Attached files
Exhibit 10.4
EXCLUSIVE LICENSE AGREEMENT
PREAMBLE
This
Agreement is made and entered into, effective as of March 4, 2013,
(“Effective Date”) by and between: Washington
University, a corporation established by special act of the
Missouri General Assembly approved February 22, 1853 and acts
amendatory thereto, having its principal offices at One Brookings
Drive, St. Louis, Missouri 63130 (hereinafter referred to as "WU");
and Chromadex a corporation organized and existing under the laws
of the State of California, having its principal offices at 10005
Muirlands Blvd. Suite G Irvine CA 92618 (hereinafter referred to as
"Licensee") and the following correspondence
addresses:
|
Attn: Legal/C.F.O
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
tom.varvaro@chromadex.com
|
Attn: Accounting
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
jamesl@chromadex.com
|
Attn: Technical
Postal: 10005 Muirlands Blvd. #G
City, State, Zip: Irvine CA 92618
Fax:949-600-9597
Email:
tom.varvaro@chromadex.com
|
License
Issue Fee: $40,000
License
Maintenance Fee: $25,000
Options
for Improvement: 1 yr option; $20,000 additional licensing fee per
improvement.
Milestones
and Payments:
|
Market
|
Milestone
|
Timing
|
Payment
|
|
Field 1 (dietary supplement, sports
nutrition, functional foods, skin
care/cosmetic)
|
Commercial-scale
production
|
12
months
|
$2K
|
|
Cumulative
sales >3kg
|
18
months
|
$5K
|
|
|
$200K
cumulative sales
|
24
months
|
$10K
|
|
|
$1M
cumulative sales
|
36
months
|
$15K
|
|
|
Field 2 (food/beverage with FDA
approval)
|
Cumulative
sales >3kg
|
36
months
|
$5K
|
|
Cumulative
sales >20kg
|
48
months
|
$10K
|
|
|
Field 3 (consumer
foods)
|
Cumulative
sales >3kg
|
24
months
|
$5K
|
|
$100K
cumulative sales
|
36
months
|
$10K
|
|
|
$500K
cumulative sales
|
48
months
|
$15K
|
|
|
Field 4 (research
reagents)
|
$5K
cumulative sales
|
24
months
|
$500
|
|
$10K
cumulative sales
|
36
months
|
$1k
|
|
|
Field 5 (pharmaceutical)
|
IND
|
TBD
|
$20,000
|
|
Phase I
initiation
|
$20,000
|
||
|
Phase
II initiation
|
$25,000
|
||
|
Phase
III initiation
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$50,000
|
||
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NDA
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$100,000
|
||
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First
Commercial Sale
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$250,000
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-1-
Royalty
Rate:
|
a.Patent Royalty
Rate
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4%
|
|
b.Non-Patent
Royalty Rate
|
2%
|
|
c.
Pass-through for sublicensee(s)
|
2%
|
Minimum
Royalty: $25,000
Sublicensee
Revenue percentage: 50% if technology is flipped, 25% if
significant value is added to the technology such as an IND filing
or additional enabling technology.
Patents:
Listed in Exhibit E herein, below; all patent expenses to be paid
by Licensee.
All
past patent expenses authorized by Chromadex.
Field:
dietary supplements, sports nutrition,
functional foods, skin care and cosmetics, food and beverage,
research reagents, medical foods, and pharmaceutical
uses.
Territory:
Worldwide.
Term:
The term of this Agreement shall commence on the Effective Date and
continue until the later of: a) the last day that at least one
Valid Claim exists; or b) the tenth anniversary of the day of the
First Commercial Sale whichever is longer.
A.
WU possesses
certain Patent Rights (as defined below), Technical Information (as
defined below), and Tangible Research Property (as defined
below).
B.
Licensee has
developed a plan to manufacture, promote, import, sell and/or
market products based on the Patent Rights, the Technical
Information, and/or the Tangible Research Property which plan is
attached hereto as Exhibit A (the “Development
Plan”).
C.
Licensee WU
possesses the desire, knowledge, expertise, experience and
resources to carry out the Development Plan, to meet the milestones
set forth in Exhibit F hereto and to otherwise diligently
manufacture, market and to otherwise diligently commercialize
products based on the Patent Rights, Tangible Research Property
and/or the Technical Information.
D.
Licensee desires to
obtain from WU certain licenses to the Tangible Research Property,
Technical Information and Patent Rights and WU desires to grant
such licenses to Licensee.
TERMS
AND CONDITIONS
NOW,
THEREFORE, in consideration of the premises, covenants and
agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Definitions.
As used
in this Agreement, the following terms have the meaning ascribed to
them below:
1.1 “Agreement”
is defined in the Preamble above.
1.2 “Affiliate”
means an entity that now or hereafter, directly or indirectly,
controls or is controlled by or is under common control with a
party to this Agreement whether by beneficial ownership, contract,
or otherwise.
-2-
1.3 “Calendar
Half” means each six-month period of a calendar year,
or portion thereof, beginning on January 1 or July 1.
1.4 “Claims”
is defined in Section 11.1 below.
1.5 “Confidential
Information” is defined in Section 7.1
below.
1.6 “Development
Plan” is defined in Recital B above.
1.7 “Effective
Date” is defined in the Preamble above.
1.8 “Election
Notice” is defined in Section 9.3 below.
1.9 “Field”
is defined in the Preamble above.
1.10 “First
Commercial Sale” means the earlier to occur of (a) the
earliest date on which Licensee transfers a Licensed Product for
compensation (including equivalent cash value for trades or other
non-cash payments), or (b) the earliest date on which Licensee
offers a Licensed Service for compensation (including equivalent
cash value for trades or other non-cash payments).
1.11 “License
Issue Fee” is defined in the Preamble
above.
1.12 “Licensed
Product” means (a) any product made, made for, used,
sold or imported by Licensee and/or Sublicensee that (i) in the
absence of this Agreement would infringe at least one Valid Claim,
or (ii) uses a process covered by a Valid Claim, and/or (b) any
product made, and/or method or process used, in whole or in part,
using or otherwise derived from Technical Information and/or
Tangible Research Property., with the provisio that no product
shall be construed a "Licensed Product" pursuant to (a)(i) or
(a)(ii) of this section which would not infringe any claim of a
Patent Rights patent application pending in the United States as of
October 15, 2012, or any claim of an issued, unexpired, valid and
enforceable Patent Rights patent, in either the country of the
product's manufacture or sale or (3)does not contain nicotinamide
adenine dinucleotide (NAD) or its precursor NADH, an intermediate
of a de novo pathway for synthesizing NAD, an intermediate of a NAD
salvage pathway, an intermediate of a nicotinamide riboside kinase
pathway, or a combination thereof, such ingredients including but
not limited to nicotinamide mononucleotide, nicotinic acid
mononucleotide, and nicotinamide riboside."
1.13 “Licensed
Service” means (a) any service performed by Licensee
and/or Sublicensee that (i) in the absence of this Agreement would
infringe at least one Valid Claim, or (ii) uses a process covered
by a Valid Claim, and/or (b) service performed by Licensee that
uses or is otherwise derived from Technical Information and/or
Tangible Research Property.
1.14 “Licensee”
is defined in the Preamble above.
1.15 “Minimum
Royalty” is defined in the Preamble
above.
1.16 “Net
Sales” means mean Net Sales for Licensed Products and
Net Sales for Licensed Services.
1.17 “Net
Sales for Licensed Products and Net Sales for Licensed
Services” means the gross value, compensation, and
payments, whether in cash or in kind, received by Licensee or its
Sublicensees for Sales of Licensed Products or Licensed Services,
respectively, less all Permissible Deductions.
1.18 “Patent
Rights” means, subject to Section 9.3 below, the
patents and patent applications, and all foreign counterparts,
continuations, divisions, extensions, reexaminations and reissues
thereof, which trace their earliest priority filing date by
unbroken lineage to any of such patent or patent applications, as
set forth in Exhibit E, herein below.
-3-
1.19
“Permissible
Deductions” means, and shall be limited to, any (a)
trade, quantity and cash discounts on Licensed Products actually
provided to third parties in connection with arms length
transactions, (b) credits, allowances or refunds, not to exceed the
original invoice amount, for actual claims, damaged goods,
rejections or returns of Licensed Products, and (c) excise, sale,
use, value added or other taxes, other than income taxes, paid by
Licensee due to the Sale of Licensed Products.
1.20 “Sale”
means any transaction in which a Licensed Product or Licensed
Service is exchanged or transferred for any value, payment or
compensation of any type or kind. Notwithstanding the forgoing,
Sales of any kind shall not include and shall expressly exclude
transfers by Licensee: (a) to a Sublicensee of Affiliate for
distribution or their own internal testing of samples of any
Licensed Product or Licensed Service, provided that such testing is
not conducted for or on behalf of any end user and further provided
that Licensee receives no payment for such Licensed Product or
Licensed Service in excess of the fully burdened (i.e. direct and
indirect) costs of producing and transporting such materials; and
(b) for its and its Affiliates own non-commercial laboratory
research and development purposes, manufacturing,
marketing/promotional purposes, beta testing and/or clinical
testing, provided that the foregoing is not performed for or on
behalf of any end user and further provided that Licensee receives
no payment for such Licensed Product or Licensed Service in excess
of the fully burdened (i.e. direct and indirect) costs of producing
and transporting such materials and/or providing such Licensed
Product or License Service.
1.21
“Royalty Rate”
is defined in the Preamble above and shall include both the
“Patent Royalty Rate” and the “Non-Patent Royalty
Rate.” “Patent Royalty Rate” means the Royalty
Rate that shall apply to licensed activities within Territory
countries in which there is at least one Valid Claim.
“Non-Patent Royalty Rate” means the Royalty Rate that
shall apply to licensed activities, including use of Tangible
Research Property and/or Technical Information, in Territory
countries in which there is no Valid Claim.
1.22 “Tangible
Research Property” means, subject to Section 9.3
below, any and all research tools and other personal property that
WU may provide to Licensee as specifically set forth in Exhibit B
hereto.
1.23 “Technical
Information” means, subject to Section 9.3 below,
research and development information, unpatented inventions,
know-how, data, methods, and technical data and information, in
each instance that are necessary to practice the Patent Rights
and/or to commercialize one or more Licensed Products, as
specifically set forth in Exhibit C hereto.
1.24 “Termination
Fee” is defined in Section 13.2 below.
1.25 “Territory”
is defined in the Preamble above, except that it shall exclude
those countries to which export of technology or goods is
prohibited by applicable U.S. export control laws or
regulations.
1.26 “WU”
is defined in the Preamble above.
1.27 “WU
Indemnitee” is defined in Section 11.1.
1.28 “Valid
Claim” means a claim (a) of a pending Patent Rights
patent application, or (b) of an issued and unexpired Patent Rights
patent that has not been (i) held invalid or unenforceable by a
court or other governmental agency of competent jurisdiction in a
decision or order that is not subject to appeal, (ii) canceled,
(iii) abandoned in accordance with, or as permitted by the terms of
this Agreement or by mutual written agreement of WU and
Licensee.
1.29
“Sublicensing
Revenue” means all value, payment or compensation of
any type or kind, other than earned royalties on Net Sales,
received by Licensee from or through its Sublicensees for the
licensing, cross-licensing or other authorized use of any license
or right granted herein by WU. Sublicensing Revenue shall include,
without limitation, all fees, milestone payments, cash equivalents,
equities, securities, equipment, property, rights or anything else
of value received by Licensee as sublicensing consideration from or
for the benefit of any Sublicensee.
-4-
2.
License Grants and Restrictions.
2.1
Patent
Rights. Subject to
the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a non-transferable,
exclusive (subject to Section 2.4 below) and royalty-bearing
license under the Patent Rights and for the Term of this Agreement,
to (a) make, have made, sell, offer for sale, use, and import
Licensed Products, and (b) perform Licensed Services, in each
instance solely in the Territory and in the Field. For the
avoidance of doubt, Licensee acknowledges and agrees that no
license is granted or implied under the Patent Rights outside the
Field or the Territory.
2.2
Technical
Information. Subject
to the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a non-transferable,
nonexclusive and royalty-bearing license for the Term of this
Agreement to use the Technical Information solely for the purpose
of exploiting the license granted to Licensee in Section 2.1 above.
For the avoidance of doubt, Licensee acknowledges and agrees that
no license is granted or implied under the Technical Information
outside the Field or the Territory.
2.3
Tangible Research
Property. Subject to
the terms and conditions of this Agreement, WU hereby grants to
Licensee, and Licensee hereby accepts, a nontransferable,
nonexclusive and royalty-bearing license, for the Term of this
Agreement, to use the Tangible Research Property solely for the
purpose of exploiting the licenses granted to Licensee in Sections
2.1 and 2.2 above. For the avoidance of doubt, Licensee
acknowledges and agrees that no license is granted or implied to
use the Tangible Research Property for any other
purpose.
2.4
Limitations on
Patent Rights License. WU retains its right to use the Patent
Rights to make, have made, use, and import Licensed Products and to
perform Licensed Services in the Territory and in the Field for
research and educational purposes including collaboration with
other nonprofit entities, which shall expressly exclude any
commercial purposes.
2.5
Clarifications.
For the avoidance of doubt, the license "to have made" granted in
Section 2.1 above means that the Licensee may contract with one or
more third parties to make Licensed Products for Licensee for Sale
or offer for Sale by Licensee within the scope of its sales
operations. In any such event, Licensee shall require all such
third parties to be bound to a written confidentiality agreement
that contains non-use and nondisclosure obligations that are at
least as restrictive as those that are contained in Article 7 below
before any Confidential Information is disclosed to such third
parties.
2.6
Government
Rights. In accordance
with Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C.
§§ 200-212, the United States government retains certain
rights to inventions arising from federally supported research or
development. Under these laws and implementing regulations, the
government may impose requirements on such inventions. Licensed
Products embodying inventions subject to these laws and regulations
sold in the United States must be substantially manufactured in the
United States. The license rights granted in this Agreement are
expressly made subject to these laws and regulations as amended
from time to time. Licensee shall be required to abide by all such
laws and regulations.
-5-
2.7 Reservation
of Rights and Restrictions. Nothing in this Agreement provides
Licensee with any ownership rights of any kind in the Patent
Rights, the Technical Information and/or any Tangible Research
Property. All ownership rights in the Patent Rights, the Technical
Information and the Tangible Research Property shall remain the
sole and exclusive property of WU. The risk of loss of all Tangible
Research Property shall pass to Licensee upon delivery. For the
avoidance of doubt, Licensee’s rights in any Tangible
Research Property extend only to the specific Tangible Research
Property delivered by WU to Licensee. Accordingly, Licensee shall
have no right to any tangible research property retained by WU
including, without limitation, any original tangible research
property that may be retained by WU and on which the Tangible
Research Property delivered to Licensee may be based. No license or
right is granted by WU, by implication or otherwise, to any patent
other than the Patent Rights. Other than the licenses expressly
granted in Sections 2.1, 2.2 and 2.3 above, all rights in and to
the Patent Rights, the Tangible Research Property and any Technical
Information are hereby reserved by WU. Licensee agrees not to
practice or use the Patent Rights, the Tangible Research Property
and/or the Technical Information or do any act in respect thereof
outside the scope of the licenses expressly granted above
including, without limitation, providing any Tangible Research
Property to any third party. Licensee further agrees that it will
not do any act or thing which would in any way contest WU’s
ownership in, or otherwise derogate from the ownership by WU, of
any rights in the Patent Rights, the Tangible Research Property
and/or Technical Information. In furtherance of the foregoing but
without limiting the generality thereof, Licensee agrees not to
register or attempt to register in the Territory or elsewhere any
rights in the Patent Rights, the Tangible Research Property and/or
Technical Information or to assist any third party to do
so.
2.8
Markings.
Licensee shall ensure that appropriate markings, such as
“Patent Pending” or the Patent Rights patent numbers or
application serial numbers, appear, in accordance with each
country’s patent laws, on all Licensed Products (or their
packaging, as appropriate) sold by or on behalf of
Licensee.
2.9 Research
Cross-License. Licensee hereby grants to WU and WU hereby
accepts, a non-transferable, non-exclusive, perpetual, irrevocable,
fully paid up, license, for research and education purposes only,
under any and all applicable patents, copyright registrations or
other intellectual property rights, to make and use any and all
inventions, discoveries or improvements conceived of or reduced to
practice by Licensee during the Term of this Agreement and relating
to the Patent Rights, Tangible Research Property or Technical
Information. For the avoidance of doubt, the rights under this
Section 2.9 do not include any right to make, use, sell or offer to
sell any products or services for any commercial
purpose.
2.10
Sublicensing.
2.10.1 General.
Subject to the further provisions of this Section 2.10, Licensee
may grant sublicenses of the licenses granted to Licensee in
Sections 2.1, 2.2 and 2.3 above to third parties by entering into a
written agreement with any such third party (each such agreement
shall be referred to herein as a “Sublicense” and each
such third party shall be referred to herein as a
“Sublicensee”). Only Licensee (and not any Sublicensee)
may enter into a Sublicense, and each Sublicense shall expressly
prohibit the Sublicensee from granting further
sublicenses.
2.10.2 Requirements
of each Sublicense Agreement. Licensee agrees that it will require
all Sublicensees to comply with the terms and conditions set forth
in this Agreement and applicable to Licensee. In furtherance of the
foregoing but without limiting the generality thereof, each
Sublicense shall, for the express benefit of WU, bind the
Sublicensee to terms and conditions no less favorable to WU than
those between WU and Licensee contained in this Agreement. To the
extent that any term, condition, or limitation of any Sublicense is
inconsistent with the terms, conditions and limitations contained
in this Agreement, such term, condition, and/or limitation shall be
null and void against WU. Without in any way narrowing or limiting
the scope of the foregoing provisions of this Section 2.10.2, all
Sublicenses shall contain the terms and conditions set forth in
Exhibit D hereto. Within thirty (30) days after the effective date
of any Sublicense, Licensee shall provide WU a complete copy of the
Sublicense including, without limitation, any and all exhibits
and/or attachments thereto. If the Sublicense is written in a
language other than English, the copy of the Sublicense shall be
accompanied by a complete translation written in
English.
Upon delivery of such translation to WU, Licensee shall be deemed
to represent and warrant to WU that such translation is a true and
accurate translation of the Sublicense.
-6-
2.10.3 Primary
Liability. Licensee
will be primarily liable to WU for all acts, errors or omissions of
a Sublicensee. Any act, error or omission of a Sublicensee that
would be a breach of this Agreement if imputed to Licensee will be
deemed to be a breach of this Agreement by Licensee.
3.
Development Plan.
3.1
Development
Plan. Licensee
represents and warrants that (a) the Development Plan contains
Licensee’s good faith, bona fide plans for commercializing
Licensed Products as rapidly and extensively as practicable, and
(b) Licensee has the knowledge, expertise, experience and resources
to fully carry out such plans.
3.2
Development Plan
Milestones. Licensee
agrees to use its best efforts to meet any and all milestones set
forth above and in the Development Plan on or before the times set
forth in the Development Plan including, without limitation, the
development milestones for each Licensed Product and any Licensed
Services.
3.3
Progress
Reports. Licensee
will deliver to WU written reports on Licensee’s progress
against the Development Plan no later than January 31 and July 31
of the first two calendar years following the calendar year in
which the Effective Date falls, and no later than January 31 of
each calendar year thereafter. Each such report will set forth
Licensee’s progress against the Development Plan in
reasonable detail including, without limitation, the progress
achieved and any problems encountered in the development,
prototyping, evaluation, testing, manufacture, Sale, and/or
marketing of, as applicable, each Licensed Product and any Licensed
Services. Each such report will identify in detail any financial
investment, grant or other source of funding awarded or provided to
Licensee that is used in part or in while to develop, evaluate,
test, manufacture, sell and/or market a Licensed Product and/or
Licensed Service. Upon reasonable request by WU from time-to-time,
Licensee will meet with WU to consult with WU about
Licensee’s then-current progress against the Development
Plan.
3.4
Changes
to Development Plan.
Licensee may not amend, change or otherwise modify the Development
Plan without the written consent of WU.
4.
Diligence.
4.1 Licensee agrees to,
throughout the term of this Agreement, use its best efforts to
develop, manufacture, promote and sell Licensed Products and to
perform any Licensed Services, in each instance throughout the
Territory and in the Field in accordance with the milestones set
forth in Exhibit F.
4.2 Should WU
conclude in its reasonable judgment that Licensee fails to meet the
diligence requirements set out in Section 4.1 above, WU may notify
Licensee of its conclusions and the basis therefore. The parties
shall then undertake to resolve WU’s concerns through good
faith negotiations for a period of 90 days. Should such
negotiations fail to result in Licensee achieving a level of
diligence consistent with its obligations under Section 4.1 above,
in WU’s sole reasonable judgment, then WU may terminate the
license in each specific sub-field where there has been
insufficient best efforts or at WU option change the license in
each specific sub-field where there has been insufficient best
effort to a non-exclusive license.
5.
Fees, Payments and Royalties.
5.1
License
Issue Fee. Within
fifteen (15) days after the Effective Date, Licensee agrees to pay
the License Issue Fee to WU. Such License Issue Fee shall be
non-refundable and shall not be credited against any other payments
that may be due hereunder.
5.2
License Maintenance
Fee. On or before
every anniversary of the Effective Date and until and including the
anniversary following the First Commercial Sale of a Licensed
Product or Licensed Service occurs in a primary country designated
in the Development Plan, Licensee agrees to pay the License
Maintenance Fee to WU. All License Maintenance Fees shall be
non-refundable and shall not be credited against any other payments
that may be due hereunder. Following the first Sale of License
Product, Licensee’s obligations for this payment will
cease and transfer to the
Minimum Royalties per Section 5.4. Payments due under this section
will be made on a prorated annual basis.
-7-
5.3 Royalties.
5.3.1 Licensed
Products. For each Licensed Product made or sold by or for
Licensee and/or Sublicensee within the Territory, Licensee agrees
to pay WU an earned royalty equal to the Patent Royalty Rate of Net
Sales if there is a Valid Claim in at least one of the country of
manufacture or country of Sale or equal to the Non-Patent Royalty
Rate of Net Sales if there is no Valid Claim in both the countries
of manufacture and Sale. Such earned royalties shall be paid by
Licensee within thirty (30) days after the end of each Calendar
Half in which the Sale of the Licensed Products to which such
earned royalties occurs. If a Licensed Product is sold in
combination with another product (“Combination
Product”) on which licensee is obligated to pay royalties,
the Patent Royalty Rate used shall be the Patent Royalty Rate if
the Licensed Product were sold alone multiplied by the ratio
A/(A+B), where A = the cost of the Licensed Product if sold alone
and B = cost of the Combination Product if sold alone, such that
this ratio not be lower than 0.5, where B is an active ingredient
and not an excipient, carrier, diluents or filler.
5.3.2 Licensed
Services. Licensee
agrees to pay WU an earned royalty equal to the Patent Royalty Rate
of the total gross revenues generated, directly or indirectly, by
Licensee and/or Sublicensee from the performance of the Licensed
Services if there is a Valid Claim in the country in which the
Licensed Services were performed or equal to the Non-Patent Royalty
Rate of the total gross revenues generated, directly or indirectly,
by Licensee from the performance of the Licensed Services if there
is no Valid Claim in the country in which the Licensed Services
were performed. Such earned royalties shall be paid by Licensee
within thirty (30) days after the end of each Calendar Half in
which the performance of the Licensed Services occurs. if a
Licensed Service is sold in combination with another product
(“Combination Service”) on which licensee is obligated
to pay royalties, the Patent Royalty Rate used shall be the Patent
Royalty Rate if the Licensed Service were sold alone multiplied by
the ratio A/(A+B), where A = the cost of the Licensed Service if
sold alone and B = cost of the Combination Product if sold alone,
such that this ratio not be lower than 0.5.
5.4
Minimum
Royalties. Commencing
with the Calendar Half in which the First Commercial Sale occurs
and continuing thereafter throughout the term of this Agreement,
Licensee agrees to pay WU a minimum royalty equal to the Minimum
Royalty for each Calendar Half as an advance against the royalties
due under Section 5.3.1 above. Such Minimum Royalties shall be due
on January 31 and July 31 of each Calendar Half.
5.5
Milestone
Payments. Licensee
agrees to pay WU milestone payments in the amounts set forth in the
Preamble, herein above, within thirty (30) days after the date that
the applicable milestone is met
5.6
Clarifications.
For the avoidance of doubt, no multiple royalty will be required to
be paid because a Licensed Product or its manufacture, use, Sale or
importation is covered by more than one Valid Claim or patent or
patent application within the Patent Rights. A Sale of a Licensed
Product will be deemed to have been made at the time Licensee or a
Sublicensee (or anyone acting on behalf of or for the benefit of
Licensee or its Sublicensees) first invoices, ships, or receives
value for a Licensed Product. Similarly, the performance of a
Licensed Service shall be deemed to have been performed at the time
Licensee or a Sublicensee (or anyone acting on behalf of or for the
benefit of Licensee or its Sublicensees) first invoices or receives
value for a Licensed Service. In order to ensure that WU obtains
the full amount of royalty payments contemplated in this Agreement,
if any Licensed Product is sold or transferred internally within
Licensee or any Sublicensee or other third party with whom Licensee
has any agreement or arrangement regarding consideration (including
but not limited to an option to purchase stock, stock ownership,
division of profits, or special rebates or allowances), the amount
of the Sale shall be deemed to be the greater of (a) the price at
which the Licensed Product is resold to the end user or (b) the
fair market value of the Licensed Product. Similarly, if any
Licensed Service is performed internally within Licensee or any
Sublicensee or other third party with whom Licensee has any
agreement or arrangement regarding consideration (including but not
limited to an option to purchase stock, stock ownership, division
of profits, or special rebates or allowances), the amount of
revenue received by Licensee for such performance shall be deemed
to be the greater of (a) the price at which the Licensed Service is
resold to the end user or (b) the fair market value of the Licensed
Service.
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5.7 Sublicensing
Revenue Obligations. Licensee shall pay to WU the percentage
of Sublicensing Revenue identified in the Preamble above within
thirty (30) days of the end of the Calendar Half in which Licensee
receives the Sublicensing Revenue.
6.
Place and Method of Payment; Reports and Records; Audit;
Interest.
6.1 Method
of Payment. All
dollar ($) amounts referred to in this Agreement are expressed in
United States dollars. All payments to WU shall be made in United
States dollars by check or electronic transfer payable to
"Washington University." Any Sales revenues for Licensed Products
or revenue for Licensed Services in currency other than United
States dollars shall be converted to United States dollars at the
conversion rate for the foreign currency as published in the
Eastern edition of The Wall Street
Journal as of the last business day in the United States of
the applicable Calendar Half.
6.2 Place
of Payment. Checks
shall reference WU Contract Number 004446-0011and shall be sent
to:
Accounting
Department
Office
of Technology Management
Washington
University in St. Louis
660
South Euclid Avenue, CB 8013
St.
Louis, MO 63110
All
payments shall include the WU Contract Number to ensure accurate
crediting to Licensee’s account. Electronic transfers shall
be made to a bank account designated in writing by WU.
6.3 Reports.
Within forty-five (45) days after the end of each Calendar Half in
which a Licensed Product is Sold or made or in which a Licensed
Service is performed, Licensee shall deliver to WU, a written
report setting forth the calculation of all amounts due to Licensee
under Sections 5.3 and 5.5 above for such Calendar Half. For
Licensed Products, each such report shall show, at a minimum, (a)
the number of Licensed Products in inventory at the beginning of
such Calendar Half, (b) the number of Licensed Products Sold and
amount of Sales by country during such Calendar Half, (c) the
number of Licensed Products in inventory at the end of such
Calendar Half, (d) the gross receipts for Sales of Licensed
Products during such Calendar Half including total amounts invoiced
and received, (e) any Permissible Deductions giving totals by each
type for such Calendar Half, (f) Net Sales of Licensed Products by
country for such Calendar Half, (g) royalties, fees and payments
due to WU for such Calendar Half, giving totals for each category,
and (h) earned royalty amounts credited against minimum royalty
payments for such Calendar Half. For Licensed Services, each such
report shall show, at a minimum, (a) the number of Licensed
Services performed during such Calendar Half and a description of
such Licensed Services, (b) the total gross revenues by country for
Licensed Services during such Calendar Half including total amounts
invoiced and received, and (c) royalties due to WU for such
Calendar Half, giving totals for each category.
6.4
Books
and Records. Licensee
shall maintain complete and accurate books of account and records
that would enable an independent auditor to verify the amounts paid
as royalties, fees and payments under this Agreement. The books and
records must be maintained for ten years following the Calendar
Half after submission of the reports required by this Agreement.
Upon reasonable notice by WU, Licensee must give WU (or auditors or
inspectors appointed by and representing WU) access to all books
and records relating to Sales of Licensed Products by Licensee and
the performance of Licensed Services by Licensee to conduct, at
WU’s expense, an audit or review of those books and records.
This access must be available at least once every six (6) months,
during regular business hours, during the term of this Agreement
and for the three calendar years following the year in which
termination or expiration of this Agreement occurs. If any such
audit or review determines that Licensee has underpaid royalties by
5% or more for any Calendar Half, Licensee shall (a) reimburse WU
for the costs and expenses of the accountants and auditors in
connection with the review and audit, and (b) immediately pay WU
the amount of such underpayment along with interest on the past due
amount as provided in Section 6.5 below.
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6.5 Interest
and Collection. Any
amounts not paid by Licensee to WU when due shall accrue interest,
from the date thirty (30) days after the balance is due at an
interest rate of 1.5% per month or portion of a month. In addition,
Licensee will reimburse WU for all reasonable costs and expenses
incurred (including reasonable attorneys’ fees) in collecting
any overdue amounts.
6.6
Foreign
Taxes. Payments shall
be paid to WU free and clear of all foreign taxes. If laws, rules
or regulations require withholding of income taxes of other rates
imposed upon payments set forth in this Agreement, Licensee shall
make such withholding payments as required and without subtracting
such withholding payments from such payments to WU. Licensee shall
submit appropriate proof of payment of the withholding rates to WU
within a reasonable period of time. Licensee shall use efforts
consistent with its usual business practices to minimize the extent
of any withholding taxes imposed under the provisions of the
current or any future double taxation treaties or agreement between
foreign countries, and the parties shall cooperate with each other
with respect thereto, with the appropriate party under the
circumstances providing the documentation required under such
treaty or agreement to claim benefits thereunder.
7.
Confidentiality.
7.1
Definition of
Confidential Information. The parties acknowledge that, prior to
and during the Term of this Agreement, the parties may disclose to
one another scientific, technical, trade secret, business, or other
information which is treated by the disclosing Party as
confidential or proprietary, including but not limited to
unpublished Patent Rights patent applications, Technical
Information, and Tangible Research Property. (hereinafter referred
to as “Confidential Information”). Both parties agree
that in order to ensure that each party understands which
information is deemed to be confidential, all Confidential
Information will be in written form and clearly marked as
“Confidential,” and if the Confidential Information is
initially disclosed in oral or some other non-written form, it will
be confirmed and summarized in writing and clearly marked as
“Confidential” within thirty (30) days of disclosure.
The receiving party shall hold such Confidential Information in
confidence and shall treat such information in the same manner as
it treats its own confidential information but not less than with a
reasonable degree of care. In recognition that WU is a
non-commercial, academic institution, Licensee agrees to limit to
the extent possible the delivery of Licensee Confidential
Information to WU. WU retains the right to refuse to accept any
such information or data from Licensee which it does not consider
to be essential to this Agreement or which it believes to be
improperly designated, for any reason, but such refusal shall not
eliminate the obligation of the individual making such a
determination from treating such information as confidential
hereunder where such information has been read by such individual.
The Confidential Information provided to the receiving party will
remain the property of the disclosing party, and will be disclosed
only to those persons necessary for the performance of this
Agreement. No indirect or consequential damages or damages based on
loss of profits or market share are contemplated or recoverable for
breach of confidentiality.
7.2
Exclusions.
Confidential Information does not include information that (a) was
known to the receiving party prior to receipt from the disclosing
party as evidenced by the receiving party’s records; (b) is
or becomes part of the public domain through no act by or on behalf
of the receiving party; (c) is lawfully received by the receiving
party from a third party without any restrictions, and/or (d)
comprises identical subject matter to that which had been
originally and independently developed by the receiving party
personnel without knowledge or use of any Confidential Information
as evidenced by the receiving party’s records.
7.3 General
Obligations. Subject
to Section 2.5 above and to Sections 7.5 and 7.6 below, the
receiving party agrees that during the term of this Agreement and
forever thereafter it will (a) refrain from disclosing any
Confidential Information to third parties, (b) disclose
Confidential Information to only those employees of the receiving
party necessary for the receiving party to use the Confidential
Information in accordance with this Agreement and who are subject
to restrictions on use and disclosure at least as restrictive as
those set forth in this Agreement, (c) keep confidential the
Confidential Information, and (d) except for use in accordance with
the licenses which are expressly granted in this Agreement, refrain
from using Confidential Information.
-10-
7.4
No
License. By
disclosing the WU Confidential Information to Licensee, WU does not
grant any express or implied rights to Licensee under any patents,
copyrights, trademarks, or trade secrets. WU reserves, without
prejudice, the ability to protect its rights under any such
patents, copyrights, trademarks, or trade secrets.
7.5
Judicial
Procedures. The
receiving party may, to the extent necessary, disclose the
disclosing party’s Confidential Information in accordance
with a judicial or other governmental order, provided that the
receiving party either (a) gives the disclosing party reasonable
notice prior to such disclosure to allow the disclosing party a
reasonable opportunity to seek a protective order or equivalent, or
(b) obtains written assurance from the applicable judicial or
governmental entity that it will afford the Confidential
Information the highest level of protection afforded under
applicable law or regulation.
7.6
Governmental
Approvals. Licensee
may, to the extent necessary, use and disclose the Confidential
Information to secure governmental approval to clinically test or
market a Licensed Product or Licensed Service, or, if applicable,
to secure patent protection for an invention within the Patent
Rights. Licensee will, in any such event, take all reasonably
available steps to maintain the confidentiality of the disclosed
Confidential Information and to guard against any further
disclosure.
8.
Representations and Warranties.
8.1
Authority.
Each of WU and Licensee represents and warrants to the other of
them that (a) this Agreement has been duly executed and
delivered and constitutes a valid and binding agreement enforceable
against such party in accordance with its terms, (b) no
authorization or approval from any third party is required in
connection with such party’s execution, delivery, or
performance of this Agreement, and (c) the execution,
delivery, and performance of this Agreement does not violate the
laws of any jurisdiction or the terms or conditions of any other
agreement to which it is a party or by which it is otherwise
bound.
8.2
Compliance with
Laws. Licensee
represents and warrants that it will (a) use the Patent Rights,
Tangible Research Property and Technical Information only to
exploit the license rights granted in Sections 2.1, 2.2 and 2.3 in
accordance with the provisions of this Agreement and with such
laws, rules, regulations, government permissions and standards as
may be applicable thereto in the Territory and in the Field, and
(b) otherwise comply with all laws, rules, regulations, government
permissions and standards as may be applicable to Licensee in the
Territory with respect to the performance by Licensee of its
obligations hereunder.
8.3
Reports
and Statements. Licensee warrants that all reports
and/or statements provided by Licensee hereunder are true and
correct and are certified true and correct by Licensee upon
delivery to WU.
8.4
Additional
Warranties of Licensee. Licensee represents and warrants that
(a) it has obtained the insurance coverage required by Article 11
below, and (b) there is no pending litigation and no threatened
claims against it that could impair its ability or capacity to
perform and fulfill its duties and obligations under this
Agreement.
8.5
Additional
Warranties of WU. WU represents and warrants that (a) it has
in place an intellectual property policy that provides for its
ownership (subject to any rights retained by the U.S. government by
operation of law) of the Patent Rights, Technical Information and
Tangible Research Property; (b) as of the Effective Date, it has
received no notice of any third party claims against WU challenging
WU’s ownership or control of the Patent Rights, Technical
Information and Tangible Research Property; and (c) it has obtained
assignments from all WU inventors named in patent applications
within the Patent Rights assigning to WU all their right, title and
interest in and to the Patent Rights.
-11-
9.
Application, Prosecution and Maintenance of Patent
Rights.
9.1 Patent
Applications. WU has
the sole right to control the preparation, filing, prosecution,
issue and maintenance of Patent Rights patents and applications.
Subject to compliance by Licensee of the terms and conditions of
this Agreement (including, without limitation, Section 9.2
below),WU will (a) prosecute and maintain the applications and
patents within the Patent Rights, and (b) prepare, file and
prosecute additional applications within the Patent Rights as
Licensee may reasonably request, in WU's name at Licensee’s
sole cost and expense. WU will select qualified outside patent
counsel and corresponding foreign associates reasonably acceptable
to Licensee to prepare, file, prosecute and maintain U.S.
patents/applications and foreign counterparts within the Patent
Rights. WU will consult with Licensee regarding the prosecution of
Patent Rights patent applications including, without limitation,
providing Licensee a reasonable opportunity to review and comment
on proposed submissions to any patent office before the submission
is filed. WU will keep Licensee reasonably informed of the status
of Patent Rights patents and applications by timely giving Licensee
copies of significant communications relating to such Patent Rights
that are received from any patent office or outside patent counsel
of record or foreign associate.
9.2 Costs
and Expenses. Subject
to Section 9.3 below, Licensee agrees to reimburse WU for all
reasonable costs and expenses incurred by WU in connection with the
preparation, filing, prosecution, issue and/or maintenance of
patents and applications within the Patent Rights both prior to the
Effective Date on patent actions authorized by Licensee and anytime
thereafter during the term of this Agreement provided WU provides
Licensee notice of such fees before the date on which the
applicable cost or expense is to be incurred by WU. Licensee agrees
to pay WU the amount of any such reimbursement within thirty (30)
days after receipt by Licensee of documentation for any such costs
and expenses, which WU may provide to Licensee from
time-to-time.
9.3
Failure
to Reimburse.
Licensee may elect not to reimburse WU for amounts due under
Section 9.2 in respect to one or more Patent Rights patent and/or
applications only by giving WU notice of such election at least
thirty (30) days before the date on which the applicable cost or
expense is to be incurred by WU (each an “Election
Notice”). For purposes of this Section 9.3, a cost or expense
shall be deemed to be incurred by WU on the earlier of (a) the date
WU actually pays the cost or expense, or (b) the date WU becomes
obligated to pay the cost or expense (which, for example, shall be
the date WU engages a third party to perform any service which
gives rise to any such cost or expense). Any such Election Notice
shall specify the Patent Rights patents and/or applications to
which such Election Notice relates (“Elected Patent
Rights”). In the event any Election Notice is given by
Licensee, (a) the term “Patent Rights” shall be
modified to exclude, as applicable, such Elected Patent Rights, (b)
the term “Technical Information” shall be modified to
exclude any research and development information, unpatented
inventions, know-how, data, methods, and technical data and
information no longer necessary for the exploitation of the license
granted to the remaining Patent Rights, and (c) the term
“Tangible Research Property” shall be modified to
exclude any and all research tools and other personal property that
WU may have provided to Licensee that is no longer necessary for
the exploitation of the license granted to the remaining Patent
Rights, in each instance as of the date the Election Notice is
given. Accordingly, and for the avoidance of doubt, as of the date
the Election Notice is given, the license to the Elected Patent
Rights, the applicable Technical Information and the applicable
Tangible Research Property granted to Licensee under Sections 2.1,
2.2 and 2.3 above shall terminate, and WU shall be free, without
any further obligation to Licensee whatsoever, to abandon the
applications or patents subject to the Election Notice, or to
continue prosecution or maintenance, for WU’s sole use and
benefit, including a license to unrelated third parties, at
WU’s option. Licensee agrees to deliver to WU, along with any
Election Notice, all Technical Information and Tangible Research
Property to which such Election Notice relates. For the avoidance
of doubt, WU will not refund any amounts paid under Section 9.2 to
WU prior to WU’s receipt of an Election Notice.
-12-
9.4 Community
of Interest. The Parties desire to avail themselves to the
maximum extent possible of all applicable legal privileges. The
Parties intend that information regarding the preparation, filing,
prosecution and maintenance of the applications and patents within
the Patent Rights (“Shared Information”) that would
otherwise be subject to one or more legal privileges or protections
is and shall be subject to those same privileges and protections
despite the fact that it has been developed by or exchanged between
or among them and/or their joint or independent counsel. The
Parties further intend that Shared Information is and shall be
subject to the joint defense doctrine and common interest/community
of interest doctrine as recognized in such cases as Hunydee v.
United States, 355 F.2d 183 (9th Cir. 1965), Continental Oil
Company v. United States, 330 F.2d 347 (9th Cir. 1964), In re
University of California, 101 F.3d 1386 (Fed. Cir. 1996), and In re
Spalding Sports Worldwide, Inc., 203 F.3d 800 (Fed. Cir. 2000),
including the cases cited therein. The Parties acknowledge that the
legal privileges and protections pertaining to Shared Information
are held jointly by all Parties, and that no individual Party is
authorized to waive any such privilege or protection. Further, this
Agreement shall not affect the ethical, fiduciary or other
obligations inherent in those attorney-client relationships other
than to extend the cloak of confidentiality and privilege to the
Shared Information as provided herein. Each Party agrees that
Shared Information obtained from another Party or developed jointly
shall be used only for the preparation and prosecution of the
Licensed Patents and for no other purpose. Each Party agrees to
keep Shared Information confidential, disclose Shared Information
within each Party only to those individuals who have a business
need to know the information and not to disclose Shared Information
to any person or firm not a Party to this License
Agreement.
10.
Infringement, Enforcement, and Defense.
10.1
Notice of
Infringement.
Throughout the term of this Agreement, each of WU and Licensee
agree to give the other prompt notice of (a) any known or suspected
infringement of the Patent Rights or unauthorized use or disclosure
of the Technical Information and/or Tangible Research Property in
the Territory, and (b) any claim that a Licensed Product or
Licensed Service infringes the intellectual property rights of a
third party.
10.2
Patent
Rights.
10.2.1
Enforcement.
Licensee, at its sole expense, will attempt to stop promptly any
infringement of the Patent Rights in the Territory. Upon receipt of
WU’s written consent, such consent not to be unreasonably
withheld, Licensee may initiate and prosecute actions in its own
name or, if required by law, in WU’s name against third
parties for infringement of the Patent Rights in the Territory
through outside counsel of Licensee’s choice who are
reasonably acceptable to WU. Licensee shall consult with WU prior
to and in conjunction with all significant issues, shall keep WU
informed of all proceedings, and shall provide copies to WU of all
pleadings, legal analyses, and other papers related to such
actions. WU will provide reasonable assistance to Licensee in
prosecuting any such actions. If Licensee fails or declines to take
any action under this Section 10.2.1 within a reasonable time after
learning of the infringement of the Patent Rights, WU shall have
the right (but not the obligation) to take appropriate actions
including, without limitation, filing a lawsuit. Licensee will
provide reasonable assistance to WU in prosecuting, resolving
and/or settling any such actions In the event a third party alleged
to have infringed the Patent Rights brings a declaratory judgment
action against Licensee, Licensee may at its sole discretion
decline to litigate the declaratory judgment action or initiate
action for the alleged infringement in question. Should
Licensee decline to litigate a declaratory judgment action, WU
shall have the right (but not the obligation) to defend Licensee
and the Patent Rights at WU's sole expense and direction.
Licensee will provide reasonable assistance to WU in prosecuting,
defending, resolving and/or settling such action. Nothing under
this Section 10.2.1 shall be construed to require Licensee to
initiate or prosecute an action for patent infringement against
third parties.
10.2.2 Restrictions
on Settlement.
Notwithstanding anything in this Agreement to the contrary,
Licensee may not, without the advanced written consent of WU,
settle, compromise, or otherwise enter into any form of settlement
(or other similar agreement) regarding any claim of action brought
under Section 10.2.1 above that either (a) admits liability on the
part of WU, (b) otherwise negatively affects the rights of WU or
imposes any liability, restrictions or obligation upon WU, (c)
requires any financial payment by WU, (d) concedes or otherwise
portions the Territory and/or (e) grants rights or concessions to a
third party to the Patent Rights, any Licensed Products, any
Licensed Services.
-13-
10.2.3 Proceeds.
If Licensee obtains any value, payment or compensation of any type
or kind as a result of any claim brought pursuant to Section 10.2.1
above, such proceeds shall be distributed in accordance with the
further provisions of this Section 10.2.3. Licensee shall pay to WU
a percentage of any and all proceeds equal to the Patent Royalty
Rate.
10.3 Technical
Information. WU shall
have the exclusive right (but not the obligation) to institute
legal action against any third party arising out of such third
party’s actual or threatened infringement or misappropriation
of the Technical Information, and WU shall retain any and all
proceeds from any such actions. Licensee shall have no right to
make any demands or claims, bring suit, effect any settlements or
take any other action with respect to any such infringement or
misappropriation without the prior written consent of
WU.
11.
Indemnification.
11.1 Notwithstanding
anything else in this Agreement, Licensee agrees to indemnify,
reimburse and hold harmless WU, WU personnel, the principal
investigator, WU’s Affiliates, and each of their respective
present trustees, faculty, staff, employees, students, directors,
officers, agents, successors and assigns (altogether the “WU
Indemnitees”) from, for and against any and all judgments,
settlements, losses, expenses, damages and/or liabilities (the
“Losses”) and any and all court costs, attorneys’
fees, and expert witness fees and expenses (“Fees”)
that a WU Indemnitee may incur from any and all allegations,
claims, suits, actions or proceedings (the “Claims”)
arising out of, relating to, or incidental to Licensee’s
breach of this Agreement or its use, commercialization, or other
exploitation of WU deliverables, whether by or through Licensee,
and including all Claims for infringement, injury to business,
personal injury and product liability, but excluding Losses, not
Fees, to the extent they are adjudicated by a Court of competent
jurisdiction to be caused by the gross negligence or willful
misconduct of a WU Indemnitee.
11.2
WU agrees to indemnify,
reimburse and hold harmless Licensee, Licensee personnel,
Licensee’s Affiliates, and its present staff, employees,
directors, officers, agents, successors and assigns (together the
“Licensee Indemnitees”) from, for and against any and
all Losses and Fees that a Licensee Indemnitee may incur from any
and all Claims by WU Indemnitees arising out of, relating to, or
incidental to WU’s activities pursuant to this Agreement,
including, without limitation, WU’s use, storage or handling
of company property at WU.
11.3 Obligations
set forth in this section shall survive termination of this
Agreement, shall continue even after assignment of rights and
responsibilities, and shall not be limited by any provision of this
Agreement outside this section. A party seeking indemnification
under this Agreement shall: (a) give the indemnifying party prompt
written notice of the Claim; (b) cooperate with the indemnifying
party, at the indemnifying party’s expense, in connection
with the defense and settlement of the Claim; and (c) not settle or
compromise the Claim without the written consent of the
indemnifying party, which shall not be unreasonably withheld. An
indemnifying party may satisfy its duty to indemnify for Fees by
accepting an irrevocable duty to defend the Claim on behalf of the
Indemnitees without a reservation of rights, at which time the
indemnifying party shall be entitled to conduct and direct the
defense of Indemnitees against such Claim using attorneys of its
own selection; for all other Claims, the Indemnitee shall be
entitled to conduct and direct its own defense and that of other
Indemnitees using attorneys of its own selection with Fees subject
to the indemnifying party’s ongoing obligation to indemnify
for Fees.
12.
Insurance.
Throughout
the Term of this Agreement and for a period of five (5) years
thereafter, Licensee shall obtain and maintain comprehensive
general liability and product liability insurance, naming WU as an
additional insured, with carrier(s) having at least A.M. Best
ratings/class sizes of A/VII and in the following minimum annual
limits: From the Effective Date until the date at least one day
prior to the First Commercial Sale or clinical study: $2,000,000
per occurrence and $5,000,000 in the aggregate; and from the date
at least one day prior to the First Commercial Sale or clinical
study: $5,000,000 per occurrence and $10,000,000 in the
aggregate.
Licensee
will provide WU with a certificate of insurance within thirty days
of execution of this Agreement and annually thereafter. The
certificates must provide that Licensee’s insurer will notify
WU in writing at least thirty (30) days prior to cancellation or
material change in coverage. The specified minimum insurance
coverage and limits do not
constitute a limitation on Licensee’s liability or obligation
to indemnify or defend under this Agreement.
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13.
Term and Termination.
13.1
Term. The
Term of this Agreement is defined in the Preamble and is subject to
earlier termination as provided herein.
13.2
Termination By
Licensee. Licensee may terminate this
Agreement without cause by (a) giving notice thereof to WU, and (b)
paying WU, along with such notice, all amounts due and owing to WU
under this Agreement as of the date of termination and a
termination fee (“Termination Fee”). Any such
termination shall be effective on the date such notice is given
along with the Termination Fee. The Termination Fee shall be an
amount equal to all amounts that would have come due under this
Agreement (absent termination) under Sections 5.2, 5.4 and 5.5
above in the one hundred twenty (120) day period after the
effective date of termination.
13.3
Termination by
WU. WU may terminate
this Agreement by giving notice thereof to Licensee upon the
occurrence of any one or more of the following events (in which
event this Agreement shall terminate on the date such notice is
given): (a) Licensee fails to meet any of the milestones set forth
in the Development Plan and/or in Exhibit F on or before the times
set forth in the Development Plan (regardless of whether Licensee
has used its best efforts to do so) and fails to remedy such
failure within sixty (60) days after WU gives Licensee notice of
such failure, (b) Licensee breaches any other written agreement
between Licensee and WU (and/or defaults in any obligation to WU
outside the scope of this Agreement) and Licensee fails to remedy
such breach (or default) within sixty (60) days after WU gives
Licensee notice of, as applicable, such breach or default, (c)
Licensee exercises, or
attempts or offers to exercise, any rights with respect to the
Patent Rights and/or the Technical Information outside the scope of
the licenses granted to Licensee in Article 2 above, (d) Licensee
breaches any provision of Article 6 above, and/or (e) Licensee (i)
becomes insolvent, bankrupt, or is otherwise unable to pay its
debt(s) to WU by the due date(s), or (ii) Licensee suffers the
appointment of a receiver, receiver and manager, or administrative
receiver of the whole or any part of its assets or undertaking,
(iii) a resolution is passed, for its winding up (other than for
the purpose of amalgamation or reconstruction),.
13.4
Breach
and Failure to Cure.
WU may terminate this Agreement by giving notice thereof to
Licensee in the event Licensee commits a breach of any provision of
this Agreement (other than a breach of the type contemplated by
Section 13.3 above) and fails to cure such breach within sixty (60)
days after the day that WU gives Licensee notice of such breach.
Such termination shall be effective on the date such notice of
termination is given. Licensee may terminate this Agreement by
giving notice thereof to WU in the event WU commits a breach of any
provision of this Agreement and fails to cure such breach within
thirty (30) days after the day that Licensee gives notice to WU of
such breach, and such termination shall be effective on the date
such notice of termination is given.
13.5
Duties Upon
Expiration or Earlier Termination. For the avoidance of doubt, on the
date of expiration or earlier termination of this Agreement, all
license rights granted to Licensee under Article 2 above shall
terminate. Licensee agrees to, promptly upon the expiration or
earlier termination of this Agreement, deliver to WU all originals,
copies, reproductions and summaries of all Tangible Research
Property, Technical Information and Confidential Information, in
each instance in the format in which it exists at the time of
expiration or earlier termination of this Agreement, or in another
mutually agreed format. Within ten (10) days after the expiration
or earlier termination of this Agreement for any reason whatsoever,
Licensee agrees to deliver a written report to WU of all Licensed
Products in inventory. If this Agreement terminates before the
expiration of the last-to-expire Patent Rights, then, upon the
termination of this Agreement, Licensee agrees (a) to immediately
discontinue the exportation of Licensed Products that were made in
the Territory, (b) to immediately discontinue the manufacture, Sale
and distribution of the Licensed Products in the Territory and the
performance of Licensed Services in the Territory, (c) to
immediately destroy all Licensed Products in inventory, and (d) not
to manufacture, sell and/or distribute Licensed Products in the
Territory until the expiration of applicable last-to-expire Patent
Rights. If this Agreement expires, Licensee agrees to, within ten
(10) days after the expiration of this Agreement, pay WU a royalty
for the Licensed Products in inventory equal to the Royalty Rate of
the then current market value of the Licensed Products in
inventory.
-15-
13.6
Effect of
Expiration or Earlier Termination. For the avoidance of doubt, the
expiration or earlier termination of this Agreement shall not
relieve Licensee of its obligation to account for and make payment
to WU of any amount due hereunder including, without limitation,
any royalties accrued during the Term of this Agreement and amounts
under Section 9.2 and 13.2 above.
14.
Disclaimer and
Limitation of Liability. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, EVERYTHING PROVIDED BY WU UNDER THIS AGREEMENT IS
UNDERSTOOD TO BE EXPERIMENTAL IN NATURE, MAY HAVE HAZARDOUS
PROPERTIES, AND IS PROVIDED WITHOUT ANY WARRANTY OF ANY KIND,
EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR
NON-INFRINGEMENT OF ANY THIRD-PARTY PATENT, TRADEMARK, COPYRIGHT OR
ANY OTHER THIRD-PARTY RIGHT. WU MAKES NO WARRANTIES REGARDING THE
QUALITY, ACCURACY, COMMERCIAL VIABILITY OR ANY OTHER ASPECT OF ITS
PERFORMANCE PURSUANT TO THIS AGREEMENT OR REGARDING THE
PERFORMANCE, VALIDITY, SAFETY, EFFICACY OR COMMERCIAL VIABILITY OF
ANYTHING PROVIDED BY WU UNDER THIS AGREEMENT. IN NO EVENT SHALL WU
OR LICENSEE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT,
WHETHER IN BREACH OF CONTRACT, TORT OR OTHERWISE, EVEN IF THE PARTY
IS ADVISED OF THE POSSIBLITY OF SUCH DAMAGES. EXCEPT FOR THEIR
RESPECTIVE INDEMNITY OBLIGATIONS, EACH OF WU’S AND
LICENSEE’S AGGREGATE LIABILITY TO THE OTHER UNDER THIS
AGREEMENT SHALL NOT EXCEED THE PAYMENTS MADE OR PAYMENTS DUE UNDER
THIS AGREEMENT, RESPECTIVELY.
15.
General Provisions.
15.1
Import/Export
Controls. In performing their respective obligations under
the Agreement, the Parties will comply with United States export
control and asset control laws, regulations, and orders, as they
may be amended from time to time, applicable to the export or
re-export of goods or services, including software, processes, or
technical data. Such regulations include without limitation the
Export Administration Regulations (“EAR”),
International Traffic in Arms Regulations (“ITAR”), and
regulations and orders administered by the Treasury
Department’s Office of Foreign Assets Control (collectively,
“Export Control Laws”). WU is not transferring any
information or material outside of the United States under this
Agreement and is providing no representation regarding the export
control status or classification of any information or materials
provided hereunder.
15.2
Entire
Agreement; Amendment.
This Agreement embodies the entire understanding of the parties and
supersedes all other past and present communications and agreements
relating to the subject matter. No amendment or modification of
this Agreement shall be valid unless made in writing and signed by
authorized representatives of both parties.
15.3 Governing
Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State
Missouri, without regard to its rules or procedures involving
conflicts of laws. All actions relating to this Agreement shall be
brought exclusively in the United States District Court for the
Eastern District of Missouri or the Circuit Court of St. Louis
County, Missouri, if no federal subject matter jurisdiction exists.
The Parties irrevocably waive all present and future objections to
personal jurisdiction, forum or venue in such courts.
15.4
Survival.
Each provision of this Agreement that would by its nature or terms
survive, shall survive any termination or expiration of this
Agreement, regardless of the cause. Such provisions include,
without limitation, Sections 7, 8, 10, 11, 12, and 14.
-16-
15.5
Notices.
Notices pursuant to this Agreement shall be to the following
contacts and are effective when sent if sent by a commercial
carrier’s overnight delivery service or when received if sent
otherwise:
Office of
Technology Management
Attention:
Director
Washington
University in St. Louis
660 South Euclid
Avenue, CB 8013
St. Louis, MO
63110
15.6
Assignment.
This Agreement is binding upon and inures to the benefit of the
Parties and their successors, but this Agreement may not be
assigned by either party without the prior written consent of the
other party.
15.7
Construction.
The recitals and preamble to this Agreement, if any, are hereby
incorporated as an integral part of this Agreement as if restated
herein in full. Headings are included for convenience and reference
only and are not incorporated as an integral part of this
Agreement. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and as
executed shall constitute one agreement, binding on both parties,
even though both parties do not sign the same
counterpart.
15.8
Relationship of the
Parties. Each Party
is an independent contractor and not a partner or agent of the
other Party. This Agreement will not be interpreted or construed as
creating or evidencing any partnership or agency between the
Parties or as imposing any partnership or agency obligation or
liability upon either Party. Further, neither Party is authorized
to, and will not, enter into or incur any agreement, contract,
commitment, obligation or liability in the name of or otherwise on
behalf of the other Party.
15.9
Severability. If any
provision in this Agreement is held invalid, illegal, or
unenforceable in any respect, such holding shall not affect any
other provisions of this Agreement, and this Agreement shall be
construed as if it had never contained the invalid, illegal, or
unenforceable provisions.
15.10
Remedies.
The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement,
or to exercise any right or remedy under this Agreement will not be
interpreted or construed as a waiver or relinquishment of that
Party's right to assert or rely upon any such provision, right or
remedy in that or any other instance; rather, the same will be and
remain in full force and effect. All rights and remedies under this
Agreement are cumulative of every other such right or remedy and
may be exercised concurrently or separately from
time-to-time.
15.11
Use of
Names. Neither Party
may use the trademarks or name of the other Party or its employees
for any commercial, advertisement, or promotional purposes without
the prior written consent of the other with WU acting through an
authorized corporate officer. If either party is required by law,
governmental regulation, or its own authorship or conflict of
interest policies to disclose its relationship with the other
Party, including, but not limited to, in SEC filings, scientific
publications or grant submissions, it shall provide the other Party
with a copy of the disclosure.
15.12
Force
Majeure. Neither WU
nor Licensee will be liable for failure of or delay in performing
obligations set forth in this Agreement, and neither will be deemed
in breach of its obligations, other than for Payments, if such
failure or delay is due to natural disasters or other causes
reasonably beyond the control of a Party and reasonable notice of
the delay is provided to the other Party.
15.13
WU
Personnel. Licensee
agrees that for all WU faculty or staff members who serve Licensee
in the capacity of consultant, officer, employee, board member,
advisor, or otherwise through a personal relationship with Licensee
(a “Consultant”) (i) such Consultant shall serve the
Licensee in his or her individual capacity, as an independent
contractor, and not as an agent, employee or representative of WU;
(ii) WU exercises no authority or control over such Consultant
while acting in such capacity; (iii) WU receives no benefit from
such activity; (iv) neither Licensee nor the Consultant may use WU
resources in the course of such service; (v) WU makes no
representations or warranties regarding such service and otherwise
assumes no liability or obligation in connection
with
any such work or service undertaken by such Consultant; and (vi)
any breach, error, or omission by a Consultant acting in the
capacity set forth in this paragraph shall not be imputed or
otherwise attributed to WU, and shall not constitute a breach of
this Agreement by WU.
-17-
15.14
Further
Acts. Each party shall, at the reasonable request of the
other, execute and deliver to the other such instruments and/or
documents and shall take such actions as may be required to more
effectively carry out the terms of this Agreement.
15.15
Impact
on Tax-Exempt Status. WU advises (a) that it is exempt
from federal income tax under Section 501(c) (3) of the Internal
Revenue Code, (b) that maintenance of such exempt status is of
critical importance to WU and to its members, and (c) that WU has
entered into this Agreement with the expectation that there will be
no adverse impact on its tax exempt status. As such, and if it
becomes necessary, the parties agree to amend, modify or reform
this Agreement as necessary (i) in order to ensure that there is no
material adverse impact on WU's tax exempt status, and (ii) in a
manner that preserves the economic terms of the Agreement as such
are set forth in this Agreement.
The
signatures of the undersigned indicate that they have read,
understand and agree with the terms of this Agreement and have the
authority to execute this Agreement on behalf of their represented
Party and to bind their Party to all the terms of this
Agreement.
WASHINGTON
UNIVERSITY
By:
/s/ Bradley J. Castanho,
Ph.D.
Title:
Assistant Vice
Chancellor for Research
Office of
Technology Management
Washington
University in St. Louis
LICENSEE
By:
/s/ Tom
Varvaro
Title:
CFO
-18-
Exhibit A
Initial Development Plan
(a) a
definition and/or specification of each Licensed Product/Service
planned for development,
|
Field
1
|
Dietary
supplement, sports nutrition, foods with health claims,
skincare/cosmetics
|
|
Field
2
|
food
or drink products requiring FDA approval
|
|
Field
3
|
Consumer foods,
such as dairy products, formulas, cereal
|
|
Field
4
|
Research (ref
standard at $3000/gram)
|
|
Field
5
|
Pharmaceuticals
|
(b) the
tasks to be performed by Licensee, its contractors to develop each
Licensed Product to the point of commercialization, including
estimated time schedules for specific tasks such as prototype
development, beta testing, trials, product development, and market
surveys and testing;
Product
Development
ChromaDex embarked
on an ambitious NR product development program to yield a
commercially viable product. After careful review of the patent
literature surrounding the synthesis of NR and 9 months of
continuous experimentation, ChromaDex scientists have arrived at an
improved synthetic chemistry approach that yields a high purity NR
product with very good recoveries. While the methodolgy is sound
and reproducible, the resultant material is not a commercially
viable product. ChromaDex has contracted with two commercial
partners to refine the methodology, generate a commericially viable
product and scale up the resultant process to commercial production
levels. Our expected availability of product is anticipated to be
mid Q3 of 2013.
Product
Profile, Commercial Viability and Impact on Plan
The
business plan will be contigent upon having cost effective
commercially viable product, therefore the timeline for commercial
and clinical events will be represented at L + or -. L will
represent the date ChromaDex has the availability of commercially
viable product. Commercial viability is dependent on profile and
cost.
Clinical
Plan
|
Nicotinamide
Riboside
|
PK
|
L +
3mos
|
Initial
data to support dosing and safety
|
|
Nicotinamide
Riboside
|
comparison
to niacin in optimization of NAD pathway and its
effects
|
L +
3mos
|
For
cholesterol mainly, but other minor niacin comparisons
(anti-oxidant, anti-inflammatory)
|
|
Nicotinamide
Riboside
|
Weight
loss, metabolism, and associated molecular markers
|
L +
6mos
|
This is
based on NR conversion to NAD, and NAD's role in activating histone
deacetylases (HDACs) which are used to control
metabolism
|
|
Nicotinamide
Riboside
|
Endurance
and sports nutrition
|
L + 9
mos
|
Based
on NR's position in the NAD recycling pathway following use in ATP
production
|
|
Nicotinamide
Riboside
|
Joint
health
|
L + 15
mos
|
Based
on a comparison to niacin's ability to increase range of motion,
decrease pain, and act as an anti-inflammatory
|
|
Nicotinamide
Riboside
|
Chemotherapy-induced
neuropathy
|
L +
21mos
|
This
ican be an OTC and ulitimatley a pharma inquiry
|
-19-
(c) the
tasks to be performed to achieve regulatory approval or other
certification of each Licensed Product/Service, including estimated
time schedules for each;
Regulatory
Plan
Self
affirmed GRAS L+18 mos
(d) the
identification of the primary country(ies) in which the Licensed
Product(s)Service(s) will be sold and a good faith estimate of time
of First Commercial Sale in the primary country(ies);
and
|
Country Roll out
|
|
|
|
USA
|
Q3
|
2013
|
|
Canada
|
Q2
|
2015
|
|
Australia
|
Q2
|
2016
|
|
EU
|
Q4
|
2016
|
|
Asia
|
Q4
|
2017
|
|
(e)
good faith estimates of Sales and income by Calendar Half for the
next five calendar years including the first calendar year or
partial calendar year following the Effective Date.]
|
|
|
|
Company Sales
(USD)
|
Q3
2013
|
Q4
2013
|
1H
2014
|
2H
2014
|
1H
2015
|
|
|
Field
1
|
Dietary supplement,
sports nutrition, foods with health claims
|
$125,000
|
$187,500
|
$437,500
|
$500,000
|
$625,000
|
|
Field
2
|
food or drink
products requiring FDA approval
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
Field
3
|
Consumer foods,
such as dairy products, formulas, cereal
|
$0
|
$0
|
$0
|
$8,000
|
$20,000
|
|
Field
4
|
Research
|
$750
|
$750
|
$1,500
|
$1,500
|
$2,250
|
|
Total
|
$125,750
|
$188,250
|
$439,000
|
$509,500
|
$647,250
|
|
|
|
|
|
|
|
|
|
|
Company Sales
(USD)
|
2H
2015
|
1H
2016
|
2H
2016
|
1H
2017
|
2H
2017
|
|
|
Field
1
|
Dietary supplement,
sports nutrition, foods with health claims
|
$812,500
|
$1,000,000
|
$1,125,000
|
$1,250,000
|
$1,312,500
|
|
Field
2
|
food or drink
products requiring FDA approval
|
$0
|
$10,000
|
$20,000
|
$30,000
|
$40,000
|
|
Field Field
3
|
Consumer foods,
such as dairy products, formulas, cereal
|
$50,000
|
$60,000
|
$100,000
|
$150,000
|
$150,000
|
|
Field
4
|
Research
|
$2,250
|
$3,000
|
$3,000
|
$4,500
|
$4,500
|
|
Total
|
$864,750
|
$1,073,000
|
$1,248,000
|
$1,434,500
|
$1,507,000
|
|
-20-
Exhibit B
Tangible Research Properties
NAD biosynthetic pathway carboxy His-tag murine cDNAs that
encode:
Nmnat1
Nmnat2
Nmnat3
Nrk1
Nrk2
Nampt
-21-
Exhibit C
Technical Information
Specific
protocols from the laboratory of Jeffrey Milbrandt outlining
experimental details of the prevention of axonal degradation by
increased activity of NAD salvage pathway via NMNAT and
Sir2
-22-
Exhibit D
Sublicense Agreement Provisions
Sublicensee agrees
to indemnify and hold harmless WU Indemnitees to the same extent
and under terms no less favorable to WU Indemnitees as
Licensee’s obligations under Article 11 of this
Agreement.
Sublicensee agrees
to maintain insurance for WU’s benefit to the same extent and
under terms no less favorable to WU as Licensee’s obligations
under Article 12 of this Agreement.
Sublicensee agrees
to maintain books and records and allow audits for WU’s
benefit to the same extent and under terms no less favorable to WU
as Licensee’s obligations under this Agreement.
If
Licensee enters bankruptcy or receivership, voluntarily or
involuntarily, sublicensing revenue then or thereafter due to
Licensee will, upon notice from WU to any Sublicensee, become
directly due and owing to WU for the account of Licensee. WU will
remit to Licensee any amounts received that exceed the sum actually
owed by Licensee to WU.
Washington
University is a third party beneficiary of this Sublicense
Agreement. Accordingly, Washington University may enforce this
Agreement against Sublicensee to the same extent as the
Sublicensor.
-23-
Exhibit E
Patent Rights
|
Application Type
|
Country
|
Application Number
|
Patent Number
|
Status
|
|
|
|
|
|
|
|
PCT
|
PCT
|
PCT/US2005/019524
|
|
Converted
|
|
Provisional
|
United States
|
60/577,233
|
|
Converted
|
|
Provisional
|
United States
|
60/641,330
|
|
Converted
|
|
Non-provisional application
|
United States
|
11/144,358
|
7,776,326
|
Granted
|
|
FOR - Foreign
|
EPO
|
5790283.5
|
|
Pending
|
|
FOR - Foreign
|
China
|
China
200580018114.8
|
ZL200580018114.8
|
Granted
|
|
Provisional
|
United States
|
60/886,854
|
|
Converted
|
|
PCT
|
PCT
|
PCT/US08/01085
|
|
Converted
|
|
FOR - Foreign
|
Canada
|
2676609
|
|
Pending
|
|
FOR - Foreign
|
Mexico
|
MX/A/2009/008022
|
|
Pending
|
|
Non-provisional application
|
United States
|
12/524,718
|
|
Pending
|
|
Divisional
|
United States
|
12/790,722
|
|
Pending
|
-24-
Exhibit F
Diligence Milestones
|
Market
|
Milestone
|
Timing
|
|
Field 1 (dietary supplement, sports
nutrition, functional foods, skin
care/cosmetic)
|
Commercial-scale
production
|
12
months
|
|
Cumulative
sales >3kg
|
18
months
|
|
|
$200K
cumulative sales
|
24
months
|
|
|
$1M
cumulative sales
|
36
months
|
|
|
Field 2 (food/beverage with FDA
approval)
|
Cumulative
sales >3kg
|
36
months
|
|
Cumulative
sales >20kg
|
48
months
|
|
|
Field 3 (consumer
foods)
|
Cumulative
sales >3kg
|
24months
|
|
$100K
cumulative sales
|
36
months
|
|
|
$500K
cumulative sales
|
48months
|
|
|
Field 4 (research)
|
$5K
cumulative sales
|
24
months
|
|
$10K
cumulative sales
|
36
months
|
|
|
Field 5 (pharmaceutical)
|
TBD
|
TBD
|
|
|
|
-25-