Item 1.01 Entry into a Material Definitive Agreement
On October 2, 2019, Qrons Inc. (the “Company”) entered into an Intellectual Property License Agreement (the “Agreement”) with the Trustees of Dartmouth College (“Dartmouth”) pursuant to which, effective September 3,
2019 (the Effective Date”), Dartmouth granted the Company an exclusive world-wide license under the patent application entitled “Mechanically Interlocked Molecules-based Materials for 3D Printing” in the field of human and animal health and certain
additional patent rights to use and commercialize licensed products and services.
The license grant includes the right of the Company to sublicense to third parties subject to the terms of the Agreement.
Dartmouth has reserved certain rights in its intellectual property for educational and research purposes.
As consideration for the license grant, the Company will pay Dartmouth: (i) a license issue fee of $25,000); (ii) an annual license maintenance fee of $25,000, commencing on the first anniversary of the Effective Date
until the date of the first commercial sale
of a licensed product or service; (iii) an earned royalty of 2% of net sales (as defined in the Agreement) of licensed products and services by the Company or a sublicensee;
(v)15% of all consideration received by the Company under a sublicense; and (vi) beginning as of the date of the first commercial sale, an annual minimum royalty payment of $500,000 in the first calendar year after the first commercial sale,
$1,000,000 in the second calendar year, and $2,000,000 in the third calendar year and each year thereafter.
The Company will also reimburse Dartmouth for all patent preparation, filing, maintenance and defense costs.
Under the Agreement, the Company must diligently proceed with the development, manufacture and sale of licensed products and licensed services, including funding at least $1,000,000 of research in each calendar year
beginning in 2019 and ending with the first commercial sale of a licensed product; filing an IND/BLA (or equivalent) with the FDA or a comparable European regulatory agency before the four-year anniversary of the Effective Date, make the first
commercial sale of a licensed product before the twelve-year anniversary of the Effective Date and achieve annual net sales of at least $50,000,000 by 2033. If the Company fails to perform any of these obligations, Dartmouth has the option to
terminate the Agreement or change the exclusive license to a nonexclusive license.
Failure to timely make any payment due under the Agreement will result in interest charges to the Company of the lower of 10% per year or the maximum amount of interest allowable by applicable law.
The Agreement may be terminated by Dartmouth if the Company is in material breach of the Agreement which is not cured after 30 days of notice thereof or if the Company becomes insolvent. Dartmouth may terminate the
Agreement if the Company challenges a Dartmouth patent or does not terminate a sublicensee that challenges a Dartmouth patent, except in response to a valid court or governmental order. The Company may terminate the Agreement at any time upon six
months written notice to Dartmouth.
If the Company or any sublicensee or affiliate institutes or participates in a licensed patent challenge, the then current earned royalty rate for licensed products covered by Dartmouth patents will automatically be
increased to three times the then current earned royalty rate.
The Agreement also includes indemnification and insurance requirements by the Company and customary confidentiality provisions.
The foregoing description of the License Agreement is qualified in its entirety by reference to the full text of such License Agreement, a copy of which is attached hereto as Exhibit 10.23 and is incorporated herein in
its entirety by reference.