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Technology Transfer Agreement - Baylor College of Medicine and Molecular Analytical Systems Inc.

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MOLECULAR ANALYTICAL SYSTEMS, INC.

BAYLOR COLLEGE OF MEDICINE

Technology Transfer Agreement

This Technology Transfer Agreement (this “Agreement”) is made and entered into on this 14th day of September, 1993 (the “Effective Date”), by and between Baylor College of Medicine (“Baylor”), a Texas non-profit corporation having its principal place of business at One Baylor Plaza, Houston, Texas 77030, and Molecular Analytical Systems, Inc. (the “Company”), a Texas corporation having its principal place of business at 4544 Post Oak Place Drive. Suite 255, Houston, Texas 77027.

W I T N E S S E T H:

WHEREAS, Baylor is the owner of certain right, title and interest in and to the Technology (as defined in Section 1.3 hereof) invented and/or developed by T. William Hutchens (“Hutchens”) and Tai-Tung Yip (“Yip”);

WHEREAS, Baylor desires to grant to the Company and the Company desires to obtain an exclusive, worldwide license to use the Technology, with a right to develop, make and have made, use, sell, market and otherwise commercially exploit products and services using the Technology;

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

1. Definitions. As used herein, the terms “Agreement,” “Baylor.” “Effective Date,” “Company,” “Hutchens” and “Yip” shall have the meanings indicated above. As used herein, the following terms shall have the following meanings:

1.1 “Fields of Interest” shall mean desorption and ionization strategies for the analysis of analytes and molecules.

1.2 “Patent Rights” shall mean all U.S. patents or patent applications (including but not limited to the Disclosure of Invention) listed on Schedule 1.2 hereof, and all divisions, reissues, re-examinations, renewals, continuations, continuations in-part, extensions and patents issued thereon, and any and all other counterpart applications in any other countries and patents and inventor’s certificates, utility models and the like issuing therefrom.

1.3 “Technology” shall only mean and include the Patent Rights together with related know-how, information, processes, formulae, patterns, compilations, programs, devices, methods, techniques, compounds, products, data, preparations and usage information or

materials and sources thereof, whether or not patentable, in each case that relate to the Patent Rights and are included within the Fields of Interest and (i) have been developed in a laboratory at Baylor that was under the direct supervision of Hutchens or Yip or (ii) that otherwise have been developed by Hutchens or Yip prior to the Effective Date. The Technology includes, but is not limited to, biological, medical, mechanical, chemical, engineering and other scientific and practical information, drawings, specifications, notes, records, lab notebooks and other writings or compilations of information.

1.4 “Licensed Patented Product” shall mean any product made, used, marketed or sold, or any service used, marketed or sold, in any country where such product or service is covered by one or more valid claims within the Patent Rights.

1.5 “Licensed Product” shall mean any product made, used, marketed or sold, or any service used, marketed or sold, using all or any part of the Technology and which is not covered under “Licensed Patented Product.”

1.6 “Shares” shall have the meaning set forth in Section 2.4.

1.7 “Net Sales” shall mean all monies and/or equivalent goods and services received by the Company for the manufacture, use and sale of Licensed Patented Products or Licensed Products less any separately identified discounts and allowances to customers (actually granted), refunds for returned or damaged goods, excise and sales taxes, customs duties and costs of transportation (including without limitation packing and insurance) actually paid.

1.8 “First Commercial Sale” shall mean the date on which the Company first transfers title to a Licensed Patented Product or Licensed Product to an independent third party for monetary consideration.

1.9 “Improvement” shall mean any change or modification to an invention disclosed in the Patent Rights or in the Technology that, if unlicensed, would infringe one or more claims of any issued patent included within the Patent Rights and made in a laboratory at Baylor under the supervision of Hutchens and Yip during the four year period commencing on the Effective Date.

1.10 “Affiliate” shall mean with respect to a particular Person, (a) any Person directly or. indirectly owning, controlling or holding with power to vote 25% or more of the outstanding voting securities of such other Person, (b) any Person 25% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such other Person, (c) any Person directly or indirectly controlling, controlled by or under common control with such other person, and (d) any officer, director or partner of such other Person.

1.11 “Person” shall mean any individual, corporation, partnership, trust, estate, or other entity or association.

2. Assignment and Grant of License; Initial License Fee; Royalties; Equity.

2.1 Grant of Exclusive License to Company. Subject to the terms and conditions hereof, effective as of the Effective Date, Baylor hereby grants to the Company an exclusive, worldwide, transferable license (with the right to sublicense) to use the Technology and any Improvement, with rights to develop, make and have made, use, sell and market and otherwise commercially exploit Licensed Patented Products and Licensed Products using such Technology and any Improvement throughout the world; provided, however, that the exclusive license of the Technology and any Improvement to the Company shall be subject to, and non-exclusive with respect to:

(a) the use of the Technology and any Improvement by Baylor solely for non-commercial research purposes;

(b) any non-exclusive license that Baylor may be required by law to grant to the United States of America or to a foreign state pursuant to an existing or future treaty with the United States of America; and

(c) the right hereby reserved to Baylor and its faculty, staff, students and employees to publish scientific findings from research related to the Technology and any Improvement (provided, however, that no such right shall apply to matters within the scope of the Disclosure of Invention set forth on Schedule 1.2 for the period of 120 days commencing on the Effective Date).

2.2 Initial License Fee. In consideration in part for the grant of the exclusive license set forth in Section 2.1, the Company agrees to pay Baylor $50,000 in cash on the Effective Date.

2.3 Royalties.

(a) In consideration in part for the grant of the exclusive license set forth in Section 2.1, the Company agrees to pay Baylor (i) a royalty of two percent (2%) of Net Sales of Licensed Patented Products sold by the Company or an Affiliate or (ii) a royalty of ten percent (10%) of the Net Sales of Licensed Patented Products sold by a sublicensee for a period of four years from the first Commercial Sale. Notwithstanding the foregoing, the obligation to pay royalties set forth in Section 2.3(a)(ii) shall not to exceed in the aggregate $50,000 per 12 month period.

(b) In consideration in part for the grant of the exclusive license set forth in Section 2.1, the Company agrees to pay Baylor (i) a royalty of one percent (1%) of Net Sales of any Licensed Product sold by the Company or an Affiliate or (ii) a royalty of five percent (5 %) of the Net Sales of Licensed Products sold by a sublicensee for a period of four years from the first Commercial Sale. Notwithstanding the

foregoing, the obligation to pay royalties set forth in Section 2.3(b)(ii) shall not to exceed in the aggregate $50,000 per 12 month period.

(c) In the event that the Company fails to pay the royalties described in this Section 2.3 on or before the last day of the time period set forth in Section 4. l(a) within which such royalties are due, such royalties shall bear interest from and after such date until paid at a variable rate per annum equal to the lesser of (i) the highest lawful rate permitted by applicable law as defined in Section 12.14 hereof) and (ii) “Texas Commerce Bank—Houston, N.A. Prime”. “Texas Commerce Bank—Houston, N.A. Prime” means the fluctuating interest rate per annum announced from time to time by Texas Commerce Bank—Houston, N.A. as its, “Prime Rate” (or, if otherwise denominated, such bank’s reference rate for interest rate calculations on general commercial loans) which rate is not necessarily the lowest or best rate which such bank may at any time and from time to time charge any of its customers. Each such royalty payment when made shall be accompanied by all accrued and unpaid interest. Said interest and the payment and acceptance thereof shall not negate or waive the right of Baylor to seek any other remedy, legal or equitable, to which it may be entitled because of the delinquency of any payment or any other breach of this Agreement by the Company.

2.4. Equity. In consideration in part for the grant of the exclusive license set forth in Section 2.1, the Company agrees to issue shares of its common stock, $.01 par value to Baylor (the “Shares”). On the date hereof, the Company has issued to Baylor 160 of the Shares. The Company hereby covenants and agrees that the Company shall issue no shares of its capital stock or grant any rights for the issuance of any shares of its capital stock if as a result of such issuance and/or grant, after the date of such issuance and/or grant, the Shares would represent less than 8% of the total issued and outstanding shares of capital stock of the Company (assuming for this purpose that all rights then outstanding for the issuance of shares of capital stock of the Company had been exercised, converted or otherwise effected, as the case may be, so that such shares of capital stock issuable pursuant to such rights were issued and outstanding).

2.5. Subsequent Shares. In the event that the Company issues additional shares of its capital stock or grants additional rights for the issuance of any shares of its capital stock, it shall distribute to Baylor a sufficient number of its shares of common stock, $0.01 par value to maintain Baylor’s 8 % ownership interest in the Company. In addition to the consideration for the issuance of the shares described in Section 2.4 hereof, Baylor shall pay the Company an amount equal to the par value per share of the Company’s common stock for each Share issued pursuant to this Section 2.5. The Company agrees that it shall not increase the par value of its shares of common stock above $0.01 per share.

3. Warranties and Representations.

3.1 Baylor. Baylor represents and warrants that:

(a) Baylor is validly existing and in good standing under the laws of the State of Texas.

(b) The execution, delivery and authority to execute and deliver this Agreement have been duly authorized by all necessary action on the part of Baylor.

(c) Baylor has the power and authority to execute and deliver this Agreement and to perform its obligations tinder this Agreement.

(d) Baylor hereby represents and warrants that, other than the grant set forth herein including, without limitations, any non-exclusive license that Baylor may be required by law to grant to the United States of America or to a foreign state pursuant to an existing or future treaty with the United States of America, it has not encumbered, restricted, transferred or otherwise burdened the Technology.

(e) Baylor hereby represents and warrants that on the date hereof, other than as set forth in Schedule 3.1 hereto, it is not aware of any infringement of or by the Patent Rights or any claims by any other party in and to the Technology.

(f) Except as may be expressly set forth herein, Baylor hereby disclaims and negates any and all warranties, whether express or implied, with respect to the Technology, and Improvement or any rights hereunder transferred, including but not limited to, any IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. Without limiting the generality of the foregoing, Baylor makes no representations or warranties as to the patentability, noninfringement, use or other application of the Technology or any Improvement, or as to the likelihood of the success of any research, development, testing, marketing or other utilization of the Technology or any Improvement.

3.2 Company. The Company represents and warrants that:

(a) It is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas.

(b) The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of the Company.

(c) The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement.

(d) The Shares have been duly authorized and upon issuance, pursuant to the terms hereof and for the consideration herein set forth, will be validly issued, fully paid and nonassessable.

(e) On the date of such issuance, the Shares will represent at least 8 % of the total issued and outstanding shares of capital stock of the Company (assuming for this purpose that ill rights then outstanding for the issuance of shares of capital stock of the Company had been exercised, converted or otherwise effected, as the case may be, so that such shares of capital stock issuable pursuant to such rights were issued and outstanding).

3.3 No Assurance of Patents. Baylor represents and warrants to the Company that, and the Company represents and warrants to Baylor that it understands that, there is no assurance that any patents included in the Patent Rights or any patent applications subsequently filed on the Technology or any Improvement will actually be issued. In the event that any claim within the Patent Rights is disallowed in a final rejection by the United States Patent Office, then the provisions of Section 2.3(a) relating to such claim will be effectively deleted from this Agreement. In the event that all claims of the Patent Rights or any future disclosures made to the Company under this Agreement art abandoned by Baylor or are finally rejected by the Patent Office, with exhaustion of all appeals, then the provisions of Section 2.4, Section 2.5 and Section 3.2(e) will be effectively deleted from this Agreement, however, in respect to Section 2.3(a), Section 2.4, Section 2.5 and Section 3.2(e) there shall be no retroactive adjustment.

4. Financial Statements: Other Information.

4.1 (a) At the close of each calendar quarter, the Net Sales from the Licensed Patented Products and Licensed Products for which revenues have been received by the Company shall be computed, and the royalties earned thereon shall be paid to Baylor within 60 days after the close of said quarter.

(b) With each royalty payment, the Company shall furnish to Baylor a written accounting report for the closed quarter stating the Net Sales Receipts, the royalties due and the royalties paid.

(c) The Company agrees to maintain written records with respect to its operations pursuant to this Agreement in sufficient detail to enable Baylor or its designated accountants to compute the amount of royalties payable to Baylor, and further agrees to permit said records to be examined from time to time, on reasonable notice during normal business hours to the extent necessary to verify the amount of royalties due hereunder. Baylor shall pay the costs of said examination unless a discrepancy of greater than 5% in royalties due is present, in which case the Company shall reimburse Baylor for the examination expenses.

4.2 The Company will furnish to Baylor, so long as Baylor owns any of the Shares as soon as practicable after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its subsidiaries (if any), as at the end of such fiscal year and consolidated statements of income and cash flows of the Company and its subsidiaries (if any) for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by the report thereon of independent certified public accountants selected by the Company, which report shall state that (i) such financial statements have been prepared in accordance with generally accepted accounting principles and (ii) the report by such accountants in connection with such financial statements has been made in accordance with generally accepted accounting principles.

5. Protection of Property Rights.

5.1 Confidentiality. Except as provided below, each party receiving information of the other party hereunder agrees to use all reasonable efforts to keep confidential all information of the disclosing party which is in the possession or comes into the possession of the receiving party during the term of this Agreement related to the Patent Rights or Technology, or any Improvement, together with any and all documentation and other physical manifestations or embodiments thereof. In carrying out its obligations hereunder each receiving party shall use the same degree of care, effort and procedures in protecting such confidential information as such party utilizes in connection with protecting its own information of similar character. The trustees, officers, directors and department heads of Baylor and its Affiliates shall not disclose, directly or indirectly, internally or externally (excluding disclosures to those with knowledge of such information prior to the Effective Date), information contained within the Patent Rights for 120 days from the Effective Date, except to the Company, Hutchens or Yip. In the event that the trustees, officers, directors or department heads of Baylor or its Affiliates shall violate this provision, then the provisions of Section 2.3, Section 2.4, Section 2.5 and Section 3.2(e) will be effectively deleted from this Agreement.

5.2. Exemptions. The foregoing provisions of Section 5.1 shall not apply to information which:

(a) on the date hereof, is a publicly available document unless such document became publicly available as a result of the fault of the trustees, officers, directors or department heads of Baylor or its Affiliates;

(b) at the time of its disclosure hereunder, is without fault of the receiving party, part of the public domain;

(c) subsequent to its disclosure hereunder, is obtained from a third party not subject to a contractual or fiduciary obligation for confidentiality to the disclosing party and without fault of the receiving party;

(d) is required by court or governmental order, law or regulation to be disclosed, provided, however, that the receiving party required to disclose such information shall provide the other party with reasonable advance notice of any such proposed disclosure to give such party a reasonable period of time in which to object to such disclosure;

(e) is disclosed pursuant to any research grant or required report relating to technology included within the Fields of Interest from a non-commercial granting entity such as grants from the United Stated Department of Health and Human Services and other governmental and private non-profit agencies; provided, however, that the terms of any such research grant application are first approved by the Board of Directors of the Company.

5.3 Disclosures. Notwithstanding the foregoing, the parties understand and agree that the Company may, to the extent it deems necessary or appropriate, disclose the Technology and any Improvement to potential sublicensees or investors, but the Company agrees to use its reasonable efforts to make such disclosures subject to a satisfactory confidentiality agreement.

5.4 Rights to Subsequent Technologies. Any subsequent discoveries, inventions, and/or technologies resulting from the development of the Technology at and by the Company shall belong to the Company. During the four year period commencing on the Effective Date, the rights to any subsequent discoveries, inventions and/or technologies in the Fields of Interest developed in a laboratory under the supervision of Hutchens and/or Yip at Baylor shall be licensed to the Company pursuant to the provisions of this Agreement (including without limitation thereto, Section 2.3) as if such technologies were Technology. Additionally, during the four year period commencing on the Effective Date, Baylor agrees that the Company shall have a right of first refusal for 30 days following an offer to purchase or license any subsequent discoveries, inventions and/or technologies within the Fields of Interest by an employee at Baylor not under the supervision of Hutchens and/or Yip for any rights held by such employee at Baylor.

5.5 Patent Applications.

(a) The Company shall have initial responsibility for deciding whether and how to file, or continue prosecution of, any U.S. patent application, or to maintain any U.S. patent application or patent regarding the Technology or any Improvement. If the Company decides to take such actions:

(i) The Company will pay all costs incurred after the Effective Date incident to the U.S. patent applications, patents and like protection regarding the Technology and any Improvement, including all costs incurred for filing, prosecution, issuance and maintenance fees, as well as any costs incurred

in filing continuations, continuations in-part, divisionals or related applications and any re-examination or reissue proceedings.

(ii) The Company will, at its expense (for costs incurred after the Effective Date), prosecute with good faith and due diligence all U.S. patent applications and take all actions necessary to maintain and enforce the Patent Rights and propriety rights in and to the Technology and any Improvement in respect of any U.S. patent application or U.S. patents included therein.

(b) The Company shall have initial responsibility for deciding whether and how to file, or continue prosecution of, any foreign patent application, or to maintain any foreign patent application or patent regarding the Technology or any Improvement. If the Company decides to take such actions:

(i) The Company will pay all costs incurred after the Effective Date -incident to the foreign patent applications, patents and like protection regarding the Technology and any Improvement, including all costs incurred for filing, prosecution, issuance and maintenance fees, as well as any costs incurred in filing continuations, continuations in-part, divisional or related applications and any re-examination or reissue proceedings.

(ii) The Company will, at its expense (for costs incurred after the Effective Date), prosecute with good faith and due diligence all foreign patent applications and take all actions necessary to maintain and enforce the Patent Rights and proprietary rights in and to the Technology and any Improvement in respect of any foreign patent application or patent including therein.

(iii) The Company will, at its expense (for costs incurred after the Effective Date), prepare and dispatch for foreign filings within such period of time as will result in the applications of the “one year conviction” as to retroactive filing date proper applications for foreign letters patent regarding the Technology and any Improvement.

(c) The Company shall timely notify Baylor in writing of the Company’s decision to file any patent application regarding the Technology or any Improvement, or to abandon the prosecution of any patent application or patent regarding the Technology or any Improvement. Baylor shall timely notify the Company in writing in the event that Baylor determines that the Company should file any U.S. applications or continue said prosecution or maintenance of such patent application or patents. If the Company does not timely notify Baylor that the Company will do so, then Baylor may file any U.S. applications or continue said prosecution or maintenance of such patent application or patents at Baylor’s expense, provided, however, that Baylor shall likewise notify the Company in writing of its decision to do so, as well as its decision to abandon

any such application or patent. In the event Baylor does make any such filing or continues such prosecution or maintenance, pursuant to the provisions of this Section, the Company shall lose and forfeit the rights granted to it hereunder in respect to the Technology or any such Improvement in the United States attributable to such patent applications or patents.

(d) The Company shall timely notify Baylor in writing of the filing of the Company’s decision to file any foreign patent applications regarding the Technology or any Improvement, or to continue prosecution of a patent application to issuance or to maintain any foreign patent application or patent or to abandon the prosecution of any such patent application or patent regarding the Technology or any Improvement. Baylor shall timely notify the Company in writing in the event that Baylor determines that the Company should file any foreign patent applications or continue said prosecution or maintenance of such patent application or patents. If the Company does not timely notify Baylor that the Company will do so, then Baylor may file any foreign applications or continue said prosecution or maintenance of such patent application or patents at Baylor’s expense, provided, however, that Baylor shall likewise notify the Company in writing of its decision to do so, as well as its decision to abandon any such application or patent. In the event Baylor does make any such filing or continues such prosecution or maintenance, pursuant to the provisions of this Section, the Company shall lose and forfeit the rights granted to it hereunder in respect to the Technology or any such Improvement in any such foreign jurisdiction attributable to such patent applications or patents.

(e) Each of the parties hereto agrees to cooperate with the other parties to whatever extent is reasonably necessary to procure patent protection of any rights regarding the Technology and any Improvement, including fully agreeing to execute any and all documents to give the Company the full benefit of the licenses granted herein.

5.6 Use of Baylor’s Name. The Company shall have no right or license pursuant to this Agreement to use the name of, trademarks, logotypes or symbols associated with, or otherwise refer to, “Baylor,” “Baylor College of Medicine,” “BCMT,” “BCM Technologies, Inc.” or their affiliated entities or any derivative thereof or any of the members of their faculty or staff in the use, advertisement, public disclosure by press release or otherwise, promotion or sale of the Technology or products and services utilizing the Technology without the express written consent in each instance of Baylor, and nothing herein shall imply or be deemed to grant said right or license, provided, however that this prohibition shall not extend to the use of the names “IllumeSys,” Hutchens or Yip.

6. Infringement.

6.1 Notification. Each party shall promptly inform the other party of any suspected infringement of the Patent Rights or of any patents issued on Technology or any Improvement or any misuse, misappropriation, theft or breach of confidence of other proprietary

rights in the Technology or any Improvement, and with respect to such activities as are suspected, Baylor and the Company shall each have the right to institute an action for infringement, misuse, misappropriation, theft or breach of confidence of the proprietary rights against such third parry in accordance with the following procedures:

(a) If Baylor and the Company agree to institute suit jointly, the suit shall be brought in both their names, the out-of-pocket costs thereof shall be borne equally, and recoveries, if any, whether by judgment, award, decree or settlement, shall be shared equally. The Company shall exercise control over such action, provided, however, that Baylor may, if it so desires, be represented by counsel of its own selection, the fees for which shall be paid by Baylor.

(b) In the absence of agreement to institute a suit jointly, the Company may institute suit, and, at its option, join Baylor as a plaintiff. In such event, the Company shall bear the entire cost of such litigation, and the Company shall be entitled to retain any recovery by way of judgment, award, decree or settlement.

(c) In the absence of agreement to institute a suit jointly and if the Company decides not to institute a suit as provided in (b) above and timely notifies Baylor of such decision, Baylor may institute suit and, at its option, join the Company as a plaintiff. In such event, Baylor shall bear the entire cost of such litigation, and Baylor shall be entitled to retain any recovery by way of judgment, award, decree or settlement.

(d) Should either Baylor or the Company commence a suit under the provisions of this Section 6.1 and thereafter elect to abandon the same, it shall give timely prior notice thereof to the other party who may, if it so desires, continue prosecution of such suit. If the other party desires to continue prosecution, it shall bear the entire cost of continuation of such suit, and it shall be entitled to retain any recovery by way of judgment, award, decree or settlement.

6.2 Consent of Other Party. Neither Baylor nor the Company shall settle any action covered by this Section 6 without first obtaining the prior written consent of the other party, which consent will not be unreasonably withheld.

6.3 Exercise of the Company’s Right. Baylor shall not be liable for any losses incurred as the result of an action for infringement brought against the Company as a result of the Company’s exercise of any right granted under this Agreement.

7. Independent Contractor. It is agreed that the relationship of the Company to Baylor in the performance of this Agreement is as an independent licensee and that the Company is not an agent of Baylor. The Company agrees to refrain form representing itself as being the agent of Baylor in performing or acting pursuant to this Agreement. The Company shall not have the power or authority to bind or otherwise commit Baylor and shall not attempt to do so.

8. Exportation/Importation.

8.1 Exportation. The Company shall fulfill all governmental formalities with respect to exportation of Technology and any Improvement and tangible materials embodying or reflecting same from the United States. It is particularly understood and agreed that before Baylor shall be required to perform any obligation hereunder which shall be subject to the United States exportation regulations, the Company shall first provide Baylor with any letter of assurance or other certification which may be required to comply with the export administration regulations or other regulations of the U.S. Department of Commerce or any other agency or instrumentality of the federal government of the U.S. having jurisdiction over the export of products or technical data from the U.S. The Company further agrees it will comply with said regulations in respect to any exportation or reexportation of Technology and any Improvement, Inability or failure, if any, of the Company to secure any necessary government license or approval to export any of the Technology to any particular country or countries shall not entitle the Company to terminate the Agreement or to any form of relief, credit, rebate or recovery from Baylor.

8 2 Importation. The Company shall fulfill all governmental formalities with respect to importation or transfer of the Technology or products embodying the Technology and any Improvement.

8.3 Fees and Expenses. The Company shall be responsible for any fees, duties or taxes necessary to comply with export formalities, regulations or laws.

9. Indemnification.

9.1 Representations: Covenants.

(a) The Company agrees to indemnify and hold Baylor, its Affiliates and its respective officers, trustees, directors, employees, agents and representatives, harmless from any liabilities, costs and expenses including attorney’s fees and expenses), obligations to any third party or causes of action by any third party arising out of or related to any breach of the representations, warranties, covenants and agreements made by the Company herein.

(b) Baylor agrees to indemnify and hold the Company, its Affiliates and their respective officers, trustees, directors, employees, agents and representatives, harmless from any liabilities, costs and expenses (including attorney’s fees and expenses), obligations to any third party or causes of action by any third party arising out of or related to any breach of the representations, warranties, covenants and agreements made by Baylor herein.

9.2 Use of Technology. The Company agrees to protect, defend, indemnify and hold Baylor, its Affiliates and their respective officers, trustees, directors, employees, agents

and representatives harmless from and against, and to pay any and all amounts arising out of any and all losses, liabilities, claims, demands, causes of action, lawsuits or other proceedings (whether in contract, tort, strict liability or otherwise), fines, assessments, damages or any other amounts of whatever nature which Baylor, its Affiliates or their respective officers, trustees, directors, employees, agents or representatives may sustain or incur, of any claims or demands of any third party (including, but not limited to, the officers, directors, employees, agents, consultants, representatives or servants of the Company) arising from the use, testing, operation, sale, lease or manufacture of the Technology or any Improvement or products and services (including without limitation thereto, Licensed Patented Products and Licensed Products) using the Technology or any Improvement (including those resulting in whole or in part from the negligence of any of such indemnified Persons conducted under the direct supervision of the Company, Hutchens or Yip, but not otherwise), provided, however, that the Company shall not be required to indemnify and hold such indemnified Persons harmless from and against losses, liabilities, claims, demands, causes of action, lawsuits or other proceedings, fines, assessments, damages or any other amounts of whatever nature which such indemnified Persons may sustain or incur as a result of the use, testing, sale or manufacture of the Technology or any Improvement prior to the Effective Date, or the use, testing, sale or manufacture of the Technology or any Improvement by Baylor its Affiliates and their respective officers, trustees, directors, employees, agents and representatives arising out of the gross negligence or willful misconduct of such indemnified Persons or the negligence of such indemnified Persons not conducted under the direct supervision of the Company Hutchens or Yip.

9.3 Indemnification Procedures.

(a) Baylor will promptly notify the Company in writing of notice of any claims or potential claims or the commencement of any action, if a claim in respect thereof is to be made against the Company under Sections 9. l(a) or 9.2. Baylor’s failure to notify the Company will not relieve the Company from any liability thereunder except to the extent that the Company suffers any additional damages under Sections 9.1(a) or 9.2 due to Baylor’s failure to notify the Company or except to the extent that such failure to notify adversely affects the Company’s ability to defend any claims made by any third party. After receiving notice of said action, the Company is entitled to participate in the defense therein, and may elect to assume the defense thereof by promptly notifying Baylor in writing and by selecting counsel reasonably satisfactory to Baylor. After Baylor has received notice of the Company’s election to assume the defense of the action and has approved the Company’s counsel, the Company will not be liable under Section 9.1(a) or 9.2 for any legal or other expenses subsequently incurred in connection with the defense thereof unless (i) Baylor, in any action has reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to the Company, in which case Baylor shall have the right to select separate counsel to assume said legal defenses and to otherwise participate in the defense of said action on behalf of Baylor, (ii) the Company shall not have employed counsel reasonably satisfactory to Baylor to represent Baylor within a reasonable time after notice of

commencement of the action, or (iii) the Company has authorized the employment of counsel for Baylor at the expense of the Company.

(b) The Company will promptly notify Baylor in writing of notice of any claims or potential claims or the commencement of any action, if a claim in respect thereof is to be made against the Company under Section 9.1 (b). The Company’s failure to notify Baylor will not relieve Baylor from any liability to the Company except to the extent that Baylor suffers any additional damages under Section 9.1 (b) due to the Company’s failure to notify Baylor and except to the extent that such failure to notify adversely affects Baylor’s ability to defend any claims made by any third party. After receiving notice of said action, Baylor is entitled to participate in the defense therein, and may elect to assume the defense thereof by promptly notifying the Company in writing and by selecting counsel reasonably satisfactory to the Company. After the Company has received notice of Baylor’s election to assume the defense of the action and has approved Baylor’s counsel, Baylor will not be liable to the Company under Section 9.l (b) for any legal or other expenses subsequently incurred by the Company in connection with the defense thereof unless (i) the Company, in any action has reasonably concluded that there may be legal defenses available to it which arc different from or additional to those available to Baylor, in which case the Company shall have the right to select separate counsel to assume said legal defenses and to otherwise participate in the defense of said action on behalf of the Company, (ii) Baylor shall not have employed counsel reasonably satisfactory to the Company, to represent the Company within a reasonable time after ,notice of commencement of the action, or (iii) Baylor has authorized the employment of counsel for the Company at the expense of Baylor.

(c) No party shall settle any action covered by Sections 9.1 or 9.2 without first obtaining the consent, of the other party. Such consent will not be unreasonably withheld by either party.

9.4 Insurance.

(a) Prior to the First Commercial Sale, the Company agrees to cause Baylor (and its respective officers, directors, trustees and employees, as the case may be) to be included as additional named insureds under its product and general liability insurance coverages, if any.

(b) Commencing with the First Commercial Sale of the Technology, Improvement, Licensed Product or Licensed - Patented Product (referred to herein as “Products”), the Company and each of its affiliates and sublicensees, as applicable, shall, for so long as the Company or its Affiliates or sublicensees manufacture, sell, test, operate, license, lease or use the Products, maintain in full force and effect policies of (i) general liability insurance with limits of not less than one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) in the aggregate and (ii) product liability insurance with limits of not less than one million dollars ($1,000,000) per

occurrence and three million dollars ($3,000,000) in the aggregate. Such coverage(s) shall name Baylor and its Affiliates as additional insureds and shall be purchased from a carrier reasonably deemed acceptable to Baylor. The Company shall promptly provide verification of such insurance coverages to Baylor.

10. Term and Termination.

10.1 Patent and License Termination. Unless sooner terminated as otherwise provided herein, the license granted pursuant to Section 2.1 hereof will terminate on the later to occur of (i) the date of expiration of the last of the Patent Rights to expire and (ii) in the event no patents included within the Patent Rights issue, the first date following both (x) the tenth anniversary of the First Commercial Sale and (y) the date of abandonment of the last of the patent applications filed or pending during the term hereof included in the Patent Rights to be abandoned.

10.2 Events of Default. The following events will be considered events to default under this Agreement:

(a) the assets of the Company are seized or attached, in conjunction with any action against it by any third party, and such seizure or attachment is not abated within 90 days;

(b) (x) the Company is dissolved or (y) a sale of all or substantially all of the assets of the Company pursuant to a liquidation without the prior written approval of Baylor is made; or

(c) The Company assigns or attempts to assign any rights under this Agreement (other than as set forth in Section 2.1) without the prior written approval of Baylor, which approval shall not be unreasonably withheld.

10.3 Agreement Breaches. Either party may terminate this Agreement in the event that the other breaches any provision of this Agreement and fails to remedy said breach within 90 days after being given written notice of the breach.

10.4 Company’s Voluntary Termination of License. The Company may terminate this Agreement upon prior written notice of 180 days to Baylor.

10.5 Consequences of Termination. In the event that an event of default described in Section 10.2 occurs, or this Agreement is terminated under Section 10.3 or 10.4:

(a) Any and all rights in and to the Technology and any Improvement will revert to Baylor;

(b) All grants and licenses made pursuant to this Agreement will automatically terminate;

(c) The Company will within ten days of such termination destroy all copies of all documents and other tangible information in its possession or control which contain the Technology and any Improvement;

(d) Company will execute all instruments as Baylor may reasonably request which are necessary to reinvest any licensed rights;

(e) Subject to Section 5, Company will maintain after the termination of this Agreement the confidentiality of all confidential information of Baylor;

(f) The Company will not use any confidential information regarding the Technology and any Improvement for a period of five years after termination of this Agreement;

(g) The Company will have 45 days to complete the manufacture and 180 days to complete the sale or license of any Licensed Patented Products and Licensed Products in stock or in the course of manufacture at the time of termination;

(h) Except as expressly provided herein, the Company will be discharged or relieved from any liability or obligation existing prior to such termination;

(i) Baylor shall be released from any obligations of confidentiality with respect to the Technology and any Improvement as set forth in Section 5.

11. Assignment and Sublicensing.

11.1 Assignment by Baylor. Baylor may assign its rights hereunder, including without limitation thereto the right to receive the consideration for the license herein granted.

11.2 Assignment by the Company. The Company may not assign or attempt to assign any rights under this Agreement (other than as set forth in Section 2.1) without the prior written approval of Baylor.

12. Miscellaneous.

12.1 Further Assurances. Without further consideration, Baylor hereby agrees to execute and deliver, and to cause its respective officers, trustees, directors, employees, and agents to execute and deliver, such other instruments, and to take such other action as the Company hereunder may reasonably request to more effectively license to the Company the rights granted hereunder, and to assist the Company in the recordation of same as necessary, all in such form and substance as the Company may reasonably request and at its expense.

12.2 Applicable Law. The substantive laws of the State of Texas excluding any law, rule or principle which might refer to the substantive law of another jurisdiction, will govern the interpretation, validity and effect of this Agreement without regard to the place of execution or the place for performance thereof. This Agreement is to be at least partially negotiated, executed and performed in Harris County, Texas, and the Company and Baylor agree that personal jurisdiction and venue shall be proper in the state and federal courts situated in Harris County, Texas to hear all disputes arising under this Agreement.

12.3 Severability. All parties hereby especially agree in contract that neither party intends to violate any public policy, statutory or common law, rule, regulation, treaty of decision of any government agency or executive body thereof of any country or community or association of countries; that if any word, sentence, paragraph or clause or combination thereof of this Agreement is found, by a court or executive body with judicial powers having jurisdiction over this Agreement or any or its parties hereto, in a final unappealed order to be in violation of any such provision in any country or community or association of countries, such words, sentences, paragraphs or clauses or combination shall be inoperative in such country or community or association of countries, and the remainder of this Agreement shall remain binding upon the parties hereto.

12.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

12.5 Headings. The Section headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

12.6 Entire Agreement. This Agreement, including the Schedules hereto, constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the subject matter hereof. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party, or by anyone acting on behalf of either party, which is not embodied herein or in the Schedules hereto, and that no agreement, statement or promise relating to the subject matter hereof, which is not contained in this Agreement and the Schedules hereto, shall be valid or binding.

12.7 Successors. This Agreement shall inure to the benefit of, and be binding upon, the successors, permitted assigns, legatees, distributees, legal representatives and heirs of each party and is not intended to confer upon any person, other than the parties and their permitted successors and assigns, any rights or remedies hereunder.

12.8 No Waiver. The parties covenant and agree that if either party fails or neglects for any reason to take advantage of any of the terms provided for the termination of this Agreement or if either party, having the right to declare this Agreement terminated, shall fail

to do so, any such failure or neglect by either party shall not be a waiver or be deemed or be construed to be a waiver of any cause for the termination of this Agreement subsequently arising, or as a waiver of any of the terms, covenants or conditions of this Agreement or of the performance thereof. None of the terms, covenants and conditions of this Agreement may be waived by either party except by its written consent.

12.9 Survivability. The provisions, rights and obligations set forth in Articles 1, 3, 4, 5, 8, 9, 10 and 12 and any other obligations set forth herein that by their terms survive termination, will survive the termination of this Agreement.

12.10 Amendments. No amendment or modification to this Agreement will be effective unless it is in writing and signed by each party.

12.11 Notice. Any notice required or permitted to be given to another party hereto shall be given by sending such notice by registered or certified mail, postage prepaid to the address set forth herein, or to such other address as that party may designate by like notice.

12.12 Expenses. Except as expressly provided herein, each party to this Agreement will be responsible for its own legal and other costs and charges in the preparation, execution and performance hereof.

12.13 Sublicensees and Sublicensee Agreements. The Company shall give Baylor prompt written notification of the identity and address of each Affiliate or sublicensee with which it concludes a sublicense agreement and shall furnish Baylor with a copy of such sublicense agreement.

12.14 Usury Savings. It is the intent of Baylor and the Company in the execution and performance of this Agreement to remain in strict compliance with Applicable Law from time to time in effect. In furtherance thereof, Baylor and the Company stipulate and agree that none of the terms and provisions contained in this Agreement, or in any document securing or otherwise relating to this Agreement, shall ever be construed to create a contract to pay for the use, forbearance or detention of money with interest at a rate or in an amount in excess of the maximum rate or amount of interest permitted to be charged under Applicable Law. For purposes of this Agreement, “interest” shall include the aggregate of all charges that constitute “interest under Applicable Law that are contracted for, charged, reserved, received or paid under this Agreement or under any other document executed in connection herewith or pursuant hereto. The Company shall never be required to pay unearned interest and shall never be required to pay interest at a rate or in an amount in excess of the maximum rate or amount of interest that may be lawfully charged under Applicable Law, and the provisions of this paragraph shall control over all other provisions of this Agreement and any such other document which may be in apparent conflict herewith. If under any contingency the effective rate or amount of interest that would otherwise be payable under this Agreement would exceed the maximum rate or amount of interest Baylor is allowed by Applicable Law to charge, contract for, take, reserve or receive, or in the event Baylor shall charge, contract for, take, reserve or receive monies that

are deemed to constitute interest that would, in the absence of this provision, increase the effective rate or amount of interest payable under this Agreement to a rate or amount in excess of that permitted to be charged, contracted for, taken, reserved or received under Applicable Law then in effect, then the principal owed or the amount of interest that would otherwise be payable or both shall be reduced to the amount allowed under Applicable Law as now or hereinafter construed by the courts having jurisdiction, and all such moneys so charged, contracted for, taken, reserved or received that are deemed to constitute interest in excess of the maximum rate or amount of interest permitted by Applicable Law shall immediately be returned to or credited to the account of the Company upon such determination. Baylor and the Company further stipulate and agree that, without limitation of the foregoing, all calculations of the rate or amount of interest contracted for, charged, taken, reserved or received under this Agreement or any other document that is made for the purpose of determining whether such rate or amount exceeds the maximum lawful rate or amount, shall be made to the extent permitted by Applicable Law, by amortizing, prorating, allocating and spreading during the period of the full stated term hereof or thereof, as applicable, all interest at any time contracted for, charged, taken, reserved or received from the Company or otherwise by Baylor. As used herein, the term “Applicable Law” means that law in effect from time to time and applicable to this Agreement which lawfully permits the charging and collection of the highest permissible lawful, non-usurious rate of interest hereunder, including laws of the State of Texas, and to the extent controlling or providing for a higher rate of interest, federal laws of the United States of America. It is intended that Article 1.04, Title 79, Revised Civil Statutes of Texas, 1925, as amended (Article 5069-1.04, as amended, Vernon’s Texas Civil Statutes) shall be included in laws of the State of Texas in determining Applicable Law; and for the purpose of applying said Article 1.04 hereto, the interest ceiling applicable hereto under said Article 1.04 shall be the indicated rate ceiling from time to time in effect.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in multiple originals by their duly authorized officers and representatives.

“Baylor”

BAYLOR COLLEGE OF MEDICINE


By:	/s/ R.W. Evans for CRR
			C.R. Richardson			R.W. EVANS
			Vice President for Finance and Administration			EXECUTIVE DIRECTOR BUSINESS SERVICES


		“Company”

MOLECULAR ANALYTICAL SYSTEMS, INC.


By:	/s/ AI Zwan
					AI Zwan
				President

Schedule 1.2

1.		U.S. Patent Application Serial No. 08/068,896 filed May 28, 1993, for: METHOD AND APPARATUS FOR DESORPTION AND ION1ZATION OF ANALYTES; Inventors: T. William Hutchens and Tai-Tung Yip.

2.		Disclosure of Invention or Copyrightable Material dated June 11, 1993 for: SURFACES AND DEVICES FOR THE SIMULTANEOUS SEQUENCE ANALYSIS OF MULTIPLE PROTEINS OR DNA MOLECULES; Investigations: T. William Hutchens and Tai-Tung Yip.

Schedule 3.1

None.