Research And License Agreement

Exhibit 10.6 Confidential Treatment has been requested
for portions of this document marked with asterisks. RESEARCH AND LICENSE AGREEMENT This Agreement, effective as of August 10, 1998 (the " Effective Date" ), is by and between: The South Alabama Medical Science Foundation (hereinafter " SAMSF" ), a corporation organized and existing under the laws of the State of Alabama and having a place of business at 307 University Boulevard, Mobile, Alabama 36688-0002. AND Mindset Limited (hereinafter " CORPORATION" ), a corporation involved in healthcare research, organized and existing under the laws of the British Virgin Islands, having an office at 1 Beit Eshel St., Old Katamon, Jerusalem 93227, ISRAEL. RECITALS WHEREAS, Dr. Miguel A. Pappolla (hereinafter " the SAMSF Scientist" ) and/or Dr. Blas Frangione and Dr. Jorge Ghiso have made certain inventions relating to use of melatonin and melatonin analogs in the prevention or treatment of amyloid-related disorders and in the use of melatonin analogs as anti-oxidants, all as more particularly described in pending U.S. patent applications owned by SAMSF and/or New York University, identified in annexed Appendix I and forming an integral part hereof (hereinafter " the Pre-Existing Inventions" ); WHEREAS, SAMSF is willing to perform the SAMSF Research Project (as hereinafter defined); WHEREAS, CORPORATION is prepared to sponsor the SAMSF Research Project; WHEREAS, CORPORATION has a non-exclusive license agreement with Mayo Foundation for Medical Education and Research(" MAYO" ), effective date October 24, 1997

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for portions of this document marked with asterisks. (hereinafter " the MAYO license" ) for the use of Tg 2576 transgenic mice and related mice as defined in the MAYO license as " Licensed Technology" (hereinafter " the MAYO mice" ) for the development of commercial technology, said license being without the right to sublicense; WHEREAS, SAMSF desires to use the MAYO mice on a subcontractual basis in the course of the SAMSF Research Project; WHEREAS, subject to the terms and conditions hereinafter set forth, SAMSF is willing to grant to CORPORATION and CORPORATION is willing to accept from SAMSF a License (as hereinafter defined); NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereto hereby agree as follows: 1. Definitions a. " Calendar Year" shall mean any consecutive period of twelve months commencing on the first day of January of any year. b. " Corporation Entity" shall mean any company or other legal entity (including affiliates or subsidiaries) which controls, or is controlled by, or is under common control with, CORPORATION; control means the holding of twenty five and one tenth percent (25.1%) or more of (i) the capital and/or (ii) the voting rights and/or (iii) the right to elect or appoint directors. c. " Date of First Commercial Sale" shall have the meaning set forth in Section 7.b. hereof. d. " Field" shall mean research, development and testing within pharmaceutical, diagnostic and biotechnological development programs in the field of Alzheimer' s Disease and other central nervous system and neurodegenerative diseases.

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for portions of this document marked with asterisks. e. " License" shall mean the exclusive worldwide license to practice the SAMSF Research Technology (as hereinafter defined) for the development, manufacture, use, import and sale of the Licensed Products (as hereinafter defined). f. " Licensed Products" shall mean all materials and technologies, including, without limitation, rodents or other transgenic animals, products, drugs, therapeutic agents and therapeutic methods covered by a claim of any unexpired SAMSF Patent (as hereinafter defined) which has not been disclaimed or held invalid by a court of competent jurisdiction from which no appeal has been or can be taken. g. " Net Sales" shall mean the CORPORATION' S and its sublicensees' billing for Licensed Products and Licensed Processes produced hereunder less the sum of the following: i) all trade, case and quantity credits, discounts, refunds or rebates; ii) allowances or credits for returns; iii) sales taxes (including value-added tax). h. " SAMSF Know-How" shall mean the Pre-Existing Inventions and any information and materials including, but not limited to, pharmaceutical, chemical, biological and biochemical products, technical and non-technical data, materials, methods and processes and any drawings, plans, diagrams, specifications, software, and/or other documents containing such information, discovered, developed or acquired by, or on behalf of SAMSF investigators during the term and in the course of the Research Project, with the exception of any such know-how which is Corporation Know-How as hereinafter defined. i. " CORPORATION Know-How" shall mean any information and materials including, but not limited to, pharmaceutical; chemical, biological and biochemical products,

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for portions of this document marked with asterisks. technical and non-technical data, materials, methods and processes and any drawings, plans, diagrams, specification, software and/or other documents containing such information discovered, developed or acquired by employees of CORPORATION during the term and in the course of the Research Project. j. " SAMSF Patents" shall mean all United States and foreign patents and patent applications, and any divisions, continuations, in whole or in part, reissues, renewals and extensions thereof, and pending applications therefor: (1) which claim Pre-Existing Inventions and which are identified on annexed Appendix I; or (2) which claim inventions that are made, in whole or in part, as a result of the research conducted through SAMSF during the term and in the course of the Research Project; with the exception of all such patents which are CORPORATION Patents as hereinafter defined. k. " CORPORATION Patents" shall mean all United States and foreign patents and patent applications, and any divisions, continuations, in whole or-in part, reissues, renewals and extensions thereof, and pending applications therefor which claim inventions that are made, in whole or in part, by CORPORATION. l. " Payment Term" shall mean the period of time commencing on the Effective Date and continuing on a country-by-country basis, if not previously terminated under the terms of this Agreement, for fifteen (15) years) from the Date of First Commercial Sale in such country or until the expiration date of the last to expire of the SAMSF Patents whichever shall be later.

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for portions of this document marked with asterisks. m. " Research Period" shall mean the 3-year period commencing on the Effective Date hereof and any extension thereof as to which SAMSF and CORPORATION shall mutually agree in writing. n. " Research Project" shall mean the investigations at SAMSF during the Research Period into the Field under the supervision of the SAMSF Scientist in accordance with the research program (as sponsored by CORPORATION), and described in annexed Appendix II, which forms an integral part hereof. o. " Research Technology" shall mean all SAMSF Patents, SAMSF Know-How, CORPORATION Patents and CORPORATION Know-How. p. " CORPORATION Research Technology" shall mean all CORPORATION Patents and all CORPORATION Know-How. q. " SAMSF Research Technology" shall mean all SAMSF Patents and all SAMSF Know-How. 2. Effective Date This Agreement shall be effective as of the Effective Date and shall remain in full force and effect until expires or is terminated in accordance with Section 17 hereof. 3. Performance of the Research Project a. In consideration of the sums to be paid to SAMSF as set forth in Section 4 below, SAMSF undertakes to perform the Research Project under the supervision of the SAMSF Scientist during the Research Period. If, during the Research Period the SAMSF Scientist shall cease to supervise the Research Project, and SAMSF has not designated a replacement within 45 days, CORPORATION shall have the option to terminate its funding of the SAMSF Research Project. CORPORATION shall promptly advise SAMSF in writing if CORPORATION so

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for portions of this document marked with asterisks. elects. Such termination of funding pursuant to this Section 3.a. shall not terminate this Agreement. Nothing herein contained shall be deemed to impose an obligation on SAMSF to find a replacement for the SAMSF Scientist. b. Nothing contained in this Agreement shall be construed as a warranty on the part of SAMSF that any results or inventions will be achieved by the Research Project, or that the Research Technology and/or any other results or inventions achieved by the Research Project, if any, are or will be commercially exploitable and furthermore SAMSF makes no warranties whatsoever as to the commercial or scientific value of the Research Technology and/or as to any results which may be achieved in the Research Project. c. Within sixty (60) days after the end of each year of the Research Period, SAMSF shall prepare a written report summarizing the results of the work conducted on the Research Project during the preceding year, and submit such report to CORPORATION. SAMSF shall also prepare and submit to CORPORATION quarterly summaries of such work conducted during the previous quarter. It is hereby agreed that such written report and quarterly summaries shall include reports on all clinical trials carried out during the relevant period. d. SAMSF will have full authority and responsibility for its part of the Research Project. Students and SAMSF employees who work on the Research Project will do so as in those roles and not as employees of CORPORATION. e. Corporation shall be free to undertake any development of technology not covered by the Research Project. Corporation may elect to perform research and development in-house, through other academic collaborations, or through outsourcing.

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for portions of this document marked with asterisks. 4. Funding of the Research Project a. As compensation to SAMSF for work to be performed on the SAMSF Research Project during the Research Period, subject to any earlier termination of the Research Project pursuant to Section 3.a. hereof, CORPORATION will pay SAMSF the total sum of $79,000 (USD$) per year, payable in 2 equal installments of $39,500 each, commencing upon the Effective Date and according to the following schedule:$39,500 on the Effective Date, and
$39,500 after each six month (6) interval thereafter. b. Nothing in this Agreement shall be interpreted to prohibit SAMSF (or the SAMSF Scientists) from obtaining additional financing or research grants for the Research Project from government or not-for-profit agencies, which grants or financing may render all or part of the Research Project and the results thereof subject to the patent rights of the U.S. Government and its agencies, as set forth in Title 35 U.S.C. 200 et seq. so long as the terms of such grants or financing do not preclude any results of the Research Project being included in the License. 5. Title a. Subject to the terms specified hereunder, it is hereby agreed that all right, title and interest, in and to the CORPORATION Research Technology, and in and to any drawings, plans, diagrams, specifications, software, and other documents containing any of the CORPORATION Research Technology shall vest solely in CORPORATION. b. Subject to the License granted to CORPORATION hereunder, it is hereby agreed that all right, title and interest, in and to the SAMSF Research Technology, and in and to any drawings, plans, diagrams, specifications, software, or other documents containing any of

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for portions of this document marked with asterisks. the SAMSF Research Technology, shall vest solely in SAMSF. At the request of SAMSF, CORPORATION shall take all steps as may be necessary to give full effect to any said right, title and interest of SAMSF including, but not limited to, the execution of any documents that may be required to record such right, title and interest with the appropriate agency or government office. 6. Patents and Patent Applications a. CORPORATION shall, simultaneously with the signing of this Agreement pay SAMSF a Fee in the amount of $10,000 (USD$) related to all non-provisional patent applications that have been filed in the name of Dr. Miguel Pappolla related to the use of melatonin and melatonin analogs in Alzheimer' s Disease. b. SAMSF will promptly disclose to CORPORATION in writing any related inventions which constitute potential SAMSF Patents. c. The Patent applications pending at the date hereof shall continue to be maintained by Jaeckle Fleischmann & Mugel, LLP or such other patent counsel selected by SAMSF and CORPORATION. All other patent applications shall be filed and prosecuted and maintained by Browdy and Neimark or other patent counsel selected by SAMSF and CORPORATION. Copies of all such patent applications and patent office actions shall be forwarded to CORPORATION. SAMSF and CORPORATION shall each also have the right to have such patent applications and patent office actions independently reviewed by other patent counsel separately retained by SAMSF or CORPORATION at the cost of SAMSF or CORPORATION, as the case may be, and upon prior notice to and with the consent of the other party hereto, such consent not to be unreasonably withheld.

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for portions of this document marked with asterisks. d. The CORPORATION will promptly disclose to SAMSF any inventions which relate to the SAMSF Research Technology and which are conceived by employees or consultants of CORPORATION. e. [Upon prior written approval by CORPORATION, all applications and proceedings with respect to the SAMSF Patents shall be filed, prosecuted and maintained by SAMSF at the expense of CORPORATION. Against the submission of invoices, CORPORATION shall reimburse SAMSF for all costs and fees incurred by SAMSF during the team of this Agreement, in connection with the filing, maintenance, prosecution and protection and the like of the SAMSF Patents. f. All applications and proceedings with respect to the CORPORATION Patents shall be filed, prosecuted and maintained by CORPORATION at the expense of CORPORATION. g. SAMSF and CORPORATION shall assist, and cause their respective investigators to assist each other, in assembling inventorship information and data for the filing and prosecution of patent applications on inventions pertaining to the Research Technology. h. If, at any time during the term of this Agreement, CORPORATION decides that it is undesirable, as to one or more countries, to prosecute or maintain any patents or patent applications within the SAMSF Patents, it shall give prompt written (within thirty days (30)) notice thereof to SAMSF, and upon receipt of such notice, CORPORATION shall be released from its obligations to bear all of the expenses to be incurred thereafter as to such countries in conjunction with such patent(s) or patent application(s) and such patent(s) or application(s) shall be deleted from the Research Technology and SAMSF shall be free to grant rights in and to such subject matter deleted from the Research Technology in such countries to

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for portions of this document marked with asterisks. third parties, without further notice or obligation to CORPORATION, and the CORPORATION shall have no rights whatsoever to exploit such subject matter deleted from the Research Technology in such countries. i. Nothing herein contained shall be deemed to be a warranty by SAMSF i) that CORPORATION can or will be able to obtain any patent or patents on any patent application or applications in the CORPORATION Patents or any portion thereof, or that any of the CORPORATION Patents will afford adequate or commercially worthwhile protection, or ii) that SAMSF can or will be able to obtain any patent or patents on any patent application or applications in the SAMSF Patents or any portion thereof, or that any of the SAMSF Patents will afford adequate or commercially worthwhile protection, or iii) that the manufacture, use, or sale of any element of the Research Technology or any resulting Product will not infringe any patent(s) of a third party. 7. Grant of License a. Subject to the terms and conditions hereinafter set forth and subject to all United States Government rights whether now existing or arising after the date hereof, SAMSF hereby grants to CORPORATION and CORPORATION hereby accepts from SAMSF the License. b. The License granted to CORPORATION in Section 7.a. hereto shall commence upon the Effective Date and shall remain in force on a country-by-country basis, if not previously terminated under the terms of this Agreement, for fifteen (15) years from the First Commercial Sale in such country or until the expiration date of the last to expire of the SAMSF Patents whichever shall be later.

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for portions of this document marked with asterisks. c. CORPORATION shall be entitled to grant sublicenses under the License on terms and conditions in compliance and not inconsistent with the terms and conditions of this Agreement (except that the rate of royalty may be at higher rates than those set forth in this Agreement) (i) to a Corporation Entity or (ii) to other third parties for consideration and in an arms-length transaction. All sublicenses shall only be granted by CORPORATION under a written agreement a copy of which shall be provided by CORPORATION to SAMSF as soon as practicable after the signing thereof. Each sublicense granted by CORPORATION hereunder shall be subject and subordinate to the terms and conditions of any License Agreement and shall contain (inter-alia) the following provisions: (1) the sublicense shall expire automatically on the termination of the License; (2) the sublicense shall not be assignable, in whole or in part; (3) the sublicensee shall not grant further sublicenses; and (4) both during the term of the sublicense and thereafter the sublicensee shall agree to a confidentiality obligation similar to that imposed on CORPORATION in Section 10 below, and that the sublicensee shall impose on its employees, both during the terms of their employment and thereafter, a similar undertaking of confidentiality; and (5) the sublicense agreement shall include the text of Sections 15 and 16 of this Agreement and shall state that SAMSF is third party beneficiary of such sublicense agreement for the purpose of enforcing such indemnification and insurance provisions. d. SAMSF reserves the right to use and distribute tangible research products to third parties for non-commercial, research use.

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for portions of this document marked with asterisks. 8. Payments for License a. In consideration for the License granted herein, and during the Payment Term, with respect to each Licensed Product, CORPORATION shall pay to SAMSF a royalty of *** of the Net Sales of CORPORATION or of Corporation Entity or of a licensee or sublicensee of CORPORATION or Corporation Entity. CORPORATION shall inform SAMSF in writing of the Date of First Commercial Sale with respect to each Licensed Product in each country as soon as practicable after making of each such first commercial sale. b. For the purpose of computing the royalties due to SAMSF hereunder, the year shall be divided into two parts ending on June 30 and December 31. Not later than ninety (90) days after each December and June in each Calendar Year during the Payment Term, CORPORATION shall submit to SAMSF a full and detailed report of royalties or payments due SAMSF under the terms of this Agreement for the preceding half year (hereinafter " the Half-Year Report" ), setting forth the Net Sales upon which such royalties are computed and including at least i) the quantity of Products used, sold, transferred or otherwise disposed of; ii) the selling price of each Product; iii) the deductions permitted under subsection 1.g. hereof to arrive at Net Sales; and iv) the royalty computations and subject of payment.If no royalties or other payments are due, a statement shall be sent to SAMSF stating such fact. Payment of the full amount of any royalties or other payments due to SAMSF for the preceding half year shall be made within ninety (90) days of each Half-Year Report on royalties and

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for portions of this document marked with asterisks. payments. CORPORATION shall keep for a period of at least six (6) years after the date of entry, full, accurate and complete books and records consistent with sound business and accounting practices and in such form and in such detail as to enable the determination of the amounts due to SAMSF from CORPORATION pursuant to the terms of this Agreement. c. Within ninety (90) days after the end of each Calendar Year, commencing on the Date of First Commercial Sale CORPORATION shall furnish SAMSF with a report (hereinafter " the Annual Report" ), certified by any CORPORATION' S President or Chief Financial Officer, relating to the royalties and other payments due to SAMSF pursuant to this Agreement in respect of the Calendar Year covered by such Annual Report and containing the same details as those specified in Section 8.b. above in respect of the Half-Year Report. d. On reasonable notice and during regular business hours, SAMSF, or the authorized representative of SAMSF shall each have the right to inspect the books of accounts, records and other relevant documentation of CORPORATION or of Corporation Entity and the licensees or sublicensees of CORPORATION insofar as they relate to the production, marketing and sale of the Products, in order to ascertain or verify the amount of royalties and other payments due to SAMSF hereunder, and the accuracy of the information provided to SAMSF in the aforementioned reports. Should such inspection lead to the discovery of a greater than ten percent (10%) discrepancy in reporting to SAMSF' s detriment, CORPORATION agrees to pay the full cost of such inspection. 9. Method of Payment a. Royalties and other payments due to SAMSF hereunder shall he paid to SAMSF in United States dollars(USD$). Any such royalties on or other payments relating to transactions in a foreign currency shall be converted into United States dollars(USD$) based on

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for portions of this document marked with asterisks. the closing buying rate of the Morgan Guaranty Trust Company of New York applicable to transactions under exchange regulations for the particular currency on the last business day of the accounting period for which such royalty or other payment is due. b. CORPORATION shall be responsible for payment to SAMSF of all royalties due on sale, transfer or disposition of Products by Corporation Entity or by the licensees of CORPORATION or of Corporation Entity. 10. Confidential Information a. Except as otherwise provided in Section 10.c and Section 11 below, [SAMSF shall maintain any and all of the Research Technology in confidence and shall not release or disclose any tangible or intangible component thereof to any third party without first recei ...