any Prosecution matter.

8.2. Patent Reimbursement. Within thirty (30) days of the Effective Date, Licensee shall reimburse Mount Sinai for all expenses in connection with the preparation, filing, prosecution, and maintenance of all Licensed Patents, including, without limitation, attorneys’ fees, transactions expenses, official fees, and all other charges (e.g. taxes, annuities or maintenance fees on such Licensed Patents) (collectively, “Patent Costs”) accrued prior to the Effective Date, which amount is currently estimated at Twenty-Five Thousand ($25,000) U.S. Dollars and is subject to change. In addition, Licensee shall pay, within thirty (30) days of receipt of invoice, all Patent Costs that accrue from the Effective Date through the end of the Term. Licensee agrees to receive invoices directly from patent counsel, with Mount Sinai receiving a copy of such invoice. Licensee shall pay such invoices directly to patent counsel with written confirmation of payment to Mount Sinai. Further, the Parties agree to enter into a Client and Billing Agreement with patent counsel substantially in the form of Exhibit F.

8.3. Patent Extension. Licensee shall, within three (3) days of the triggering event, notify Mount Sinai of any Regulatory Approval for any Licensed Product for which an application for Patent term extension may be based, including with respect to any Third Party product, or any other event in any Jurisdiction that would enable Mount Sinai or Licensee as appropriate to apply

 

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for Patent term extension or other regulatory or marketing exclusivity or extension thereof in any Jurisdiction. The Parties agree to cooperate fully with each other to provide any information or documentation necessary to support an application for Patent term extension or other regulatory or marketing exclusivity.

8.4. Abandonment. Licensee will have the right to discontinue its obligation to pay for the Prosecution of any Licensed Patent hereunder in a particular Jurisdiction (“Abandoned Patent”). In each such instance, Licensee will provide Mount Sinai with written notice at least sixty (60) days prior to any office action to enable Mount Sinai to take appropriate action (“Abandon Notice”). Licensee shall be released from its obligation to reimburse Mount Sinai for the expenses incurred after sixty (60) days from receipt of an Abandon Notice; provided, however, that expenses incurred or authorized prior to the receipt by Mount Sinai of such Abandon Notice shall be deemed incurred prior to the notice. If any Licensed Patent becomes an Abandoned Patent hereunder, any license granted by Mount Sinai to Licensee hereunder with respect to such Abandoned Patent will immediately and automatically terminate, and Licensee will have no rights whatsoever to Exploit such Abandoned Patent. For clarity, Mount Sinai will then be free, without further notice or obligation to Licensee, to dispose of such Abandoned Patent in any manner.

8.5. Failure to Timely Pay Patent Expenses. Should Licensee decline or fail to pay by the deadlines set forth herein the costs and legal fees for the Prosecution any Licensed Patent licensed hereunder and payable under this Agreement, Mount Sinai may, at its sole discretion, elect to (a) exclude by written notice the particular Licensed Patent from this Agreement, without terminating the Agreement in its entirety, and such Licensed Patent shall be deemed an Abandoned Patent under this Agreement upon such notice, or (b) Mount Sinai may terminate this Agreement in full pursuant to Article 13 hereof.

9. INFRINGEMENT

9.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Patent or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

9.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 9.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party

 

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regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable. Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Patents related to a Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

9.3. Recoveries.

Any recovery obtained by Party as the controlling Party that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorney’s fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

10. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

10.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

10.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

 

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(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

10.3. DISCLAIMER OF WARRANTIES. THE LICENSED PATENTS, EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

10.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE MOUNT SINAI TECHNOLOGY, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

10.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 10, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR

 

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OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

11. INDEMNIFICATION

11.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 11 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

 

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11.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 11, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Licensed Patents, Exclusively Licensed Technical Information, Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 11 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

12. INSURANCE

12.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 12, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

12.2. Other Requirements. Any policies of insurance required by Section 12.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

12.3. For clarity, the insurance coverage required by this Article 12 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

 

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13. TERM AND TERMINATION

13.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

(e) Challenge of Patents. Licensee acknowledges and agrees that nothing herein shall be construed as preventing it from challenging the validity or enforceability of the Licensed Patents at any time. In the event that Licensee or its Sublicensee shall, however, challenge the validity or enforceability of any of the Licensed Patents in any forum through any means, or

 

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otherwise indicate the remittance of any payment due under this Agreement is made under protest or with any objection, Licensee agrees that Mount Sinai shall have the right, but not the obligation, in addition to any other remedy it may have available to it at law and/or in equity, to terminate this Agreement immediately upon providing written notice of the same to Licensee. Mount Sinai in response to such challenge by Licensee or following termination by Mount Sinai under this subsection may seek redress in any court of competent jurisdiction in its sole discretion notwithstanding any other provision of this Agreement.

13.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

14. EFFECT OF TERMINATION

14.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

14.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 9 (Infringement), 10 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 11 (Indemnification), 12 (Insurance), 14 (Effect of Termination), and 15 (Additional Provisions).

14.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Licensed Patents, Exclusively Licensed Technology, and Know-How).

 

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15. ADDITIONAL PROVISIONS

15.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

15.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

15.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

15.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by

 

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sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

15.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

15.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

15.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

15.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

 

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if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

15.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

15.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

15.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

15.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

15.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 15.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

15.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other

 

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circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

15.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

15.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

15.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Licensed Patents

 

 

 

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Tech ID	Title	Serial Number	File Date
210610G	Surfacing Insights into Left and Right Ventricular Dysfunction Through Deep Learning	17/714,060	04/05/2022
210610G	Surfacing Insights into Left and Right Ventricular Dysfunction Through Deep Learning	PCT/US2023/17469	04/04/2023

 

 

 

Exclusively Licensed Technical Information

 

 

[***] Deep Learning on ECGs to Derive Left and Right Ventricular Function

 

Inventors

 [***]

 

Description

 A software algorithm using a convolutional neural network to diagnose Low Left Ventricular Ejection Fraction (LVEF) and abnormal Right Ventricular size and function.

 

Publication

 [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary

 

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Exhibit F

Client and Billing Agreement

 

 

 

 

 

 

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.5

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	INFRINGEMENT	19
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	20
10.	INDEMNIFICATION	22
11.	INSURANCE	23
12.	TERM AND TERMINATION	24
13.	EFFECT OF TERMINATION	25
14.	ADDITIONAL PROVISIONS	25

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible

 

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property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or

 

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(ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

 

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1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding respecting any Exclusively Licensed Technical Information and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

 

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1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or any Patent Rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Know-How or Exclusively Licensed Technical Information.

1.33. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.34. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.35. “Mount Sinai Technology” means the Exclusively Licensed Technical Information, and Know-How.

1.36. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

 

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(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

 

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In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.37. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.38. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.39. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.40. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.41. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.42. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.43. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such

 

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Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.44. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.45. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.46. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.47. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Territory” means worldwide.

1.49. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive

 

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license to the Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-Exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 12.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Exclusively Licensed Technical Information, and permit other Entities to practice the Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar

 

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Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

 

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(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31522]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

 

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By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement.

 

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Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted

 

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hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being

 

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fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. INFRINGEMENT

8.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Product or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

8.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 8.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable, the Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

 

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(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Exclusively Licensed Technical Information or related Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

8.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT,

 

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MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Exclusively Licensed Technical Information,

 

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Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to

 

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undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.4 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

 

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13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Infringement), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Exclusively Licensed Technical Information and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

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14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

 

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14.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

 

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14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

 

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or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Exclusively Licensed Technical Information

 

[***] Prediction of right ventricular size and systolic function from the 12-lead ECG

 

Inventors

• [***]

 

Description

• A deep learning-based software that utilizes convolutional neural networks (CNNs) to analyze 12-lead ECGs and predict right ventricular (RV) structure and function, specifically:

RV dilation

RV end-diastolic volume (RVEDV), and

RV ejection fraction (RVEF)

 

Publication:

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.6

NON-EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	19
9.	INDEMNIFICATION	21
10.	INSURANCE	22
11.	TERM AND TERMINATION	22
12.	EFFECT OF TERMINATION	23
13.	ADDITIONAL PROVISIONS	24

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Non-Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

i

 

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Non-Exclusive License Agreement

This Non-Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Non-Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Non-Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other

 

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intangible property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Non-Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Non-Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.15. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of

 

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non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.16. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.17. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.18. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.19. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.20. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.21. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.22. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.23. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality

 

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of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.24. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.25. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.26. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Non-Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

1.27. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.28. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all

 

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cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Non-Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or any Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.29. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.30. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Non-Exclusively Licensed Technical Information.

1.31. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.32. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.33. “Mount Sinai Technology” means the Non-Exclusively Licensed Technical Information and Know-How.

1.34. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

 

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(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

 

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1.35. “Non-Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Non-Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.36. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.37. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.38. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.39. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.40. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.41. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.42. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

 

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1.43. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.44. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.45. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Non-Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.46. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.47. “Territory” means worldwide.

1.48. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Non-Exclusive License to Non-Exclusively Licensed Technical Information. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Non-Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

 

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2.2. Non-Exclusive License to Know-How. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the non-exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory. For avoidance of doubt, this Agreement imposes no restriction upon Mount Sinai regarding how many licensees Mount Sinai may license the Know-How to in addition to Licensee.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 11.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are: (a) non-exclusive and therefore Mount Sinai retains all rights to use and otherwise exploit such rights and permit others to use and otherwise exploit such rights non-exclusively in the Field of Use and non-exclusively or exclusively outside the Field of Use, including via licensing, non-exclusively for any purpose; and (b) subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement. Notwithstanding the foregoing, Mount Sinai agrees that it shall grant Commercial rights to the Non-Exclusively Licensed Technical Information to no more than one Party in addition to Licensee. The Parties agree and acknowledge that Mount Sinai’s rights to use, and to allow other not-for-profit parties to use, the Non-Exclusively Licensed Technical Information in industry sponsored research is not restricted by the preceding sentence, provided that the agreement for such industry sponsored research does not grant to such industry sponsor a license, or option to negotiate a license, to any Commercial rights in the Non-Exclusively Licensed Technical Information.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed,

 

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rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

 

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3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) meet with License to arrange for revision of the due diligence events; or (c) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between

 

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such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

 

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6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 11.1 hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31588]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:	By Check:

 

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Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar

 

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Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned

 

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or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

 

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7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

8.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

8.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

8.3. DISCLAIMER OF WARRANTIES. THE NON-EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

8.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE NON-EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

8.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 8, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

 

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9. INDEMNIFICATION

9.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 9 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

9.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 9, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Non-Exclusively Licensed Technical Information, Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified

 

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Parties under this Article 9 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

10. INSURANCE

10.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 10, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

10.2. Other Requirements. Any policies of insurance required by Section 10.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

10.3. For clarity, the insurance coverage required by this Article 10 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

11. TERM AND TERMINATION

11.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then

 

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Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

11.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

11.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

12. EFFECT OF TERMINATION

12.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any

 

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other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

12.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 9 (Indemnification), 10 (Insurance), 12 (Effect of Termination), and 13 (Additional Provisions).

12.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Non-Exclusively Licensed Technical Information and Know-How).

13. ADDITIONAL PROVISIONS

13.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

13.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

13.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

 

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13.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

13.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

13.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver

 

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must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

13.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

13.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

13.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

13.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or

 

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interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

13.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

13.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

13.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 13.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

13.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

13.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or

 

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other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

13.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

13.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Non-Exclusively Licensed Technical Information

 

[***] Deep learning for electrocardiograms to identify left heart valvular dysfunction - aortic stenosis

 

Inventors

 [***]

 

Description

 A software-based algorithm using a Convolutional Neural Network that detects the likelihood of Moderate/Severe Aortic Stenosis.

 

Publication

 [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.7

NON-EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	19
9.	INDEMNIFICATION	21
10.	INSURANCE	22
11.	TERM AND TERMINATION	22
12.	EFFECT OF TERMINATION	23
13.	ADDITIONAL PROVISIONS	24

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Non-Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

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Non-Exclusive License Agreement

This Non-Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Non-Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Non-Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other

 

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intangible property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Non-Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Non-Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.15. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of

 

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non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.16. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.17. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.18. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.19. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.20. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.21. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.22. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.23. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality

 

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of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.24. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.25. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.26. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Non-Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

1.27. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.28. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all

 

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cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Non-Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or any Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.29. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.30. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Know-How or Non-Exclusively Licensed Technical Information.

1.31. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.32. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.33. “Mount Sinai Technology” means the Non-Exclusively Licensed Technical Information, and Know-How.

1.34. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

 

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(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

 

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1.35. “Non-Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Non-Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.36. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.37. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.38. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.39. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.40. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.41. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.42. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

 

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1.43. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.44. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.45. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Non-Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.46. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.47. “Territory” means worldwide.

1.48. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Non-Exclusive License to Non-Exclusively Licensed Technical Information... Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Non-Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

 

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2.2. Non-Exclusive License to Know-How. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the non-exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such

 

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agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 11.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are: (a) non-exclusive and therefore Mount Sinai retains all rights to use and otherwise exploit such rights and permit others to use and otherwise exploit such rights non-exclusively in the Field of Use and non-exclusively or exclusively outside the Field of Use, including via licensing, non-exclusively for any purpose; and (b) subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement. Notwithstanding the foregoing, Mount Sinai agrees that it shall grant Commercial rights to the Non-Exclusively Licensed Technical Information to no more than one Party in addition to Licensee. The Parties agree and acknowledge that Mount Sinai’s rights to use, and to allow other not-for-profit parties to use, the Non-Exclusively Licensed Technical Information in industry sponsored research is not restricted by the preceding sentence, provided that the agreement for such industry sponsored research does not grant to such industry sponsor a license, or option to negotiate a license, to any Commercial rights in the Non-Exclusively Licensed Technical Information.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) meet with License to arrange for revision of the due diligence events; or (c) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For

 

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clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

 

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6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 11.1 hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31655]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:	By Check:

 

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Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar

 

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Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned

 

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or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

 

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7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

8.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

8.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

8.3. DISCLAIMER OF WARRANTIES. THE NON-EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

8.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE NON-EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

8.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 8, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

 

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9. INDEMNIFICATION

9.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 9 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

9.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 9, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Non-Exclusively Licensed Technical Information, Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified

 

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Parties under this Article 9 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

10. INSURANCE

10.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 10, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

10.2. Other Requirements. Any policies of insurance required by Section 10.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

10.3. For clarity, the insurance coverage required by this Article 10 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

11. TERM AND TERMINATION

11.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then

 

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Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

11.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

11.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

12. EFFECT OF TERMINATION

12.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any

 

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other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

12.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 9 (Indemnification), 10 (Insurance), 12 (Effect of Termination), and 13 (Additional Provisions).

12.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Non-Exclusively Licensed Technical Information and Know-How).

13. ADDITIONAL PROVISIONS

13.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

13.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

13.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

 

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13.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

13.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

13.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver

 

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must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

13.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

13.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

13.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

13.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or

 

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interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

13.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

13.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

13.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 13.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

13.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

13.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or

 

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other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

13.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

13.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Non-Exclusively Licensed Technical Information

 

[***] Deep learning for electrocardiograms to identify left heart valvular dysfunction – mitral regurgitation

 

Inventors

• [***]

 

Description

• A software-based algorithm using a Convolutional Neural Network that detects the likelihood of Moderate/Severe Mitral Regurgitation.

 

Publication

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.8

NON-EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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TABLE OF CONTENTS
1.	DEFINITIONS	2
2.	LICENSE GRANT	10
3.	DUE DILIGENCE	11
4.	FEES, ROYALTIES, AND PAYMENTS	12
5.	INTENTIONALLY RESERVED	13
6.	REPORTS	13
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	16
8.	PATENT PROSECUTION	18
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	18
10.	INDEMNIFICATION	20
11.	INSURANCE	21
12.	TERM AND TERMINATION	22
13.	EFFECT OF TERMINATION	23
14.	ADDITIONAL PROVISIONS	24

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Licensed Patents

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty Report

 

 

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Non-Exclusive License Agreement

This Non-Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease,

 

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transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the Non-Exclusively Licensed Technical Information and rights therein; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee, including without limitation, through any subscription model. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Patent, Non-Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible property, an Entity’s ownership or the possession (whether by ownership, license

 

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or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Patent, Non-Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Licensed Patents, Non-Exclusively Licensed Technical Information, and Know-How as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.15. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of

 

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a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.16. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.17. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.18. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.19. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.20. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.21. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.22. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.23. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

 

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1.24. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.25. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.26. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Licensed Patents, Non-Exclusively Licensed Technical Information, and Know-How, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement.

1.27. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.28. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Licensed Patents or Non-Exclusively Licensed Technical Information, prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information,

 

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Non-Exclusively Licensed Technical Information, or any Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.29. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.30. “Licensed Patents” means the Patents owned or Controlled by Mount Sinai as of the Effective Date and listed on Exhibit B hereto. Notwithstanding the preceding definition, Licensed Patents shall not include any Patent based in whole or part on research conducted after the Effective Date, except as otherwise agreed in a separate writing executed by the Parties.

1.31. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which (a) is covered by at least one Valid Claim or (b) arises from the use of, involves the use of, or incorporates, in whole or in part, any Non-Exclusively Licensed Technical Information.

1.32. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee directly relating to any Licensed Product and generated after the Effective Date.

1.33. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.34. “Mount Sinai Technology” means the Licensed Patents, Non-Exclusively Licensed Technical Information, and Know-How.

1.35. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee has to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

 

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(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

In the event Licensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and Net Sales shall be calculated off the price charged for such Finished Product by the Distributor to the Third Party end user.

 

1.1. “Non-Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Non-Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein. For clarity, Non-Exclusively Licensed Technical Information includes any information contained within Licensed Patents.

 

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1.2. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.3. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.4. “Patents” means (a) United States and foreign patents and/or patent applications; (b) any and all patents issuing from the foregoing; (c) any and all claims of continuation-in-part applications that claim priority to the United States patent applications, but only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. § 112 in such United States patent applications, and such claims in any patents issuing from such continuation-in-part applications; (d) any and all foreign patent applications, foreign patents, or related foreign patent documents that claim priority to the patents and/or patent applications; and (e) any and all divisionals, continuations, reissues, re-examinations, renewals, substitutions, and extensions of the foregoing.

1.5. “Prosecution” means the filing, preparation, prosecution (including any interferences, reissue proceedings, reexaminations, and oppositions), extension, term adjustment, and maintenance of Licensed Patents. When used as a verb, “Prosecute” means to engage in Prosecution.

1.6. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.7. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.8. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not

 

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including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.9. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.10. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.11. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.12. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.13. “Territory” means worldwide.

1.14. “Third Party” means any Entity other than a Party.

1.15. “Valid Claim” means (a) an unexpired claim of an issued Patent within the Licensed Patents that has not been ruled unpatentable, invalid or unenforceable by a final and unappealable decision of a court or other competent authority in the subject Jurisdiction; or (b) a pending claim of a Patent application within the Licensed Patents.

 

 

2. LICENSE GRANT

2.1. Non-Exclusive Patent License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a non-sublicensable, non-transferable, royalty-bearing, non-exclusive license to the Licensed Patents identified in Exhibit B, solely to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory. For clarity and avoidance of doubt, this license grant does not permit Licensee to disclose or transfer any rights in the Licensed Patents to any Third Party.

2.2. Non-Exclusive License to Non-Exclusively Licensed Technical Information. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a non-sublicensable, non-transferable, royalty-bearing, non-exclusive license to the Non-Exclusively Licensed Technical Information identified in Exhibit B, solely to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory. For clarity and avoidance of doubt, this license grant does not permit Licensee to disclose or transfer any rights in the Non-Exclusively Licensed Technical Information to any Third Party.

 

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2.3. Non-exclusive Know-How License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a non-sublicensable, non-transferable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the non-exclusive rights granted in Sections 2.1 and 2.2 in the Field of Use, during the Term, and throughout the Territory.

2.4. Retained Rights. The grants provided hereunder are: (a) non-exclusive and therefore Mount Sinai retains all rights to use and otherwise exploit such rights and permit others to use and otherwise exploit such rights non-exclusively in the Field of Use and non-exclusively or exclusively outside the Field of Use, including via licensing, for any purpose; and (b) subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee in the United States will be Manufactured substantially in the United States.

2.6. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to

 

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Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) meet with License to arrange for revision of the due diligence events; or (c) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product exploiting a Valid Claim	[***]%
For Net Sales of a Licensed Product not exploiting a Valid Claim	[***]%

 

For the avoidance of doubt, the running royalties outlined in Section 4.1 above are payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and

 

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invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

 

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(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 12.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement AGR-31512. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer:	By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

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028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

 

6.7. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.8. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.9. Records and Audit Rights. Licensee shall keep complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown

 

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to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees and independent contractors (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know

 

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basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to its accountants, attorneys and other professional advisors, provided that (l) in the case of any disclosure under clause (ii) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

 

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8. PATENT PROSECUTION

8.1. Patent Prosecution. Mount Sinai shall control Prosecution of the Licensed Patents, having the sole and exclusive right to Prosecute the Licensed Patents and the select patent counsel and shall be responsible for associated costs. For avoidance of doubt, Mount Sinai’s Prosecution rights include, without limitation, the right to decide in which jurisdictions to file applications for the Licensed Patents and whether, at any point during prosecution, to abandon the Licensed Patents, as well as all other rights respecting Prosecution of the Licensed Patents. Licensee shall have no right to receive copies of any correspondence with patent counsel or any patent office respecting Prosecution of the Licensed Patents.

8.2. Patent Extension. Licensee shall, within three (3) days of the triggering event, notify Mount Sinai of any Regulatory Approval for any Licensed Product for which an application for Patent term extension may be based, including with respect to any Third Party product, or any other event in any Jurisdiction that would enable Mount Sinai or Licensee as appropriate to apply for Patent term extension or other regulatory or marketing exclusivity or extension thereof in any Jurisdiction. Licensee agrees to cooperate fully with Mount Sinai to provide any information or documentation necessary to support an application for Patent term extension or other regulatory or marketing exclusivity.

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be

 

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debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE LICENSED PATENTS, NON-EXCLUISVELY LICENSED TECHNICAL INFORMATION, AND KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OF THE MOUNT SINAI TECHNOLOGY, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

 

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(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement;

(b) any breach of this Agreement by Licensee, any of Licensee’s officers, directors, employees or agents; ;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or any of Licensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Licensed Patents, Non-Exclusively Licensed Technical Information, Know-How, or Licensed Products or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk

 

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of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3.

 

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If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

(e) Challenge of Patents. Licensee acknowledges and agrees that nothing herein shall be construed as preventing it from challenging the validity or enforceability of the Licensed Patents at any time. In the event that Licensee shall, however, challenge the validity or enforceability of any of the Licensed Patents in any forum through any means, or otherwise indicate the remittance of any payment due under this Agreement is made under protest or with any objection, Licensee agrees that Mount Sinai shall have the right, but not the obligation, in addition to any other remedy it may have available to it at law and/or in equity, to terminate this Agreement immediately upon providing written notice of the same to Licensee. Mount Sinai in response to such challenge by Licensee or following termination by Mount Sinai under this subsection may seek redress in any court of competent jurisdiction in its sole discretion notwithstanding any other provision of this Agreement.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

 

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12.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How, Non-Exclusively Licensed Technical Information, and Licensed Products existing in tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How, Non-Exclusively Licensed Technical Information, and Licensed Products have been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Licensed Patents, Non-Exclusively Licensed Technical Information, and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between

 

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the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee

 

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will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

14.5. Marking. Licensee shall comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, and every part of it, is a personal contract between the Parties. None of the rights or obligations or other interests of Licensee hereunder may be assigned or otherwise transferred by Licensee, either directly or by merger or operation of Law and any such assignment granted, or purported to be granted, shall be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

 

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14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing,

 

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whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17. Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Licensed Patents

 

 

 

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Tech ID	Title	Serial Number	Status	Country	File Date
230103G	HeartBEiT: Vision Transformers improve diagnostic performance for electrocardiograms	63/468,435	Pending	US	5/23/2023

 

 

 

Non-Exclusively Licensed Technical Information

 

[***] HeartBEiT: Vision Transformers improve diagnostic performance for electrocardiograms

 

Inventors

 

• [***]

 

Description

 

• The first vision-based waveform transformer that can be used to develop specialized models for ECG analysis especially at low sample sizes.

 

Publication

 

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty Report

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.9

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	INFRINGEMENT	19
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	20
10.	INDEMNIFICATION	22
11.	INSURANCE	23
12.	TERM AND TERMINATION	24
13.	EFFECT OF TERMINATION	25
14.	ADDITIONAL PROVISIONS	25

 

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-0

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible

 

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property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or

 

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(ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

 

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1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding respecting any Exclusively Licensed Technical Information and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

 

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1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.33. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.34. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.35. “Mount Sinai Technology” means the Exclusively Licensed Technical Information, and Know-How.

1.36. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

 

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(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

 

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In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.37. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.38. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.39. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.40. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.41. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.42. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.43. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such

 

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Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.44. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.45. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.46. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.47. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Territory” means worldwide.

1.49. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive

 

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license to the Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-Exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 12.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Exclusively Licensed Technical Information, and permit other Entities to practice the Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar

 

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Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

 

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(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31519]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

 

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By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement.

 

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Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted

 

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hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being

 

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fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. INFRINGEMENT

8.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Product or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

8.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 8.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable, the Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

 

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(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Exclusively Licensed Technical Information or related Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

8.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT,

 

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MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Exclusively Licensed Technical Information,

 

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Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to

 

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undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.4 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

 

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13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Infringement), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Exclusively Licensed Technical Information and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

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14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

 

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14.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

 

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14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

 

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or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Exclusively Licensed Technical Information

 

[***] Derivation of low Left Ventricular Ejection fraction based on a foundational vision transformer (HeartBEiT)

 

Inventors

 

• [***]

 

Description

 

• A specialized model based on HeartBEiT which identifies patients with low Left Ventricular Ejection Fraction (LVEF) from analysis of electrocardiogram (ECG) data

 

Publication

 

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.10

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	INFRINGEMENT	19
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	20
10.	INDEMNIFICATION	22
11.	INSURANCE	23
12.	TERM AND TERMINATION	24
13.	EFFECT OF TERMINATION	25
14.	ADDITIONAL PROVISIONS	25

 

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-0

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible

 

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property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or

 

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(ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

 

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1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding respecting any Exclusively Licensed Technical Information and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

 

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1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.33. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.34. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.35. “Mount Sinai Technology” means the Exclusively Licensed Technical Information, and Know-How.

1.36. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

 

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(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

 

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In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.37. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.38. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.39. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.40. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.41. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.42. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.43. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such

 

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Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.44. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.45. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.46. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.47. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Territory” means worldwide.

1.49. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive

 

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license to the Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-Exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 12.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Exclusively Licensed Technical Information, and permit other Entities to practice the Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar

 

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Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

 

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(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31519]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

 

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By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement.

 

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Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted

 

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hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being

 

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fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. INFRINGEMENT

8.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Product or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

8.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 8.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable, the Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

 

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(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Exclusively Licensed Technical Information or related Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

8.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT,

 

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MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Exclusively Licensed Technical Information,

 

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Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to

 

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undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.4 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

 

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13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Infringement), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Exclusively Licensed Technical Information and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

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14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

 

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14.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

 

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14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

 

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or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Exclusively Licensed Technical Information

 

[***] Diagnosis of Hypertrophic Cardiomyopathy using a model derived from a foundational vision transformer (HeartBEiT)

 

Inventors

 

• [***]

 

Description

 

• A specialized model based on HeartBEiT which identifies patients with Hypertrophic Cardiomyopathy (HCM) from analysis of electrocardiogram (ECG) data.

 

Publication

 

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.11

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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CONFIDENTIAL

TABLE OF CONTENTS
1.	DEFINITIONS	1
2.	LICENSE GRANT	9
3.	DUE DILIGENCE	12
4.	FEES, ROYALTIES, AND PAYMENTS	13
5.	INTENTIONALLY RESERVED	14
6.	REPORTS	14
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	17
8.	INFRINGEMENT	19
9.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	20
10.	INDEMNIFICATION	22
11.	INSURANCE	23
12.	TERM AND TERMINATION	24
13.	EFFECT OF TERMINATION	25
14.	ADDITIONAL PROVISIONS	25

 

 

 

 

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Exclusively Licensed Technical Information

Exhibit C: Link to Licensee 10-0

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who controlled a majority of the outstanding voting securities prior to the transaction are the holders of

 

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a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

1.8. “Control” or “Controlled” shall mean, with respect to any Exclusively Licensed Technical Information, Know-How, or other intellectual property right or other intangible

 

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property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein.

1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or

 

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(ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products (including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

 

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1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding respecting any Exclusively Licensed Technical Information and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Exclusively Licensed Technical Information, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement, upon written consent of Mount Sinai.

 

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1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.33. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.34. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

1.35. “Mount Sinai Technology” means the Exclusively Licensed Technical Information, and Know-How.

1.36. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

 

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(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

 

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In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.37. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.38. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.39. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.40. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.41. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.42. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.43. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such

 

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Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.44. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.45. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.46. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Exclusively Licensed Technical Information or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.47. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Territory” means worldwide.

1.49. “Third Party” means any Entity other than a Party.

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive

 

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license to the Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-Exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(vii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(viii) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(ix) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

 

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(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 12.1.

(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Exclusively Licensed Technical Information, and permit other Entities to practice the Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States.

 

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2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite

 

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consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product	[***]%

For the avoidance of doubt, the running royalty in Section 4.1 above is payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar

 

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Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

 

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(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31519]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

 

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By Electronic Transfer:   Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

By Check: Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement.

 

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Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted

 

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hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being

 

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fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. INFRINGEMENT

8.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Product or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

8.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 8.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action if necessary or desirable, the Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

 

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(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Exclusively Licensed Technical Information or related Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

8.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

9. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

9.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

 

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(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

9.3. DISCLAIMER OF WARRANTIES. THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

9.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

9.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 9, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT,

 

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MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

10. INDEMNIFICATION

10.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 10 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

10.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 10, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Exclusively Licensed Technical Information,

 

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Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 10 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

11. INSURANCE

11.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 11, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

11.2. Other Requirements. Any policies of insurance required by Section 11.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

11.3. For clarity, the insurance coverage required by this Article 11 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

12. TERM AND TERMINATION

12.1. Termination by Mount Sinai.

(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to

 

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undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

12.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.4 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

 

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13. EFFECT OF TERMINATION

13.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

13.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 8 (Infringement), 9 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 10 (Indemnification), 11 (Insurance), 13 (Effect of Termination), and 14 (Additional Provisions).

13.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Exclusively Licensed Technical Information and Know-How).

14. ADDITIONAL PROVISIONS

14.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

14.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

 

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14.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

14.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

 

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14.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

14.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

14.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

14.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

 

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14.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

14.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

14.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

14.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

14.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 14.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

14.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

14.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument

 

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or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

14.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

14.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Exclusively Licensed Technical Information

 

[***] Diagnosis of STEMI using a model derived from a foundational vision transformer (HeartBEiT)

 

Inventors

 

• [***]

 

Description

 

• A specialized model based on HeartBEiT which identifies patients with ST-Elevated Myocardial Infarction (STEMI) from analysis of electrocardiogram (ECG) data.

 

Publication

 

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary.

 

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[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.12

EXCLUSIVE LICENSE AGREEMENT

between

Heart Test Laboratories, Inc.

and

Icahn School of Medicine at Mount Sinai


 

 

 

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TABLE OF CONTENTS

1.	DEFINITIONS	3
2.	LICENSE GRANT	12
3.	DUE DILIGENCE	15
4.	FEES, ROYALTIES, AND PAYMENTS	16
5.	INTENTIONALLY RESERVED	17
6.	REPORTS	17
7.	CONFIDENTIALITY; PUBLICITY; USE OF NAME	20
8.	PATENT PROSECUTION AND REIMBURSEMENT	22
9.	INFRINGEMENT	23
10.	REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES	24
11.	INDEMNIFICATION	26
12.	INSURANCE	27
13.	TERM AND TERMINATION	28
14.	EFFECT OF TERMINATION	29
15.	ADDITIONAL PROVISIONS	30

 

 

Exhibit A: Securities Purchase Agreement

Exhibit B: Licensed Patents

Exhibit C: Link to Licensee 10-K

Exhibit D: Initial Development Plan

Exhibit E: Form of Quarterly Royalty and Sublicense Income Report

Exhibit F: Client and Billing Agreement

 

 

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Exclusive License Agreement

This Exclusive License Agreement (this “Agreement”) is by and between Icahn School of Medicine at Mount Sinai, a New York not-for-profit education corporation, with a principal place of business at One Gustave L. Levy Place, New York, NY 10029 (“Mount Sinai”) and Heart Test Laboratories, Inc. d/b/a HeartSciences a Texas corporation, with a principal place of business at 550 Reserve Street, Suite 360, Southlake, TX 76092 (referred to herein as (“Licensee”). This Agreement shall become effective upon the Closing (the “Effective Date”), which shall be deemed the Closing Date. Mount Sinai and Licensee are each referred to herein as a “Party” and collectively as the “Parties.” Terms not defined herein shall have the meaning ascribed to them in the Securities Purchase Agreement between the Parties, executed contemporaneously herewith (the “SPA”) and annexed hereto as Exhibit A.

WHEREAS, Mount Sinai has created and owns certain intellectual property relating to screening for and diagnosis of cardiovascular disease;

WHEREAS, Licensee wishes to obtain from Mount Sinai certain rights to such intellectual property and to develop and commercialize Licensed Products (as defined below);

WHEREAS, Mount Sinai has determined that the exploitation of the intellectual property by Licensee subject to the terms and conditions of this Agreement is in the best interest of Mount Sinai, consistent with Mount Sinai’s educational, research, and public health missions and goals; and

WHEREAS, the Parties are contemporaneously entering into additional non-exclusive licenses (the “Non-Exclusive Licenses”) and exclusive licenses (the “Exclusive Licenses”) with respect to screening for and diagnosis of cardiovascular disease;

WHEREAS, the Parties are contemporaneously entering into the SPA pursuant to which, in consideration for entering into this Agreement, Licensee wishes to issue to Mount Sinai certain equity securities of the Licensee upon the Closing Date;

 

NOW THEREFORE, in consideration of the mutual rights and obligations contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS

1.1. “Calendar Year” means January 1 through December 31 of a given year.

1.2. “Change of Control” means, with respect to any entity, the occurrence of any one or more of the following: (1) the acquisition, whether directly, indirectly, beneficially or of record, by any individual, entity or group of fifty percent (50%) or more of the ownership of such entity, whether by merger, consolidation, sale or other transfer of Licensee Shares in a single transaction or series of related transactions (other than (i) a bona fide equity financing by such entity for capital raising purposes and (ii) a transaction where one or more of the equity owners of such entity who

 

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controlled a majority of the outstanding voting securities prior to the transaction are the holders of a majority of the voting securities of the entity that survives such transaction); or (2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such entity of all or substantially all the assets of such entity.

1.3. “Combination Product” means a Licensed Product that: (a) is sold, combined or bundled with one or more algorithms that are not licensed to Licensee by Mount Sinai (in this Agreement or any other agreement), in addition to the rights contained in the Licensed Patents and Exclusively Licensed Technical Information; and (b) the additional algorithm is capable of being sold as a separate product or service. Notwithstanding the foregoing, to qualify as a Combination Product, such product or service and all its components (e.g. algorithms) must be sold together as a single product and invoiced as one product.

1.4. “Commercial Sale” means any bona fide transaction with a Third Party for which consideration is received for the sale, use, lease, transfer or other disposition of a Licensed Product by or on behalf of Licensee or its Sublicensee. Commercial Sale is deemed completed when a bona fide transaction qualifies as a Gross Sale.

1.5. “Commercialization” means any and all activities related to the manufacturing, promotion, distribution, marketing, offering for sale and selling of or otherwise granting rights to a product, including advertising, educating, planning, obtaining, supporting and maintaining pricing and reimbursement approvals and Regulatory Authorizations, managing and responding to adverse events involving the product, pricing, price reporting, marketing, promoting, detailing, storing, handling, shipping, distributing, importing, exporting, using, offering for sale, or selling a product anywhere in the world. Commercialization excludes Development activities. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6. “Commercially Reasonable Efforts” means, with respect to Licensee’s obligations under this Agreement, the diligent and continuous dedication and expenditure of efforts, money, personnel, and other resources, consistent with those that companies of similar size, type, characteristics, and position, reasonably necessary, as soon as reasonably practicable, to fulfill Licensees obligations under this Agreement including the obligation to utilize the licensed rights to Exploit the Licensed Product. Such efforts must be reasonably documented and be reasonably consistent with those that companies of similar size, type, circumstance, and position have reasonably used in actively, diligently and successfully pursuing the research, Development, Manufacturing or Commercialization of a similarly situated , product, or service at a similar stage of Development or Commercialization as the applicable Licensed Product. At a minimum, Commercially Reasonable Efforts shall require material compliance with the Initial Development Plan and subsequent Development Plans as updated, that are submitted to Mount Sinai by Licensee as required under this Agreement. In determining Commercially Reasonable Efforts with respect to a particular Licensed Product, Licensee may not reduce such efforts due to the competitive, regulatory or other impact of any other product, or asset that is Developed, Commercialized, or Controlled by Licensee or its Sublicensees.

1.7. “Confidential Information” shall have the meaning assigned in Article 7.

 

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1.8. “Control” or “Controlled” shall mean, with respect to any Patent, Know-How, or other intellectual property right or other intangible property, an Entity’s ownership or the possession (whether by ownership, license or “control” over an affiliated entity having possession by ownership or license) of the ability to grant access to, or a license or sublicense to, such Patent, Exclusively Licensed Technical Information, Know-How, rights or property. For purposes of this definition, “control” and its various forms means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Entity, whether through ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, the Licensee will be deemed to control another Entity if the Licensee owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other securities of the Entity.

1.9. “Development” means any and all activities related to researching or developing a product or process or service, including preclinical and clinical research, testing and development activities relating to the discovery and/or development of product or process candidates and submission of information and applications to a Regulatory Authority, including toxicology, pharmacology, and other discovery, optimization, and preclinical efforts, test method development and stability testing, manufacturing process development, formulation development, upscaling, validation, delivery system development, quality assurance and quality control development, statistical analysis, managing and responding to adverse events involving a product. When used as a verb, “Develop” means to engage in Development.

1.10. “Development Plan” means the then-current version of Licensee’s plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How as such plan may be adjusted or updated from time to time e.g. as contemplated by Section 3.1. For clarity no updated Development Plan will be effective until agreed to in writing by both Parties.

1.11. “Derivative Work(s)” means any improvement, product, service, software, or algorithm created by or on behalf of Licensee, that is based upon or created in whole or in part through, the decompiling, reverse engineering, use or analysis of, or that includes or incorporates any portion of, the Mount Sinai Technology. For avoidance of doubt, all Derivative Works shall be Licensed Products.

1.12. “EMA” means the European Medicines Agency or any successor Entities thereto.

1.13. “Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an institution, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

1.14. “Exclusively Licensed Technical Information” means the software, algorithms, formulae, and other technology and information identified as Exclusively Licensed Technical Information in Exhibit B hereto, together with all copyright protection therein. For clarity, Exclusively Licensed Technical Information includes any information contained within Licensed Patents.

 

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1.15. “Exploit” means, collectively, to Develop and Commercialize, including to Manufacture, to have Developed, to have Manufactured, to have Commercialized, and otherwise to commercially exploit. “Exploitation” has a correlative meaning.

1.16. “Fair Market Value” means (a) in the case of arm’s length sale of a Licensed Product, (i) the cash consideration that Licensee or its Sublicensee has realized from such sale, or (ii) if there have been no such sales or such sales have been insufficient, the cash consideration that Licensee or its Sublicensee would have realized from an unaffiliated, unrelated buyer in an arm’s length sale of Licensed Product in the same quantity, under the same terms, and at the same time and place as the sale for which Fair Market Value is being determined; (b) in the case of non‑cash consideration received in a sale of a Licensed Product or in a transaction giving rise to Sublicense Income, the cash value of such consideration; or (c) in the case of determining the portion of proceeds from an issuance of equity to be included in Sublicense Income, the value of the issued equity as then most recently determined under U.S. Internal Revenue Code § 409A for purposes of the Licensee’s equity grants (or, if the class of equity issued has not then been so valued, then a value based on the value of a class of equity that has been so valued, taking into account differences between the rights and preferences of the class of equity issued and those of the class of equity then most recently valued).

1.17. “FDA” means the United States Food and Drug Administration or any successor Entities thereto.

1.18. “Field of Use” means screening for, or diagnosis of, cardiovascular disease in humans using electrocardiogram ECG data.

1.19. "Finished Product” means a Licensed Product sold, licensed, or otherwise transferred by the Licensee to a Third Party without modification by the Third Party.

 

1.20. “First Commercial Sale” means, on a Jurisdiction-by-Jurisdiction basis and Licensed Product-by-Licensed Product basis, the first time a Commercial Sale is made.

1.21. “Good Clinical Practices” means the then-current standards, practices and procedures for good clinical practices in the conduct of clinical trials, including adequate human subject protections, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, such as set forth in, “International Conference on Harmonization - Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” or as otherwise required by applicable Law.

1.22. “Good Laboratory Practices” means the then-current standards, practices and procedures for good laboratory practices by facilities that perform non-clinical (including pre-clinical) laboratory studies, as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including as set forth in 21 C.F.R. Part 58, or as otherwise required by applicable Law.

1.23. “Good Manufacturing Practices” means the then-current standards, practices and procedures for the manufacture of drugs or medical devices, as applicable to the Licensed Products

 

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(including the practices of and methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packaging, sterilizing, labeling, testing or holding of the Licensed Products), as promulgated or endorsed by the FDA and other applicable Governmental Authorities, including, as applicable, as set forth in 21 C.F.R. Parts 210, 211, and 820, or as otherwise required by applicable Law.

1.24. “Governmental Authority” means any supranational, national, federal, state, provincial, local or foreign Entity of any nature exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental authority, agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.

1.25. “Gross Sales” means the gross amounts actually received from a Third Party by Licensee or its Sublicensees, as applicable, for Commercial Sales. A Licensed Product shall be considered sold for purposes of calculating Gross Sales when it is paid. In the event Licensee or its Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Gross Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Gross Sales price shall be the Fair Market Value of the Licensed Product.

1.26. “Health Care Law” means all applicable Laws relating in any way to patient care and human health and safety, including such Laws pertaining to: (a) the Development, Manufacture and Commercialization of drugs and medical devices, including, without limitation, the United States Food, Drug and Cosmetic Act, the Public Health Service Act, the regulations promulgated thereunder (including with respect to Good Clinical Practices, Good Laboratory Practices and Good Manufacturing Practices), and equivalent applicable Laws of other Governmental Authorities; and (b) the reimbursement and payment for health care products and services, including any United States federal health care program (as such term is defined in 42 U.S.C. § 1320a-7b(f)), and programs and arrangements pertaining to providers of health care products or services that are paid for by any Governmental Authority or other Entity, including the federal Anti‑Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), 42 U.S.C. § 1320a-7 and 42 U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes, Medicare (Title XVIII of the Social Security Act) and the regulations promulgated thereunder, Medicaid (Title XIX of the Social Security Act) and the regulations promulgated thereunder, and equivalent applicable Laws of other Governmental Authorities; and (c) the privacy and security of patient-identifying information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) and the regulations promulgated thereunder and equivalent applicable Laws of other Governmental Authorities; in each of the foregoing (a) through (c), as may be amended from time to time.

1.27. “Infringement Action” means any threatened, pending, or ongoing action, claim, litigation, or proceeding (other than oppositions, cancellations, interferences, reissue proceedings,

 

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or reexaminations), respecting any Licensed Patent and/or Licensed Product, whether initiated by or against a Party or its Sublicensee.

1.28. “Initial Development Plan” means the initial Development Plan for the Exploitation by Licensee of the Licensed Patents, Exclusively Licensed Technical Information, and Know-How, to be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date, which Development Plan shall be attached at Exhibit D, incorporated into and made part of this Agreement.

1.29. “Jurisdiction” means a geographic area (e.g. country or region) in which any Licensed Product is Exploited.

1.30. “Know-How” means any and all technical, scientific and other knowledge and information regarding technology, methods, processes, practices, formulae, assays, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, specifications, data and/or results relating solely to Licensed Products, in all cases whether or not confidential, proprietary, patented, patentable, existing in written or electronic form developed in the laboratory of one or more inventors or authors of the Licensed Patents or Exclusively Licensed Technical Information prior to the Effective Date of this Agreement. For clarity, Know-How does not include any Exclusively Licensed Technical Information, Non-Exclusively Licensed Technical Information, or Patent rights of Mount Sinai, including without limitation, software, algorithms, or formulae, licensed to Licensee under any of the Exclusive Licenses or Non-Exclusive Licenses.

1.31. “Laws” means all active governmental constitutions, laws, statutes, ordinances, treaties, rules, common laws, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar legally effective pronouncements of any Governmental Authority.

1.32. “Licensed Patents” means the Patents owned or Controlled by Mount Sinai as of the Effective Date and listed on Exhibit B hereto. Notwithstanding the preceding definition, Licensed Patents shall not include any Patent based in whole or part on research conducted after the Effective Date, except as otherwise agreed in a separate writing executed by the Parties.

1.33. “Licensed Product” means any product or service, the exploitation, development, manufacturing, commercialization, use, rental or lease of which (a) is covered by at least one Valid Claim or (b) arises from the use of, involves the use of, or incorporates, in whole or in part, any Exclusively Licensed Technical Information.

1.34. “Licensed Product Data” means data (including clinical data) that is possessed, owned or Controlled by Licensee or its Sublicensee directly relating to any Licensed Product and generated after the Effective Date.

1.35. “Manufacturing” means all activities directed to sourcing of necessary raw materials, producing, processing, packaging, labeling, quality assurance testing, release of a Licensed Product or Licensed Product candidate, whether for Development or Commercialization. When used as a verb, “Manufacture” means to engage in Manufacturing.

 

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1.36. “Mount Sinai Technology” means the Licensed Patents, Exclusively Licensed Technical Information, and Know-How.

1.37. “Net Sales” means all Gross Sales of Licensed Product less the total of the following: deductions to the extent they are included in the gross invoiced sale price of the Licensed Product or otherwise directly paid or incurred by Licensee or its Sublicensees with respect to such sale of the Licensed Product:

(a) trade, cash and/or quantity discounts, retroactive price reductions, chargeback payments and rebates actually allowed and taken by purchasers of a Licensed Product or Third Party payors, including discounts and rebates to governmental payors or managed care organizations, their agencies, purchasers and reimbursers, and allowances or credits to Third Parties for rejections or returns that do not exceed the original invoice amount;

(b) taxes, tariffs, duties and governmental charges required by law that are applicable to the sale, transportation or delivery of Licensed Product that Licensee or its Sublicensees have to pay on such sales, transportation or delivery of Licensed Product (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48)); and

(c) required outbound transportation and insurance charges prepaid or allowed, but not separately reimbursed by the purchaser.

Sales or other transfers of Licensed Products between Licensee and its Sublicensees shall be excluded from the computation of Net Sales (and therefore no payments will be payable to Mount Sinai on such sales or transfers) except where such Sublicensees are end users or consumers of Licensed Products in which event, notwithstanding anything herein to the contrary, Licensed Product transfers to such Sublicensees shall be included in Net Sales. For avoidance of doubt, the sale of Licensed Product by Sublicensees to Third Parties shall be considered as part of Net Sales. In the event Licensee or Sublicensee transfers a Licensed Product to a Third Party in a bona fide arm’s length transaction, for any consideration other than cash, then the Net Sales price for such Licensed Product shall be deemed to be the standard invoice price then being invoiced by Licensee or its Sublicensee, as applicable, in an arm’s length transaction with similar companies. In the absence of such standard invoice price, then the Net Sales price shall be the Fair Market Value of the Licensed Product. Components of Net Sales shall be determined in the ordinary course of business using the accrual method of accounting in accordance with generally accepted accounting principles, consistently applied.

Any Write Offs that are at any time thereafter collected, in whatever amount, shall be deemed a Net Sale and will be subject to the running royalties pursuant to Section 4.1 hereunder.

 

No deductions shall be made from Net Sales for commissions paid to individuals whether they are (i) with independent sales agents or agencies or (ii) regularly employed by Licensee or its Sublicensees on its or their payroll, or (iii) for the cost of collections.

For the avoidance of doubt, disposal of any Licensed Product without charge for use in any clinical trials, as free samples, or under compassionate use, patient assistance, named patient or test

 

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marketing programs or non-registrational studies or other similar programs or studies where Licensed Product is supplied or delivered without charge, shall not result in any Net Sales. No Licensed Product donated by Licensee or its Sublicensee to non-profit institutions or government agencies for a non-commercial purpose shall result in any Net Sales.

If Licensee or its Sublicensee sells, leases or otherwise Commercializes any Licensed Product at a reduced fee or price for the purpose of promoting other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai) or for the purpose of facilitating the sale, license or lease of other products, goods or services (except when those other products, goods or services are solely other Licensed Products from Mount Sinai), then notwithstanding anything herein to the contrary, Mount Sinai shall be entitled to payments under Article 4 based upon the Fair Market Value of the Licensed Product.

In the event that Licensee or its Sublicensee contracts with a Third Party (whether such Third Party is a Third Party authorized representative, importer or distributor) for such Third Party to sell Finished Products to Third Party end users (including hospitals, healthcare institutions or direct sale to patients (as opposed to resale)), such Third Party shall be considered a “Distributor” and not a Sublicensee.

 

1.38. “Open Source License Terms” means terms in any license agreement or license grant that require, as a condition of use, modification and/or distribution of a work:

i. the making available of Source Code, design descriptions or other materials for modification, or

ii. the granting of permission for creating derivative works, or

iii. the reproduction of certain notices or license terms in derivative works or accompanying documentation, or

iv. the granting of a royalty-free license to any party under intellectual property rights regarding the work and/or any work that contains, is combined with, requires, or otherwise is based on the work.

1.39. “Open Source Software” means any software that is licensed under Open Source License Terms.

1.40. “Patent Costs” has the meaning assigned in Section 8.2.

1.41. “Patents” means (a) United States and foreign patents and/or patent applications; (b) any and all patents issuing from the foregoing; (c) any and all claims of continuation-in-part applications that claim priority to the United States patent applications, but only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. § 112 in such United States patent applications, and such claims in any patents issuing from such continuation-in-part applications; (d) any and all foreign patent applications, foreign patents, or related foreign patent documents that claim priority to the patents and/or patent applications; and (e) any and all divisionals, continuations, reissues, re-examinations, renewals, substitutions, and extensions of the foregoing.

 

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1.42. “Prosecution” means the filing, preparation, prosecution (including any interferences, reissue proceedings, reexaminations, and oppositions), extension, term adjustment, and maintenance of Licensed Patents. When used as a verb, “Prosecute” means to engage in Prosecution.

1.43. “Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each Calendar Year; provided, however, that as it relates to the Commercial Sale of Licensed Products, the first Quarter shall be comprised of the time period beginning on the date of First Commercial Sale and ending at the end of the Quarter during which such First Commercial Sale occurs. “Quarterly” means once during each Quarter.

1.44. “Quarterly Reports” shall have the meaning assigned in Article 6.

1.45. “Regulatory Approval” means, with respect to a country or other jurisdiction, all approvals, licenses, clearances, marks, registrations, authorizations certificates, exemptions, consents, franchises, concessions, notices or other like item of or issued by any Governmental Authority, from the relevant Governmental Authority necessary or useful to commercially distribute, sell or market a Licensed Product in such country or other applicable jurisdiction (not including any applicable pricing and governmental reimbursement approvals unless legally required to market the Licensed Product in a country or other applicable jurisdiction).

1.46. “Regulatory Authority” means any applicable Governmental Authority involved in granting Regulatory Approval for, and responsible for the regulation of, the Licensed Product in any Jurisdiction, including the FDA, EMA, and any corresponding Governmental Authority.

1.47. “Royalty Term” means, on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, starting with the date of the First Commercial Sale of such Licensed Product in such jurisdiction until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.48. “Source Code” means the compilable and human-readable version of software, including without limitation, all comments and procedural code, associated flow charts, concepts, algorithms, instructions and all related preparatory materials.

1.49. “Sublicense Income” means consideration Licensee receives, directly or indirectly, from any Sublicensee in consideration of a Sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement (including any option or contingent right to obtain a sublicense or other right), that is not an earned royalty a portion of which will be payable to Mount Sinai as provided in Section 4.1, including but not limited to any fixed fee, option fee, license fee, maintenance fee, milestone payment, unearned portion of any minimum royalty payment, equity, joint marketing fee, intellectual property cross license, settlement agreement, research and development funding in excess of Licensee’s budgeted cost of performing research and development activities expressly performed pursuant to a research plan and budget previously agreed to by Licensee and Sublicensee under a Sublicense, and any other property, consideration or thing of value given or exchanged for a sublicense or otherwise in consideration of any of the rights granted to Licensee under this Agreement, regardless of how Licensee and Sublicensee characterize such payments or consideration. Any earned royalty received by Licensee

 

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from a Sublicensee that is greater than the appropriate royalty listed in Section 4.1 hereunder will be considered Sublicense Income. For clarity and notwithstanding anything else in this Agreement, any consideration that does not meet the above definition of “Sublicense Income” solely because the Third Party receiving such consideration is not a Sublicensee, shall be considered Net Sales.

1.50. “Sublicensee” means any Third Party, that enters into an agreement or arrangement with Licensee, or receives from Licensee a license grant or option for license grant, under the Licensed Patents, Exclusively Licensed Technical Information, or Know-How, to exercise any of the rights granted to Licensee by Mount Sinai hereunder, other than in respect of a Finished Product, including to Manufacture, have Manufactured, Develop, have Developed, Commercialize, have Commercialized, or otherwise Exploit a Licensed Product (such agreement, arrangement, license grant, or option thereto, herein referred to as a “Sublicense”), subject to the then-current applicable article, item, service, technology, and technical data-specific requirements of the U.S. export Laws.

1.51. “Term” means from the Effective Date until Licensee notifies Mount Sinai in writing that it has ceased marketing and made its last Commercial Sale of a Licensed Product.

1.52. “Territory” means worldwide.

1.53. “Third Party” means any Entity other than a Party.

1.54. “Valid Claim” means (a) an unexpired claim of an issued Patent within the Licensed Patents that has not been ruled unpatentable, invalid or unenforceable by a final and unappealable decision of a court or other competent authority in the subject Jurisdiction; or (b) a pending claim of a Patent application within the Licensed Patents.

 

2. LICENSE GRANT

2.1. Exclusive License. Subject to the terms and conditions set forth herein, immediately upon, and contemporaneously with, the Closing Date, and without further action by the Parties, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing exclusive license to the Licensed Patents and Exclusively Licensed Technical Information identified in Exhibit B, to Exploit Licensed Products in the Field of Use, during the Term, throughout the Territory.

2.2. Non-exclusive License. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee a sub-licensable, royalty-bearing non-exclusive license to the Mount Sinai Know-How, solely to the extent Mount Sinai agrees it is reasonably required to exploit the exclusive rights granted in Section 2.1 in the Field of Use, during the Term, and throughout the Territory.

2.3. Sublicensing. Subject to the terms and conditions set forth herein, Mount Sinai hereby grants to Licensee the right to grant Sublicenses, provided that:

 

 

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(a) Any and all such Sublicenses shall:

 

(i) Expressly identify Mount Sinai as a third party beneficiary

(ii) obligate the Sublicensee to abide by and be subject to all of the terms, conditions, and limitations of this Agreement applicable to the Licensee;

(iii) expressly prohibit the Sublicensee from granting further sublicenses and declare any such purported grant of a further sublicense to be invalid and unenforceable;

(iv) prohibit Sublicensee from making payments in exchange for receipt of Sublicense rights, e.g. royalty payments, into an escrow or similar account or to any Third Party;

(v) provide that, in the event of any inconsistency between the Sublicense and this Agreement, this Agreement shall control;

(vi) cause the Sublicensee to comply with the provisions of Section 13.1(e) to the same extent as Licensee is required to comply and include a provision providing for the termination of the Sublicense, upon written request by Mount Sinai, in the event that the Sublicensee does not so comply;

(vii) obligate the Sublicensee to submit annual, Quarterly, and interim reports to Mount Sinai consistent with the reporting provisions of Article 6 and all other relevant provisions herein;

(viii) be written in the English language (for clarity, this is a reference to the original Sublicense as executed; provision of a translation to Mount Sinai shall not satisfy this requirement); and

(ix) comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers; and

(x) specify that New York law shall control any dispute arising under such Sublicense, and that jurisdiction for resolving any such dispute shall be in the federal or state courts located in New York City, New York State.

(b) If Licensee enters into any agreement, arrangement, or license purporting to grant rights to any Mount Sinai Technology that does not comport with the requirements of this Section or is otherwise inconsistent with the terms and conditions of this Agreement, such agreement, arrangement, or license shall be null and void. Licensee acknowledges and agrees that entering into such an agreement, arrangement, or license constitutes a material breach of this Agreement, subject to the cure provisions set forth in Section 13.1.

 

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(c) Licensee may not grant any Sublicenses without the prior written consent of Mount Sinai. Licensee shall notify Mount Sinai in writing of any proposed grant of a Sublicense and provide to Mount Sinai a complete and fully un-redacted copy of any proposed Sublicense at least thirty (30) days prior to execution thereof for review and comment by Mount Sinai, which comments Licensee shall incorporate therein. Any such prior consent provided by Mount Sinai is subject to the delivery of a final and executed complete, fully un-redacted copy of the Sublicense that is substantially similar to the copy that was previously approved by Mount Sinai. .

(d) Licensee hereby agrees to remain fully liable under this Agreement to Mount Sinai for the performance or non-performance under this Agreement and the relevant Sublicense by any party to those agreements. Licensee shall use best efforts to enforce all such Sublicenses against its Sublicensees, ensuring its Sublicensees’ performance in accordance with the terms of this Agreement and the relevant Sublicense. No such Sublicense or attempt to obtain a Sublicense shall relieve Licensee of its obligations hereunder to exercise its Commercially Reasonable Efforts (either directly or through a Sublicensee) to Develop and Commercialize Licensed Products, nor relieve Licensee of its obligations to pay Mount Sinai any and all license fees, royalties and other payments due under the Agreement.

2.4. Retained Rights. The grants provided hereunder are subject to and contingent upon Licensee’s compliance with all of its obligations hereunder including, but not limited to, the payment by Licensee to Mount Sinai of all consideration required under this Agreement, and further subject to rights retained by Mount Sinai to: (a) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, outside of the Field of Use for any purpose; and (b) practice the Licensed Patents and Exclusively Licensed Technical Information, and permit other non-commercial Entities to practice the Licensed Patents and Exclusively Licensed Technical Information, within or outside the Field of Use for teaching, non-commercial academic research (including publication of any such research results), and patient care purposes. For clarity, industry sponsored research shall be considered non-commercial academic research for the purposes of this Section.

2.5. Government Rights. All rights and licenses granted by Mount Sinai to Licensee under this Agreement are subject to (a) any limitations imposed by the terms of any grant, contract or cooperative agreement by any Governmental Authority applicable to the technology that is the subject of this Agreement, and (b) applicable requirements of 35 U.S.C. § 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Licensee agrees that, to the extent required under 35 U.S.C. § 204, any Licensed Product used, sold, distributed, rented or leased by Licensee or its Sublicensees in the United States will be Manufactured substantially in the United States. In addition, Licensee agrees that, to the extent required by Law including under 35 U.S.C. § 202(c)(4), the United States government is granted a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any Licensed Patent throughout the world.

2.6. Open Source. Licensee shall not perform any actions with regard to the Mount Sinai Technology that would require the Mount Sinai Technology to be sublicensed under Open Source License Terms, or any Source Code contained within the Mount Sinai Technology to be disclosed. These actions shall include without limitation (i) combining the Mount Sinai

 

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Technology with Open Source Software, by means of incorporation or linking or otherwise; or (ii) using Open Source Software to create a Derivative Work of the Mount Sinai Technology.

2.7. No Implied Licenses. Except as expressly provided under this Article 2, no right or license is granted under this Agreement (expressly or by implication or estoppel) by Mount Sinai to Licensee or its Sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, technical information, data, or other proprietary right.

3. DUE DILIGENCE

3.1. Development Plan. The Initial Development Plan shall be provided by Licensee to Mount Sinai within thirty (30) days of the Effective Date and become a part of this Agreement upon the written consent of the Parties. With respect to each Calendar Year following the Effective Date, Licensee shall deliver to Mount Sinai an annual updated Development Plan in accordance with Section 6.5, which shall set forth in reasonable detail the planned Development activities for such Calendar Year and the subsequent Calendar Year, as well as the anticipated timeline and budget for such activities. Such updated Development Plan shall replace the prior Development Plan and become incorporated into and a part of this Agreement only upon written approval of Mount Sinai of such updated Development Plan. Licensee has not fulfilled its obligations under this Section 3.1 until such approval of Mount Sinai of such updated Development Plan is provided. Licensee will promptly provide additional information as reasonably requested by Mount Sinai.

3.2. Commercially Reasonable Efforts. Throughout the Term and at Licensee’s sole cost and expense, Licensee shall use no less than Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field of Use and Territory as soon as reasonably practicable. Licensee shall maintain such active diligent Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products at all times throughout the Term. Solely seeking a Sublicense is not Commercially Reasonable Efforts.

3.3. Due Diligence Events. In addition, Licensee shall perform at least the following obligations as part of its Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products required under this Article 3:

(a) Materially perform the activities set forth in the applicable Development Plan, unless bona fide circumstances arise that make the achievement of the Development Plan impractical or the Licensee is unable to perform its obligations pursuant to the Development Plan due to the actions or omissions of Mount Sinai.

(b) Licensee raises Additional Financing pursuant to the terms and conditions of the SPA.

3.4 Failure to Achieve Due Diligence Events. If Licensee fails to exercise Commercially Reasonable Efforts to achieve the above due diligence obligation or, if despite consistent use of Commercially Reasonable Efforts, Licensee is unable to achieve the due diligence events set forth in Section 3.3 above, then Mount Sinai at its option, in its sole discretion, may: (a) terminate this License in whole or in part immediately upon provision of written notice to Licensee; (b) convert the License in whole or in part to non-exclusive license status immediately

 

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upon providing notice to such effect to Licensee (in such event no amendment or further writing will be required to convert the License to non-exclusive status); (c) meet with License to arrange for revision of the due diligence events; or (d) require that Licensee sublicense the License in whole or in part to a party selected by Mount Sinai. It is agreed and understood that in the event Licensee fails to achieve the due diligence events set forth in Section 3.3 above and has not consistently used Commercially Reasonable Efforts to do so, then Mount Sinai may exercise any and all remedies available at law or otherwise.

4. FEES, ROYALTIES, AND PAYMENTS

4.1. Running Royalties. As additional consideration for the license and other rights granted under this Agreement, during the Royalty Term, Licensee shall pay to Mount Sinai the annual percentage of Net Sales on a Licensed Product-by-Licensed Product basis as follows:

Worldwide Net Sales for the Applicable Calendar Year in the Territory	Running Royalty Percentage
For Net Sales of a Licensed Product exploiting a Valid Claim	[***]%
For Net Sales of a Licensed Product not exploiting a Valid Claim	[***]%

For the avoidance of doubt, the running royalties outlined in Section 4.1 above are payable on an annual worldwide Net Sales basis, cumulative for each Calendar Year, within thirty (30) days of December 31st of each Calendar Year.

If a Licensed Product is sold, combined or bundled as a single product with one or more other products licensed to Licensee by Mount Sinai (in this Agreement or any other agreement) and invoiced as one product, then the running royalty payable across all such licenses shall be the highest applicable royalty percentage and not the aggregate of each license running royalty added together.

 

4.2. Combination Products. In the event that a Licensed Product is sold as a Combination Product, the Net Sales of such Licensed Product for the purpose of calculating royalties owed under this Agreement shall be determined on a country-by-country basis by multiplying the Net Sales of such Combination Product as defined in Section 1.3, by the fraction A/(A+B), where “A” is the average sale price of the Licensed Product in the relevant country if sold separately, and “B” is the average sale price of additional algorithm(s) in such country, if sold separately. Regarding prices comprised in the average price when sold separately referred to above, if these are available for different use volumes of the Licensed Product or additional algorithm(s) than those that are included in the Combination Product, then Licensee shall be entitled to make a proportional adjustment to such prices in calculating the royalty-bearing Net Sales of the Combination Product. In the event that the additional algorithm(s) are other Licensed Products from Mount Sinai the total Net Sales of the Combination Product shall be pro-rated between the number of such Licensed Products sold. In the event that separate sales of products or services incorporating the additional algorithm were not made during the preceding calendar Quarter, then the Net Sales on the Combination Products shall be reasonably allocated between

 

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such Licensed Product and such additional algorithm based upon their relative value and proprietary protection as mutually agreed upon in good faith by Mount Sinai and Licensee. For clarity, notwithstanding anything else in this Section or elsewhere in this Agreement, regardless of any royalty deductions made for Combination Products under this Section 4.2, the royalty paid to Mount Sinai on the Net Sale of any Licensed Product shall not be reduced to an amount lower than two percent (2%) of the relevant Net Sale.

4.3. Sublicense Fees. In accordance with this Section, Licensee shall pay to Mount Sinai [***]% of all Sublicense Income within sixty (60) days after receipt of such Sublicense Income. All consideration received by Licensee from any Sublicensee shall be fully auditable by Mount Sinai pursuant to the audit right in Section 6.10. Licensee shall not receive from any Sublicensee anything of value in lieu of cash payments in consideration for any Sublicense without the express prior written consent of Mount Sinai. Any non-cash consideration, including, without limitation, equity in other companies or equity investments in Licensee, received by Licensee from any Sublicensee will be valued at its Fair Market Value as of the date of receipt by Licensee for purposes of calculating Sublicense Income. Licensee shall not sell or transfer, voluntarily or involuntarily, to a Third Party any of Licensee’s interest in any portion of any future sublicensing revenues under any Sublicense without the prior written consent of Mount Sinai.

5. INTENTIONALLY RESERVED

6. REPORTS

6.1. Reporting of First Commercial Sale. In addition to the Quarterly Reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of First Commercial Sale in each Jurisdiction within thirty (30) days of the occurrence thereof.

6.2. Reporting of Regulatory Approvals. In addition to the Quarterly reports required under Section 6.3, Licensee shall provide a written report to Mount Sinai setting forth the date of each Regulatory Approval in each Jurisdiction within three (3) days of the occurrence thereof.

6.3. Quarterly Royalty and Sublicense Income Report. Within thirty (30) days after the Quarter in which any First Commercial Sale occurs, and within thirty (30) days after each Quarter thereafter, Licensee shall provide Mount Sinai with a written report detailing the amount of Gross Sales from Commercial Sales of Licensed Products during the preceding Quarter, the amount of Net Sales made during such Quarter and the royalty payments due to Mount Sinai for such Quarter pursuant to Article 4 (each such report, a “Quarterly Report”). Each Quarterly Report shall include at least the following:

(a) accounting for Net Sales, detailing the Gross Sales and specifying the deductions taken to arrive at Net Sales, listed by Licensed Product and by Jurisdiction;

(b) total royalty payments due to Mount Sinai by Licensed Product and by Jurisdiction;

(c) names and addresses of all Sublicensees, all Sublicense Income received by Licensee from such Sublicensees and all amounts payable under Section 4.3, as applicable.

 

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6.4. Each Quarterly Report shall be in substantially similar form as Exhibit E, attached hereto or to such other form as Mount Sinai may provide from time to time. Each Quarterly Report shall be certified as true and correct by an officer of Licensee and be reasonably acceptable to Mount Sinai. With each Quarterly Report submitted, Licensee shall pay to Mount Sinai the royalties and fees due and payable under this Agreement, to the extent not already paid pursuant to Article 4. If no royalties or fees are due and payable, Licensee shall so report. Licensee’s failure to timely submit to Mount Sinai payment or a Quarterly Report substantially in the required form will constitute a material breach of this Agreement permitting Mount Sinai to terminate this Agreement in full pursuant to Section 13.1(a) hereof in addition to Mount Sinai’s right to exercise any and all remedies at law or otherwise.

6.5. Annual Progress Report and Development Plan. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date while a Licensed Product is under development, Licensee shall submit to Mount Sinai (a) an updated Development Plan, in accordance with Section 3.1 and (b) a written report covering Licensee’s and/or its Sublicensee’s, as applicable, progress evidencing no less than Commercially Reasonable Efforts regarding: (i) development and testing of all Licensed Products; (ii) achieving the due diligence events specified in Section 3.3; and (iii) preparing, filing, and obtaining and maintaining of any Regulatory Approvals; and (iv) plans for the upcoming year related to commercializing the Licensed Product(s) (an “Annual Progress Report”). For clarity, SEC and other regulatory filings, marketing authorizations, and/or press releases are not sufficient to satisfy the requirements of the Annual Progress Report.

6.6. Annual Sublicense Reports. Within fifteen (15) business days of the beginning of each Calendar Year following the Effective Date, Licensee shall submit to Mount Sinai a written report setting forth: (a) the names and addresses of all Sublicensees, (b) all Sublicense Income received by Licensee from each Sublicensee during the preceding Calendar Year, and (c) all amounts payable or paid to Mount Sinai under Section 4.3 during the preceding Calendar Year. In addition, within thirty (30) days of Licensee’s receipt of any Sublicense Income, Licensee shall submit to Mount Sinai the amount payable to Mount Sinai under Section 4.3, together with a written report describing the triggering event, the gross amount of Sublicense Income received, any applicable fees, credits or deductions, and the net amount of Sublicense Income payable to Mount Sinai. After any First Commercial Sale has occurred, Licensee’s obligation to provide Annual Sublicense Reports shall be satisfied by providing Quarterly Reports in accordance with Section 6.3.

6.7. Payment and Currency. All dollar amounts referred to in this Agreement are expressed in United States dollars and Licensee shall make all payments due to Mount Sinai in U.S. Dollars, without deduction of exchange, collection, wiring fees, bank fees, or any other charges, in accordance with the appropriate sections requiring payments. Each payment will reference Agreement [AGR-31517]. All payments to Mount Sinai will be made in U.S. Dollars by wire transfer or check payable to the Icahn School of Medicine at Mount Sinai and sent to:

By Electronic Transfer:	By Check:

 

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Bank Name: JPMorgan Chase Manhattan Bank Account Name: Icahn School of Medicine at Mount Sinai MSSM Ref: For Domestic Transfer: Account #: 20000011067331 Routing ABA Number for Wire Transfer: 021000021 Routing ABA Number for ACH Transfer: 028000024 For International Transfers: Account #: 134691296 Swift #: CHASUS33 Bank Contact Person: Elaine Martinez Telephone: 718-242-0173 Fax: 866-426-9083 Address: 270 Park Avenue, 43rd floor New York, NY 10017

Payable to: Icahn School of Medicine at Mount Sinai One Gustave L. Levy Place, Box 1675 New York, NY 10029 Attn: Mount Sinai Innovation Partners

 

6.8. Currency Exchange; Taxes. For converting any Net Sales made in a currency other than United States Dollars, the Parties will use the conversion rate published in the Wall Street Journal Eastern US Edition conversion rate, or other industry standard conversion rate approved in writing by Mount Sinai for the last day of the Quarter for which such royalty payment is due. All applicable currency exchange taxes and other currency exchange charges such as currency exchange duties, customs, tariffs, imposts and government-imposed currency exchange surcharges shall be borne by Licensee and will not be deducted from payments due to Mount Sinai.

6.9. Late Payments. In the event royalty payments or other fees are not received by Mount Sinai when due hereunder, Licensee shall pay to Mount Sinai interest charges that will accrue interest until paid at a rate equal to one (1) percentage point above the U.S. Prime Rate, as reported in the Wall Street Journal, Eastern Edition from time-to-time (or the maximum allowed by Law, if less), calculated on the number of days such payment is overdue.

6.10. Records and Audit Rights. Licensee shall keep, and cause its Sublicensees to keep, complete, true and accurate records and books containing all particulars that may be necessary for the purpose of showing the amounts payable to Mount Sinai hereunder. Copies of all such records and books shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. The records for each Quarter will be maintained for at least five (5) years after the Calendar Year in which the applicable report was submitted to Mount Sinai. Such books and the supporting data shall be open to inspection by Mount Sinai, its contractors or agents at all reasonable times for a term of five (5) years following the end of the Calendar Year to which they pertain, for the purpose of verifying Licensee’s royalty statement or compliance in other respects with this Agreement. Such access will be available to Mount Sinai, its contractors or agents upon not less than seven (7) days written notice to Licensee or its Sublicensee, as applicable, not more than twice each Calendar

 

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Year during the Term and once per Calendar Year after the expiration or termination of this Agreement. Should such inspection lead to the discovery of at least a five percent (5%) or five thousand dollar ($5,000) discrepancy in reporting to Mount Sinai’s detriment (whichever is greater), Licensee agrees to pay the full cost of such inspection. Whenever Licensee or its Sublicensee has its books and records audited by an independent certified public accountant with respect to any Quarter in which amounts are payable to Mount Sinai hereunder, Licensee and/or its Sublicensee, as applicable, will, within thirty (30) days of the conclusion of such audit, provide Mount Sinai with a written statement, certified by said auditor, setting forth the calculation of royalties, fees, and other payments due to Mount Sinai over the time period audited as determined from the books and records of such Entity, together with the payment of any outstanding amounts due to Mount Sinai. For clarity, any amounts shown to be owed pursuant to any audits conducted under this Section but unpaid will be due immediately and payable by Licensee within sixty (60) days after receipt of the auditor’s report.

7. CONFIDENTIALITY; PUBLICITY; USE OF NAME

7.1. “Confidential Information” means any and all information of a Party (the “Disclosing Party”), or such information of such Party’s or of Third Parties provided on behalf of such Party to the other Party (“Receiving Party”), that is disclosed in tangible form marked as “confidential” upon disclosure or, if disclosed in oral or other intangible form, is identified as confidential at the time of disclosure and summarized in a writing that is marked as “confidential” and provided to the Receiving Party within thirty (30) days of the intangible disclosure, provided however that failure to so mark, identify, or summarize shall not alter the status of such information as Confidential Information if a reasonable person would, based on the content and/or context of the disclosure, recognize such disclosure was intended as confidential. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate by written and/or electronic records: (i) is available to the public at the time of disclosure hereunder or, after disclosure, becomes a part of the public domain by publication or otherwise, through no breach by the Receiving Party; (ii) is already properly possessed by the Receiving Party prior to receipt from the Disclosing Party; (iii) was received by the Receiving Party without obligation of confidentiality or limitation on use from a Third Party who had the lawful right to disclose such information; or (iv) was independently developed by or for the Receiving Party by any person or persons who had no knowledge or benefit of the Disclosing Party’s Confidential Information, where the written or electronic records demonstrating such exception were created contemporaneously with such independent development.

7.2. Confidentiality. The Receiving Party shall maintain in confidence and not disclose to any Third Party any of Disclosing Party’s Confidential Information, using the same degree of care it uses to protect its own confidential information of a similar nature but in no event using less than a reasonable degree of care. The Receiving Party will use Disclosing Party’s Confidential Information solely as required to undertake its rights and obligations under this Agreement (the “Purpose”) and only during the Term. For clarity, except as provided for herein, the Purpose expressly excludes any use of Disclosing Party’s Confidential Information for (i) regulatory or patent filing purposes other than in express support of Licensed Products as permitted hereunder, or (ii) for initiation or pursuit of any proceeding to challenge the patentability, validity, or enforceability of any patent application or issued patent (or any portion thereof) that is owned

 

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or Controlled by Disclosing Party (including, e.g., via pre-issuance submissions, post grant review, or inter partes review). Any such excluded use is hereby deemed a material breach of this Agreement and in such event, notwithstanding anything to the contrary herein, the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party and seek resolution of such dispute in any court of competent jurisdiction notwithstanding any provisions herein regarding resolution of disputes between the Parties; in addition to any other relief granted to the non-breaching Party, the breaching Party shall pay to the non-breaching Party all costs such non-breaching Party incurs in such proceeding including in defense of such patent application or patent. Any such payment shall be made within thirty (30) days of written demand. The Receiving Party will ensure that its employees, independent contractors, and Sublicensees (“Recipient Individuals”) have access to Disclosing Party’s Confidential Information only on a need to know basis, are informed of all the obligations attaching to such Confidential Information in advance of being given access to it, and are required to comply with such Receiving Party’s obligations under this Agreement Receiving Party shall be fully responsible to Disclosing Party for such compliance by its Recipient Individuals. If such Recipient Individual is not an employee of a Party hereto, then Recipient will enter into a legally binding confidentiality agreement with provisions at least as strict as the confidentiality obligations and use restrictions herein, with such Recipient Individual prior to Disclosing Party’s Confidential Information to such Recipient Individual, and Receiving Party will be fully responsible to Disclosing Party for compliance with such obligations and restrictions by such Recipient Individual.

7.3. Notwithstanding the above Section 7.2, the Receiving Party may disclose Disclosing Party’s Confidential Information to the limited extent required by Law, court order, other governmental authority with jurisdiction, provided that the Receiving Party (a) promptly provides the Disclosing Party, to the extent legally permissible, with written notice of such requirement, (b) uses no less than reasonable efforts to obtain confidential treatment of such Disclosing Party’s Confidential Information by such court or governmental authority, and (c) cooperates, at the Disclosing Party’s written request and expense, with the Disclosing Party’s legal efforts to prevent or limit the scope of such required disclosure; the Receiving Party shall in all other respects continue to hold such Confidential Information as confidential and subject to all obligations of this Article 7. The Receiving Party’s obligations of confidentiality and non-use restrictions as set forth in this Article 7 shall remain in effect for a period of five (5) years from receipt of the Confidential Information from the Disclosing Party.

7.4. Each Party agrees to treat the terms and conditions of this Agreement as the Confidential Information of the other Party, provided however that in addition to the above exceptions, each Party shall be free to disclose any of the terms of this Agreement (i) to the extent that a Party is advised by its counsel that it is required to do so by the regulations or rules of any relevant stock exchange, (ii) to actual or prospective Sublicensees, (iii) to its accountants, attorneys and other professional advisors, or (iv) in connection with a financing, merger, consolidation, acquisition or a permitted assignment of this Agreement; provided that (l) in the case of any disclosure under clause (ii), (iii), or (iv) above, the recipient(s) are obligated and do so undertake to keep such terms of this Agreement confidential to the same extent as said Party (said Party being fully responsible to the other Party for such recipients’ compliance), and (2) in the case of disclosure under clause (i), such disclosure shall be in accordance with Section 7.3.

 

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7.5. Publicity. The Parties may issue a press release only upon mutual written agreement and, if so, will cooperate to determine the timing and content of such press release.

7.6. Use of Either Party’s Name. Except as required by law or regulation, neither Party nor its Sublicensees, employees or agents may use the name, logo, seal, trademark, or service mark of the other Party, including any school or organization of Mount Sinai, or, any faculty member, student, employee, officer, director, trustee, or other representative of such other Party in the context of their employment or association with such other Party (or any adaptation of any of the foregoing) (collectively, “Name”) without the prior written consent of such other Party, which consent will be granted or denied in the sole discretion of the Party whose name is sought to be used. In the event consent is granted, the requesting Party shall comply with any restrictions placed upon such use by the Party granting consent. Any request for use of Mount Sinai’s Name must be first submitted to and approved in writing by Mount Sinai Innovation Partners.

8. PATENT PROSECUTION AND REIMBURSEMENT

8.1. Patent Prosecution. Mount Sinai shall control the Prosecution of Licensed Patents and the selection of patent counsel. Mount Sinai will request that copies of all documents prepared by patent counsel be provided to Licensee for review and comment prior to filing, to the extent practicable under the circumstances. Mount Sinai will consider any comments from Licensee in good faith; provided, however, that Mount Sinai shall have final authority regarding all Prosecution decisions. All Licensed Patents will be in Mount Sinai’s name, and Licensee acknowledges that Mount Sinai shall remain the sole client of such patent counsel and in every case shall retain the right to make the final decision with respect to any Prosecution matter.

8.2. Patent Reimbursement. Within thirty (30) days of the Effective Date, Licensee shall reimburse Mount Sinai for all expenses in connection with the preparation, filing, prosecution, and maintenance of all Licensed Patents, including, without limitation, attorneys’ fees, transactions expenses, official fees, and all other charges (e.g. taxes, annuities or maintenance fees on such Licensed Patents) (collectively, “Patent Costs”) accrued prior to the Effective Date, which amount is currently estimated at Twenty-Seven Thousand Thirty-Eight ($27,038) U.S. Dollars and is subject to change. In addition, Licensee shall pay, within thirty (30) days of receipt of invoice, all Patent Costs that accrue from the Effective Date through the end of the Term. Licensee agrees to receive invoices directly from patent counsel, with Mount Sinai receiving a copy of such invoice. Licensee shall pay such invoices directly to patent counsel with written confirmation of payment to Mount Sinai. Further, the Parties agree to enter into a Client and Billing Agreement with patent counsel substantially in the form of Exhibit F.

8.3. Patent Extension. Licensee shall, within three (3) days of the triggering event, notify Mount Sinai of any Regulatory Approval for any Licensed Product for which an application for Patent term extension may be based, including with respect to any Third Party product, or any other event in any Jurisdiction that would enable Mount Sinai or Licensee as appropriate to apply for Patent term extension or other regulatory or marketing exclusivity or extension thereof in any Jurisdiction. The Parties agree to cooperate fully with each other to provide any information or documentation necessary to support an application for Patent term extension or other regulatory or marketing exclusivity.

 

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8.4. Abandonment. Licensee will have the right to discontinue its obligation to pay for the Prosecution of any Licensed Patent hereunder in a particular Jurisdiction (“Abandoned Patent”). In each such instance, Licensee will provide Mount Sinai with written notice at least sixty (60) days prior to any office action to enable Mount Sinai to take appropriate action (“Abandon Notice”). Licensee shall be released from its obligation to reimburse Mount Sinai for the expenses incurred after sixty (60) days from receipt of an Abandon Notice; provided, however, that expenses incurred or authorized prior to the receipt by Mount Sinai of such Abandon Notice shall be deemed incurred prior to the notice. If any Licensed Patent becomes an Abandoned Patent hereunder, any license granted by Mount Sinai to Licensee hereunder with respect to such Abandoned Patent will immediately and automatically terminate, and Licensee will have no rights whatsoever to Exploit such Abandoned Patent. For clarity, Mount Sinai will then be free, without further notice or obligation to Licensee, to dispose of such Abandoned Patent in any manner.

8.5. Failure to Timely Pay Patent Expenses. Should Licensee decline or fail to pay by the deadlines set forth herein the costs and legal fees for the Prosecution any Licensed Patent licensed hereunder and payable under this Agreement, Mount Sinai may, at its sole discretion, elect to (a) exclude by written notice the particular Licensed Patent from this Agreement, without terminating the Agreement in its entirety, and such Licensed Patent shall be deemed an Abandoned Patent under this Agreement upon such notice, or (b) Mount Sinai may terminate this Agreement in full pursuant to Article 13 hereof.

9. INFRINGEMENT

9.1. Notice. If either Party becomes aware of any suspected infringement of any Licensed Patent or of any Infringement Action, such Party shall promptly notify the other Party thereof. Licensee and Mount Sinai will consult each other in a timely manner concerning any appropriate response to such suspected infringement or Infringement Action.

9.2. Procedure.

(a) As between the Parties, Licensee will have the first right to pursue any Infringement Action against an infringing Third Party at its own expense. If, within fifteen (15) days after the notice, pursuant to Section 9.1, of any suspected infringement or Infringement Action, Licensee has elected not to initiate, defend, or otherwise resolve such Infringement Action, then Mount Sinai shall have the right, but not the obligation, to initiate, control, pursue, and/or defend such Infringement Action at its own expense.

(b) The Party controlling any Infringement Action shall use reasonable efforts to: (i) inform the other Party of the status of such Infringement Action on a regular basis or as requested by the Party without primary control of the Infringement Action; (ii) provide to the other Party copies of any documents relating to the Infringement Action promptly upon receipt from any Third Party and/or, if practicable, prior to filing such documents; (iii) consult with the other Party regarding the advisability of any contemplated course of action; and (iv) consider any comments from the other Party regarding the Infringement Action. The Party without control of an Infringement Action shall cooperate, at controlling Party’s expense (including reasonable fees and other expenses for the non-controlling Party’s attorney), with the Party controlling such Infringement Action to the extent reasonably possible, including joining the Infringement Action

 

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if necessary or desirable. Non-controlling Party’s expenses to be paid by controlling Party within thirty (30) days of invoice.

(c) Licensee shall not enter into a settlement of any Infringement Action that (i) restricts the scope of, (ii) adversely affects the enforceability of, (iii) grants a license to, or (iv) provides any other settlement action that adversely affects the value of this Agreement or any Patents related to a Licensed Product, or includes admission of fault or wrongdoing on behalf of Mount Sinai, without the prior written consent of Mount Sinai. For clarity, if the settlement of any Infringement Action includes granting a Sublicense, Licensee shall pay to Mount Sinai royalties on any Net Sales by such Sublicensee and a percentage of Sublicense Income, if applicable, in accordance with Article 4 in addition to any other share of recoveries due to Mount Sinai under this Section. For the purposes of settling an Infringement Action, a license granted as a non-revenue cross license shall be considered as a Sublicense, and must comply with all Sublicensing requirement herein, and the Fair Market Value of such cross license shall be considered Sublicense Income.

9.3. Recoveries.

Any recovery obtained by a Party as the controlling Party, that results from any Infringement Action, by settlement

or otherwise, shall be applied in the following order of priority: (a) to reimburse each Party’s litigation costs (including attorneys’ fees) incurred in connection with such proceeding and not otherwise recovered or reimbursed; and (b) the remainder of the recovery shall be split between the Parties with [***]% going to the controlling Party and [***]% going to the non-controlling Party.

 

10. REPRESENTATIONS; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITIES

10.1. Certain Representations. Each Party represents to the other Party that, as of the Effective Date:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; and

(b) this Agreement has been duly authorized and executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any applicable Law or applicable regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

10.2. Health Care Law. Licensee represents, warrants, and covenants to Mount Sinai that:

(a) Licensee and its agents and employees who are or shall be involved in the performance of this Agreement, have not been, and during the Term of this Agreement shall not be, debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for

 

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which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(b) to its reasonable knowledge, no Third Party that, on behalf of Licensee, has been or during the Term of this Agreement will be, involved in the Development, Manufacture or Commercialization of the Licensed Products (each a “Licensee Partner”), has been or will be debarred, excluded or disqualified (or convicted of any crime or engaged in any conduct for which debarment, exclusion or disqualification is mandated) under any Health Care Law, including pursuant to 21 U.S.C. § 335a;

(c) Licensee and its agents and employees involved in the performance of this Agreement, and Licensee Partners, shall perform this Agreement in full compliance with all applicable Health Care Laws; and

(d) Licensee shall notify Mount Sinai in writing immediately in the event of a violation of any of the foregoing, and shall, with respect to any Entity involved in such violation, promptly remove such Entity from performing any role under this Agreement.

10.3. DISCLAIMER OF WARRANTIES. THE LICENSED PATENTS, EXCLUSIVELY LICENSED TECHNICAL INFORMATION, KNOW-HOW, LICENSED PRODUCTS, AND ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. MOUNT SINAI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, SCOPE, OR TITLE WITH RESPECT THERETO.

10.4. DISCLAIMER OF LIABILITIES. MOUNT SINAI WILL NOT BE LIABLE TO LICENSEE, ITS SUCCESSORS OR ASSIGNS, OR TO ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM OR ATTRIBUTABLE TO USE BY LICENSEE OR ITS SUBLICENSEES OF THE MOUNT SINAI TECHNOLOGY, KNOW-HOW, LICENSED PRODUCTS, OR ANY OTHER TECHNOLOGY OR INFORMATION PROVIDED OR LICENSED UNDER THIS AGREEMENT, OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS, OR FOR LOST PROFITS, BUSINESS INTERRUPTION, INCIDENTIAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY KIND.

10.5. WITHOUT LIMITING THE GENERALITY OF ANYTHING IN THIS ARTICLE 10, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS:

(a) A WARRANTY OR REPRESENTATION BY MOUNT SINAI THAT ANYTHING MADE, USED, SOLD, OFFERED FOR SALE, DISTRIBUTED, OR AS APPLICABLE PUBLICLY PERFORMED, PUBLICLY DISPLAYED, DERIVED FROM, OR OTHERWISE DISPOSED OF PURSUANT TO ANY LICENSE GRANTED UNDER THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS;

 

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(b) AN OBLIGATION BY MOUNT SINAI TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT, MISAPPROPRIATION, OR OTHER SIMILAR CAUSES OF ACTION RELATED TO THE MOUNT SINAI TECHNOLOGY, OR

(c) CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF MOUNT SINAI OTHER THAN AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN

11. INDEMNIFICATION

11.1. Indemnification. Licensee will indemnify, hold harmless, and at Mount Sinai’s option, shall defend Mount Sinai, and its trustees, officers, faculty, agents, employees and students (each, an “Indemnified Party”) from and against any and all claims, actions, liabilities, losses, damages, judgments, costs or expenses suffered or incurred by the Indemnified Parties, including attorneys’ fees and related costs (collectively, “Liabilities”), arising out of or resulting from:

(a) the exercise of any license granted under this Agreement, whether by Licensee, its Sublicensees, assignees, vendors or associated Third Parties;

(b) any breach of this Agreement or any Sublicense by Licensee or its Sublicensees;

(c) the enforcement of this Article 11 by any Indemnified Party; and/or

(d) any willful misconduct, negligent act or omission of Licensee or its Sublicensees, or any of Licensee’s or its Sublicensee’s officers, directors, employees or agents, with respect to its obligations hereunder or with respect to applicable law or regulation;

except in each case to the extent such Liabilities result solely from the gross negligence or willful misconduct of an Indemnified Party. Liabilities under this Section include, but are not limited to, Liabilities arising in connection with: (i) the use by a Third Party of a Licensed Product that was Developed, Manufactured or Commercialized by Licensee, Sublicensees, assignees, vendors or Third Parties; (ii) a claim by a Third Party that the Mount Sinai Technology, or the design, composition, or Exploitation of any Licensed Product infringes or violates or appropriates any patent, copyright, trade secret, trademark or other intellectual property right of such Third Party; (iii) clinical trials or studies conducted by or on behalf of Licensee, its Sublicensees, assignees, vendors or associated Third Parties relating to the Mount Sinai Technology or Licensed Products, such as claims by or on behalf of a human subject of any such trial or study; or (iv) a failure to perform under this Agreement or any Sublicense in material compliance with all applicable Laws, including, without limitation, all Health Care Laws.

11.2. Indemnification Procedure. Indemnified Party will (a) promptly provide Licensee with written notice of any Liability that is indemnifiable under this Article 11, (b) giving Licensee sole control over the defense and settlement of such Liabilities, and (c) giving Licensee, at Licensee’s request and expense, all reasonably requested information and assistance to assist in the defense and settlement of any such Liabilities, provided, however, that Licensee shall not settle

 

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or compromise any Liabilities in any manner that may impose restrictions or obligations on any Indemnified Party, or that grants any rights to the Licensed Patents, Exclusively Licensed Technical Information, Know-How, or Licensed Products (other than a permitted Sublicense), or that concedes any fault or wrongdoing on the part of Indemnified Party, without the Indemnified Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed). If Licensee fails or declines to assume the defense against any claim or action within thirty (30) days after notice thereof, then Mount Sinai may assume and control the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related to such claim or action will be conclusively deemed a liability of Licensee. The indemnification rights of the Indemnified Parties under this Article 11 are in addition to all other rights that an Indemnified Party may have at law, in equity or otherwise.

12. INSURANCE

12.1. Coverages. Licensee will procure and maintain insurance policies for the following coverages with respect to personal injury, bodily injury, property damage and contractual liability arising out of Licensee’s performance under this Agreement as follows: (a) during the Term, comprehensive general liability, including broad form and contractual liability, in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate, written on an occurrence-basis, with no deductible, containing a separation of insureds provision, with additional coverage for broad form and contractual liability, completed operations; (b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of One Million U.S. Dollars ($1,000,000 USD) combined single limit per occurrence and in the aggregate; and (c) prior to the sale of the first Licensed Product, product liability coverage, in a minimum amount of Three Million U.S. Dollars ($3,000,000 USD) combined single limit per occurrence and in the aggregate. Mount Sinai may review periodically the adequacy of the minimum amounts of insurance for each type of coverage required by this Article 12, and Mount Sinai reserves the right to request Licensee to adjust the limits accordingly, such request not to be unreasonably delayed, conditioned, or denied.

12.2. Other Requirements. Any policies of insurance required by Section 12.1 will be issued by an insurance carrier with an A.M. Best rating of “A minus” or better and will name Mount Sinai as an additional insured, on a primary and non-contributory basis, with respect to Licensee’s performance under this Agreement. Licensee will provide Mount Sinai with insurance certificates evidencing the required coverage within thirty (30) days after the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance carrier will notify Mount Sinai in writing at least thirty (30) days prior to the cancellation or material change in coverage.

12.3. For clarity, the insurance coverage required by this Article 12 is the total coverage required of Licensee with respect to this Agreement and all of the Non-Exclusive Licenses and Exclusive Licenses in the aggregate.

13. TERM AND TERMINATION

13.1. Termination by Mount Sinai.

 

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(a) For Cause. Mount Sinai may give written notice of default to Licensee, if Licensee: (i) materially breaches any obligation, covenant, condition, or undertaking of this Agreement to be performed by it hereunder (including e.g. if Licensee should cease or fail to undertake Commercially Reasonable Efforts with respect to Licensed Products, fail to make any payment at the time such payment is due, fail to maintain the insurance coverage required hereunder, or fail to timely and sufficiently submit any Quarterly Report, Annual Progress Report, or Development Plan); (ii) fails to timely provide the initial Development Plan or any annual updated Development Plan; or (iii) fails to achieve any Diligence event described in Section 3.3. If Licensee should fail to cure such default within ninety (90 days of such written notice, then Mount Sinai shall have the right to terminate this Agreement, and all of the rights, privileges, and license granted hereunder, with immediate effect at the end of such ninety (90) days.

(b) Failure to Raise Required Additional Financing. If Licensee fails to raise Additional Financing as set forth in the SPA, then Mount Sinai shall have the right to terminate this Agreement immediately upon written notice to Licensee, without opportunity to cure.

(c) Event of Bankruptcy. If Licensee experiences an Event of Bankruptcy, then Licensee shall notify Mount Sinai immediately. For purposes of this provision, the term “Event of Bankruptcy” means, with respect to a Party: (a) filing by such Party in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets; (b) such Party being served with an involuntary petition against such Party, filed in any insolvency proceeding, where such petition has not been dismissed within sixty (60) days after the filing thereof; (c) such Party proposing or being a party to any dissolution or liquidation of such Party; or (d) such Party making a general assignment for the benefit of creditors. Mount Sinai has the right to immediately terminate this Agreement after sixty (60) days of such notice of an Event of Bankruptcy provided that Licensee has not provided to Mount Sinai sufficient documentation that demonstrates Licensee is no longer under an Event of Bankruptcy.

(d) Cessation of Business. If Licensee at any time (i) ceases to carry on its business with respect to the rights granted in this Agreement, (ii) liquidates all or a material portion of its assets or business locations, (iii) employs an agent or other third party to conduct a program of closings, liquidations or sales of any material portion of its business, (iv) is no longer a Going Concern, or (v) ceases to be listed on a public stock exchange (other than in connection with a Change of Control), then this Agreement shall terminate immediately upon written notice by Mount Sinai, without opportunity to cure. “Going Concern” is defined by the Auditing Standards Board SAS No. 132.

(e) Challenge of Patents. Licensee acknowledges and agrees that nothing herein shall be construed as preventing it from challenging the validity or enforceability of the Licensed Patents at any time. In the event that Licensee or its Sublicensee shall, however, challenge the validity or enforceability of any of the Licensed Patents in any forum through any means, or otherwise indicate the remittance of any payment due under this Agreement is made under protest or with any objection, Licensee agrees that Mount Sinai shall have the right, but not the obligation, in addition to any other remedy it may have available to it at law and/or in equity, to terminate this Agreement immediately upon providing written notice of the same to Licensee. Mount Sinai in

 

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response to such challenge by Licensee or following termination by Mount Sinai under this subsection may seek redress in any court of competent jurisdiction in its sole discretion notwithstanding any other provision of this Agreement.

13.2. Termination by Licensee. Licensee may terminate this Agreement, in whole or in part, at any time, without cause, by giving written notice thereof to Mount Sinai. Such termination shall become effective sixty (60) days after such notice and all of Licensee’s rights associated therewith shall cease as of such effective date.

13.3 Change of Control. For avoidance of doubt, a Change of Control shall not trigger termination of this Agreement.

 

14. EFFECT OF TERMINATION

14.1. Continuing Obligations of Licensee. Upon expiration or termination of this Agreement, Licensee shall promptly (within seven (7) business days) return to Mount Sinai or destroy all Know-How licensed hereunder if and to the extent the same was disclosed to Licensee in written or other tangible form or copied in written or other tangible form by Licensee. In the event of destruction, Licensee shall certify in a writing signed by Licensee’s authorized signatory within seven (7) business days of such destruction, that all such Know-How has been destroyed. Termination or expiration of this Agreement shall not relieve Licensee of any monetary or any other obligation or liability accrued hereunder prior to the effective date of such termination or expiration, or rescind or give rise to any right to rescind any payments made or other consideration given to Mount Sinai hereunder prior to the effective date of such termination; nor shall such termination or expiration affect in any manner any rights of Mount Sinai arising under this Agreement prior to the date of such termination. Licensee shall pay all costs incurred by Mount Sinai in enforcing any obligation of Licensee or accrued right of Mount Sinai including, but not limited to, attorney’s fees.

14.2. Survival of Terms. In addition to any provision which by its terms contemplates performance after the Term, the following provisions shall survive the expiration or termination of this Agreement: Articles 1 (Definitions), 4 (Fees, Royalties, and Payments), 6 (Reports), 7 (Confidentiality; Publicity; Use of Name), 9 (Infringement), 10 (Representations; Disclaimer of Warranties; Limitation of Liabilities), 11 (Indemnification), 12 (Insurance), 14 (Effect of Termination), and 15 (Additional Provisions).

14.3. Licensed Product Data. A copy of all Licensed Product Data must be transferred to Mount Sinai within forty-five (45) days of termination of this Agreement for any reason and shall become the sole property of Mount Sinai. Mount Sinai shall have a non-exclusive, world-wide, perpetual, non-cancelable, royalty-free, fully paid-up license, with right to sublicense, to use such Licensed Product Data to further advance the development of Mount Sinai technologies (e.g. the Licensed Patents, Exclusively Licensed Technology, and Know-How).

15. ADDITIONAL PROVISIONS

15.1. Regulatory. Licensee acknowledges that the Mount Sinai Technology has not received any governmental approval, clearance, or similar designation (“Approvals”), does not

 

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necessarily satisfy the requirements of any governmental body or other organization, and has not been validated for clinical or diagnostic use, for safety and effectiveness, or for any other specific use or application. Licensee is solely responsible for compliance with any and all applicable laws, rules and regulations, and governmental policies that pertain to Licensee’s use of the Mount Sinai Technology, including, but not limited to, obtaining any necessary Approvals and conforming with any regional, territorial or other regulatory requirements, or the requirements.

15.2. Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint venture between the Parties. At no time will either Party make commitments or incur any charges or expenses for or on behalf of the other Party.

15.3. Compliance with Laws. Licensee must comply with all prevailing Laws that apply to its activities or obligations under this Agreement. For example, Licensee will comply with applicable United States export Laws. The transfer of certain technical data and commodities may require a license from the applicable agency of the United States government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of the agency. Mount Sinai does not represent that no license is required, or that, if required, the license will issue.

15.4. Export Control. Licensee acknowledges that the export, re-export, or transfer of certain technology, software, or hardware (collectively, “Items”) may be subject to applicable laws and regulations of the United States and other jurisdictions, including but not limited to the U.S. Department of Commerce’s Export Administration Regulations (“EAR”), as set forth in 15 C.F.R. 730-774, the U.S. Department of State’s International Traffic in Arms Regulations (“ITAR”), as set forth in 22 C.F.R. 120-130, and the economic sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), as set forth in 31 C.F.R. 500-598 and certain executive orders (collectively, “Trade Control Laws”); as well as the laws and regulations of the U.S. Food and Drug Administration (“FDA”), U.S. Department of Agriculture (“USDA”), and U.S. Centers for Disease Control and Prevention (“CDC”). Notwithstanding any other provision of this Agreement, Mount Sinai and Licensee agree to comply fully with all applicable Trade Control Laws in the performance of this Agreement and the parties will not cause each other to be in violation of applicable Trade Control Laws. Neither Mount Sinai nor Licensee shall be required to take, or to refrain from taking, any action or obligation under this Agreement, where to do so would be inconsistent with or potentially violate or incur a penalty under applicable Trade Control Laws or other applicable laws, including but not limited to the anti-boycott laws administered by the U.S. Commerce and Treasury Departments. Mount Sinai shall have the sole discretion to refrain from being directly or indirectly involved in the provision of Items that may be prohibited by applicable Trade Control Laws. Licensee represents and warrants that Licensee, any parent, subsidiary, or affiliate of Licensee, any of its sub-distributors, and agents deployed in connection with the sale, supply, and delivery of any Items or services covered by the Agreement are not (i) on any list of designated parties created and maintained in line with Trade Control Laws by any country or intergovernmental or supranational organization or otherwise targeted by sanctions regimes including but not limited to those administered by the United States (“Restricted Parties”); (ii) located in, organized under the laws of, or ordinarily resident in any country or territory subject to comprehensive territorial sanctions regimes including but not limited to those

 

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administered by the United States (at present, applicable for Cuba, Iran, North Korea, and Syria, as well as the Crimea region and the so-called Donetsk People’s Republic and the Luhansk People’s Republic) (“Restricted Territories”); (iii) part of any government, including its agencies and instrumentalities, that are targeted by sanctions regimes including but not limited to those administered by the United States (“Sanctioned Government”); or (iv) owned (at 50% or more) or controlled, directly or indirectly, individually or in the aggregate, by a Restricted Party or Sanctioned Government. Licensee hereby acknowledges and confirms that, unless specifically authorized by Mount Sinai and in compliance with all applicable Trade Control Laws, the Licensee will not export, re-export, or transfer, directly or indirectly through third parties or otherwise, any Items or services covered by the Agreement to any Restricted Party or Sanctioned Country.

15.5. Marking. Licensee shall, and agrees to require its Sublicensees to, comply with any marking requirements of the intellectual property Laws of the applicable countries in the Territory, and particularly agrees to permanently and legibly mark all Licensed Products made, used, reproduced, or sold under the terms of this Agreement, or their respective containers. Any Sublicense shall impose on the Sublicensee obligations substantially similar to those imposed in this paragraph.

15.6. Modification, Waiver and Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each Party. Any waiver must be express and in writing. No waiver by either Party of a breach by the other Party will constitute a waiver of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

15.7. Assignment. This Agreement, or any part of it, is a personal contract between the Parties and the rights and interests of Licensee may not be assigned, either directly or by merger or operation of Law, without the prior written consent of Mount Sinai. Any such assignment will be valid only if: (a) at least thirty (30) days before the closing of the proposed transaction, Licensee has given Mount Sinai written notice and such background information as may be reasonably necessary to enable Mount Sinai to give an informed consent; (b) the assignee agrees in writing to be legally bound by this Agreement; and (c) the assignee agrees to deliver to Mount Sinai an updated Development Plan within forty-five (45) days after the closing of the proposed transaction. Any permitted assignment will not relieve Licensee of responsibility for performance of any obligation of Licensee that has accrued at the time of the assignment. Any assignment granted, or purported to be granted, contrary to this provision will be null and void.

15.8. Notices. Except as otherwise expressly set forth herein, any notice or other required communication under this Agreement (each, a “Notice”) must be in writing, addressed to the Party’s respective Notice Address, and delivered personally or by globally recognized express delivery service, charges prepaid. A Notice will be deemed delivered and received: (a) in the case of personal delivery, on the date of such delivery; and (b) in the case of a globally recognized express delivery service, five (5) days from transmittal by Mount Sinai to the address below. The “Notice Address” of each Party is as follows:

if to Mount Sinai, to:	Icahn School of Medicine at Mount Sinai Mount Sinai Innovation Partners One Gustave L. Levy Place, Box 1675

 

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	New York, NY 10029 Attention: Executive Vice President
and a copy of legal notices only to:	Icahn School of Medicine at Mount Sinai Place, One Gustave L. Levy Box 1099, New York, NY 10029 Attention: Office of General Counsel
if to Licensee, to:	Heart Test Laboratories, Inc. d/b/a HeartSciences 550 Reserve Street, Suite 360 Southlake, TX 76092 Attention: Chief Financial Officer

15.9. Severability and Reformation. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be revised by such court to be a valid or enforceable provision that comes as close as permitted by Law to the Parties’ original intent.

15.10. Headings and Counterparts. The headings of the articles and sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement. This Agreement may be executed in several counterparts, and execution signatures may be exchanged electronically including by facsimile or as scanned e‑mail attachments, and signatures so exchanged shall be considered as original for all purposes and taken together will constitute one and the same instrument.

15.11. Governing Law. This Agreement will be governed and construed in accordance with the Laws of the State of New York, without giving effect to the conflict of law provisions of any jurisdiction.

15.12. Dispute Resolution; Venue. Except as expressly stated otherwise herein, if a dispute arises between the Parties concerning any right or duty under this Agreement, then the Parties will confer, as soon as practicable, in an attempt to resolve the dispute amicably. If the Parties are unable to resolve the dispute amicably, the Parties each hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan, New York, New York.

15.13. Integration. This Agreement, together with all attached Exhibits, contains the entire agreement between the Parties with respect to the Mount Sinai Technology, and supersedes all other oral or written representations, statements, or agreements with respect to such subject matter, including but not limited to, the term sheet exchanged prior to this Agreement. For clarity, this Section 15.13 does not supersede the other Exclusive Licenses or Non-Exclusive Licenses.

15.14. Force Majeure. If either Party fails to fulfill its obligations hereunder (other than an obligation for the payment of money), when such failure is due to an act of God, or other circumstances beyond its reasonable control, including but not limited to fire, flood, civil commotion, riot, war (declared and undeclared), revolution, or embargoes, then said failure shall be excused for the duration of such event and for such a time thereafter as is reasonable to enable

 

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the parties to resume performance under this Agreement, provided however, that in no event shall such time extend for a period of more than one hundred eighty (180) days.

15.15. Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) all definitions set forth herein shall be deemed applicable whether the words defined are used herein with initial capital letters in the singular or the plural, (b) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (c) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (d) any reference herein to any Party shall be construed to include the Party’s successors and assigns, (e) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (f) provisions that require that a Party or the Parties “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (g) references to any specific Law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor Law, rule or regulation thereof, (h) words of any gender include each other gender, (j) words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (i) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation,” “inter alia” or words of similar import, and (j) “days” shall mean “calendar days.” In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

15.16. Business Day Requirements. In the event that any notice or other action is required to be taken by a Party under this Agreement on a day that is not a business day, then such notice or other action shall be deemed to be required to be taken on the next occurring business day.

15.17 Exhibits. All Exhibits hereto are hereby incorporated into and made a part of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

HEART TEST LABORATORIES, INC.:   BY:   NAME:   TITLE:	ICAHN SCHOOL OF MEDICINE AT Mount Sinai: BY:   NAME:   TITLE:

 

 

 

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Exhibit A

Securities Purchase Agreement

 

 

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Exhibit B

Licensed Patents

 

 

 

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Tech ID	Title	Serial Number	File Date
210710	Systems and Methods for Electrocardiogram Deep Learning Interpretability	63/283,719	11/29/2021
210710	Systems and Methods for Electrocardiogram Deep Learning Interpretability	PCT/US2022/080509	11/28/2022

 

 

 

Exclusively Licensed Technical Information

 

 

[***] Electrocardiogram Deep Learning Interpretability Toolbox

 

Inventors

• [***]

 

Description

• Software algorithm to represent and analyze the sub-waveforms of ECGs to improve the performance of a model to analyze full ECG waveforms

• Methodology using a sub-waveform representation that leverages the rhythmic pattern of ECG waveforms rather than changing neural network architecture

 

Publication

• [***]

 

 

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Exhibit C

Link to Licensee 10-K

 

https://dd7pmep5szm19.cloudfront.net/2729/0000950170-23-033424.htm

 

 

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Exhibit D

Initial Development Plan

[To be added within thirty (30) days of the Effective Date in accordance with the Agreement.]

 

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Exhibit E

Form of Quarterly Royalty and Sublicense Income Report

 

 

* Please add additional pages or line items as necessary

 

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Exhibit F

Client and Billing Agreement

 

 

 

 

 

 

 

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Exhibit 99.1

 

HeartSciences Signs Definitive Agreements with the Icahn School of Medicine at Mount Sinai to Commercialize Artificial Intelligence Cardiovascular Algorithms

 

Southlake, TX, September 21, 2023 (GLOBE NEWSWIRE) -- Heart Test Laboratories, Inc. d/b/a HeartSciences (Nasdaq: HSCS; HSCSW) ("HeartSciences" or the "Company"), an AI-powered medical technology company focused on transforming ECGs/EKGs to save lives through earlier detection of heart disease, today announced it has executed definitive agreements with the Icahn School of Medicine at Mount Sinai (Icahn Mount Sinai), in New York, NY, to commercialize electrocardiographic AI algorithms and assets, as well as a memorandum of understanding for on-going cooperation, collaboration and de-identified data access.

 

Icahn Mount Sinai has invested in the curation of tens of millions of ECG records, enabling its leading researchers to develop a range of disease detection algorithms and state-of-the art AI foundational methods for use with ECG waveforms. HeartSciences has entered into licenses covering rights to a variety of Icahn Mount Sinai’s AI algorithms, technologies and patent filings for the screening and diagnosis of cardiovascular disease.

 

HeartSciences and Icahn Mount Sinai have also entered into a memorandum of understanding for ongoing cooperation encompassing de-identified data access, on-going research, and the evaluation of HeartSciences’ MyoVista® wavECGTM.

 

"We are thrilled to announce this agreement with Icahn Mount Sinai and look forward to working with one of the top-ranked hospitals for cardiology in the world, at the cutting edge of AI-powered ECG development," said Andrew Simpson, CEO of HeartSciences. “This is a transformative event for the Company and will significantly strengthen our business, accelerate our development and broaden the range of prospective solutions that we will provide for patients.

 

In addition to providing algorithms on our MyoVista device we also intend to develop a cloud-based, device agnostic platform to enable HeartSciences to provide AI-solutions to help identify cardiovascular disease in any care setting worldwide in a manner to best suit different care providers.”

 

Girish Nadkarni, MD, MPH, Irene and Dr. Arthur Fishberg Professor of Medicine at the Icahn School of Medicine at Mount Sinai, System Chair of the Division of Data-Driven and Digital Medicine (D3M), Co-Director of the Mount Sinai Clinical Intelligence Center (MSCIC), and the Co-Director of the Charles Bronfman Institute of Personalized Medicine said, “Cardiovascular disease is the leading cause of death around the world, with over 20 million fatalities annually. Accordingly, early detection and treatment are of paramount importance. AI-powered ECG analysis offers the potential of achieving these goals, potentially reducing healthcare costs and improving patient quality of life. Icahn Mount Sinai is a leader in this developing field, having assembled a world class team of researchers led by Akhil Vaid, MD, Instructor in the Division of Data Driven and Digital Medicine (D3M), and invested in the curation of data for millions of ECG records with our Scientific Computing Infrastructure. We are delighted to enter into

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this agreement with HeartSciences and look forward to a close relationship and bringing these important technologies to market.”

 

Erik Lium, PhD, the Chief Commercial Innovation Officer of the Mount Sinai Health System and the President of Mount Sinai Innovation Partners, said, “HeartSciences is one of a small number of companies working to bring new AI-powered ECG capabilities to market. We believe that these types of technologies may enable the early detection of heart disease and improve the lives of patients.”

 

The artificial intelligence cardiovascular algorithms are based on technology developed by Mount Sinai faculty and licensed by Mount Sinai to HeartSciences. Mount Sinai and Mount Sinai faculty, including Dr. Nadkarni; Dr. Vaid; Joshua Lampert, MD, Medical Director of Machine Learning for Mount Sinai Heart; Vivek Reddy, MD, Director of Cardiac Arrhythmia Services for The Mount Sinai Hospital and Mount Sinai Health System, and The Leona M. and Harry B. Helmsley Charitable Trust Professor of Medicine in Cardiac Electrophysiology at Icahn Mount Sinai; and Son Duong, MD, Assistant Professor of Pediatrics (Pediatric Cardiology) at Icahn Mount Sinai, have a financial interest in this technology and in HeartSciences. The financial interest of Mount Sinai faculty is pursuant to the Mount Sinai Intellectual Property Policy.

 

About HeartSciences

Heart Test Laboratories, Inc. d/b/a HeartSciences is a medical technology company focused on applying innovative AI-based technology to an ECG (also known as an EKG) to expand and improve an ECG's clinical usefulness. Millions of ECGs are performed every week and the Company's objective is to improve healthcare by making an ECG a far more valuable cardiac screening tool, particularly in frontline or point-of-care clinical settings. HeartSciences' first product candidate for FDA clearance, the MyoVista® wavECG™, or the MyoVista®, is a resting 12-lead ECG that is also designed to provide diagnostic information related to cardiac dysfunction which has traditionally only been available through the use of cardiac imaging. The MyoVista® also provides conventional ECG information in the same test. The business model, which involves the use of the MyoVista® Device and consumables for each test, is expected to be "razor-razorblade" as the electrodes used with the MyoVista® are proprietary to HeartSciences, and new electrodes are required for every test performed.

 

For more information, please visit: https://www.heartsciences.com. Twitter: @HeartSciences

 

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are relating to the Company's future financial and operating performance. All statements, other than statements of historical facts, included herein are "forward-looking statements" including, among other things, statements about HeartSciences' beliefs and expectations. These statements are based on current expectations, assumptions and uncertainties involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company's control. The expectations reflected in these forward-looking statements involve significant assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Potential risks and uncertainties include, but are not

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limited to, risks discussed in HeartSciences' Annual Report on Form 10-K for the fiscal year ended April 30, 2023, filed with the U.S. Securities and Exchange Commission (the "SEC") on July 18, 2023, HeartSciences’ Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2023, filed with the SEC on September 14, 2023, and in HeartSciences' other filings with the SEC at www.sec.gov. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

 

Contacts:

HeartSciences
Gene Gephart
+1-737-414-9213 (US)
info@heartsciences.com 

 

Investors
Gilmartin Group
Vivian Cervantes
investorrelations@heartsciences.com 

 

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v3.23.3

Document And Entity Information	Sep. 20, 2023
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 20, 2023
Entity Registrant Name	Heart Test Laboratories, Inc.
Entity Central Index Key	0001468492
Entity Emerging Growth Company	true
Securities Act File Number	001-41422
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	26-1344466
Entity Address, Address Line One	550 Reserve Street, Suite 360
Entity Address, City or Town	Southlake
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76092
City Area Code	682
Local Phone Number	237-7781
Entity Information, Former Legal or Registered Name	n/a
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock
Trading Symbol	HSCS
Security Exchange Name	NASDAQ
Warrant [Member]
Document Information [Line Items]
Title of 12(b) Security	Warrants
Trading Symbol	HSCSW
Security Exchange Name	NASDAQ

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