Exhibit 10.5
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Exclusive License Agreement
---------------------------
This is an agreement between
Siemens Medical Systems, Inc. ("Licensor")
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
a Delaware corporation, acting through ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, its Executive
Vice-President, and
LipoMed, Inc. ("Licensee")
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇
a North Carolina corporation, acting through ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its President,
WHEREAS Licensor owns U.S. Patent No. 4,933,844 (the "'844 patent") and
foreign counterpart applications thereto as listed on Schedule A; and
WHEREAS Licensee wishes to obtain an exclusive license, under the `844
patent and its counterpart applications, in order to sell certain blood testing
services and Licensor is willing to grant such license;
NOW THEREFORE, in consideration of their mutual promises, and intending
to be legally bound, the parties hereto agree as follows:
1. License Grant Licensor hereby grants to Licensee, and
-------------
Licensee hereby accepts, an exclusive license to U.S. Patent No. 4,933,844 and
counterpart patents and patent application thereto as listed on Schedule A. The
'844 patent, and all the patents and patent applications listed on Schedule A,
are hereinafter referred to collectively as "Patent Rights".
1.1 Territory The license herein granted covers a territory
---------
(hereinafter, the "Territory") that is coextensive with all
territories covered by the Patent Rights.
1.1.1 Territorial Changes If the parties mutually agree that
-------------------
one or more of the patents in Schedule A may be permitted to
lapse, the territory defined at paragraph 1.1 above will be
automatically amended to remain
coextensive with the territory covered by the remaining
effective Patent Rights.
1.2 Term The license herein granted will commence on the
----
Effective Date of this agreement, and will terminate
upon the expiration of the last-to-expire one of the
Patent Rights, unless sooner terminated in accordance
with the terms hereof.
1.3 Scope The license herein granted includes:
-----
a) The exclusive right to practice the invention
claimed in the Patent Rights;
b) The exclusive right to grant sublicenses to
others to practice the invention claimed in the
Patent Rights; and
c) The exclusive right to enforce the Patent Rights
against others.
2. Compensation to Licensor As compensation for the license
------------------------
herein granted to Licensee, Licensee agrees to make the following payments to
Licensor:
2.1 Lump Sum Reimbursement Licensee will pay Licensor the
----------------------
sum of $[**]. This sum will become due and payable [**] months
after the Effective Date of this agreement. The parties agree
that this sum represents a) the unpaid portion of a debt owed
by ▇▇▇▇▇ ▇. ▇▇▇▇▇ to Siemens AG, plus b) certain other costs
incurred by Licensor in connection with the granting of this
license.
2.2 Patent Maintenance Fees Licensee will reimburse
-----------------------
Licensor for all out-of-pocket costs to maintain the Patent
Rights in force during the term defined in paragraph 1.2
above. Such costs include, but are not limited to: maintenance
fees, requests for examination, and fees to local patent
attorneys not employed full-time by Licensor or Siemens
companies. Licensee will reimburse Licensor for all such costs
within 30 days after Licensor invoices Licensee for such
costs; Licensee is entitled to copies of such documentation as
is reasonably required to establish that such costs are
properly payable.
2.3 Minimum Annual Running Royalty Licensee will pay
------------------------------
Licensor a minimum annual running royalty of $[**]. If by
December 31 in any calendar year Licensee has not accrued
running royalties payable to Licensor of at least $[**] during
that calendar year, Licensee will increase such accrued
running royalties payable to $[**] and will pay such amount to
Licensor in Licensee's January payment.
2.3.1 Investigative Phase Exception No minimum annual
-----------------------------
running royalties will be payable during the Investigative
Phase of this license. As used herein, "Investigative Phase"
means a period of time that
2
a) Commences on the Effective Date of this
agreement, and
b) Ends 24 months after Licensee has received all
approvals necessary to sell its blood-testing
services in interstate commerce.
2.4 Running Royalties Licensee will pay Licensor running
-----------------
royalties based on Licensee's Net Sales of blood tests that
are
a) carried out in the Territory; and/or
b) carried out at the request of Licensee customers
that are located in the Territory.
2.4.1 Royalty Rate Schedule The royalty rate applicable to
---------------------
Licensee's Net Sales depends as follows upon the cumulative
Net Sales made by Licensee from the Effective Date of this
agreement until the current Computation Date (defined below at
paragraph 2.4.2):
a) For cumulative Net Sales from $[**] to
$[**]--[**]%;
b) For cumulative Net Sales from $[**] to
$[**]--[**]%;
c) For cumulative Net Sales above $[**]: --[**]%
2.4.2 Running Royalty Computations and Accruals Licensee
-----------------------------------------
will compute, and will accrue on its books, running royalties
due to Licensor as of four Computation Dates each year, namely
March 31, June 30, September 30, and December 31. In each such
computation, Licensee's Net Sales between the prior
Computation Date and the current Computation Date will be
multiplied by the applicable running royalty rate to compute
the running royalties due to Licensor.
2.4.3 Payment of Running Royalties Licensee will pay
----------------------------
Licensor all accrued running royalties due to Licensor within
[**] days after each Computation Date, i.e. by [**], and [**].
2.4.4 Net Sales The parties agree that "Net Sales", as used
---------
herein, means the gross invoiced amount of all sales made by
Licensee, less:
a) Returns, allowances, discounts and rebates;
b) Sales taxes and any other sums required by law
to be charged to Licensee's customers and
remitted to any governmental agency; and
c) Licensee's out-of-pocket costs for
transportation and handling of blood samples.
2.4.4.1 Arm's Length Principles Licensee agrees that if it
-----------------------
makes any sales or purchases other than on an "arms-length"
basis, the fair market value of
3
such sales or purchases will be used for purposes of paragraph
2.4.4 above.
2.4.5 Late Payments Licensee agrees to pay interest at the
-------------
annual rate of [**]% on each payment not paid by the date on
which it is due. The interest will accrue from the due date
until the date on which payment is actually made.
2.5 Sublicenses If Licensee grants sublicense rights to any
-----------
third party, Licensee will pay running royalties to Licensor
based upon Net Sales made by the third party.
2.5.1 Amount of Running Royalties The parties agree that all
---------------------------
sales made by a sublicensee will be deemed to have been made
by Licensee. Licensee agrees to pay running royalties on such
third party sales as if it had made such sales on its own. The
parties agree that the actual consideration for any sublicense
rights, as between Licensee and any third party, is irrelevant
to the royalty payment obligation owed by Licensee to
Licensor.
2.5.2 Licensee Responsible for Sales by Its Sublicensees The
--------------------------------------------------
parties agree that Licensee is responsible for paying running
royalties to Licensor on all sales made by its sublicensees.
The parties agree that a default by any sublicensee on any
obligation owed to Licensee shall not affect Licensee's
obligations hereunder to Licensor.
2.5.3 Exclusive Sublicenses to Require Licensor's Consent The
---------------------------------------------------
parties agree that Licensee may not, without Licensor's
written consent, grant any exclusive sublicense to the Patent
Rights, or to any part thereof.
2.5.4 Sublicenses to Be Available for Licensor's Inspection
-----------------------------------------------------
and Audit If Licensee grants any sublicense rights to the
---------
Patent Rights, or to any part thereof, Licensee agrees to make
all sublicense documents available to Licensor for its
inspection and (if necessary) audit.
2.5.5 Sublicenses Agreements to Require Marking Licensee
----------------------
agrees that if it grants sublicense rights to the Patent
Rights or any part thereof, each sublicensee will be obliged
to use the legend set forth at paragraph 6 below. The parties
agree that this is a material term of this agreement and that
breach thereof by any sublicensee will, if not cured in
accordance with the provisions hereof, entitle Licensor to
terminate this agreement.
2.6 Payments Licensee will make all payments provided for
--------
herein in U.S. dollars, and in immediately available funds.
4
3. Royalty Reports and Records Licensee will maintain accounting
---------------------------
records that accurately record its sales and will retain such records for at
least [**] after the calendar periods to which such records relate.
3.1 Royalty Reports Licensee will accompany each payment of
---------------
running royalties with a report showing how the accompanying
payment was calculated and (if applicable) the rates at which
any foreign currencies were converted into U.S. dollars.
3.2 Audits Licensee will permit Licensor to audit Licensee's
------
accounting records to verify the correctness of the
computations of running royalties due to Licensor hereunder.
Licensor will conduct any such audits at its own expense, at
reasonable times, and on reasonable advance notice to
Licensee.
3.2.1 Underpayments If an audit reveals that any payment of
-------------
running royalties has been understated by 2% or more, Licensee
will pay Licensor's expenses for that audit.
3.2.2 Audit Frequency Licensor may not audit Licensee more
than once each calendar year, unless an audit reveals an
underpayment of running royalties by 5% or more. In this
event, Licensor may, at Licensee's expense, audit Licensee as
frequently as once per calendar quarter, during the year
immediately subsequent to the 5% or more understatement.
4. Indemnification and Insurance Licensee will defend Licensor,
-----------------------------
and will indemnify Licensor, and will hold Licensor harmless from, any
claim that arises out of any act or activity licensed hereunder. This
obligation of defense, indemnification and holding harmless includes
the obligation to indemnify Licensor for its costs and attorneys fees
in defending against any such claim.
4.1 Insurance Licensee agrees to maintain, during the term
---------
of this agreement, general liability insurance policies
(including products, contractual and clinical testing
liability insurance) to cover all claims that arise out of any
act or activity licensed hereunder. Licensee agrees that such
policies will name Licensor as an insured. Licensee agrees to
place such policies with reputable and financially secure
insurance carriers.
4.1.1 Type of Policy Licensee agrees that the insurance
--------------
policies will afford primary coverage and will cover all
claims arising out of any act or activity licensed hereunder,
without regard to the date upon which such claim is discovered
or asserted.
4.1.2 Policy Limits Licensee agrees that the policy limits of
-------------
the insurance policies will be at least $1,000,000 per
occurrence, with a deductable of no more that $50,000.
5
4.1.3 Change of Policies or Insurance Carrier Licensee agrees
---------------------------------------
not to change insurance carriers or forms of insurance
policies without reasonable advance notice to Licensor and
without Licensor's consent. Licensor may not unreasonably
withhold such consent.
4.1.4 Exception Licensee is not required to maintain insurance
---------
coverage during the Investigative Phase defined in paragraph
2.3.1.
4.2 Notice Licensor will, as soon as practicable, notify
------
Licensee of the assertion of any claim against Licensor that
Licensor considers to be covered by the provisions of
paragraph 4.
4.3 Survival After Termination The parties agree that
--------------------------
Licensee's obligation of defense, indemnification and holding
harmless defined in paragraph 4 above will continue
notwithstanding any termination of this agreement.
5. Termination The parties agree that Licensor, in its sole
-----------
discretion, may (but need not) terminate this agreement under any of the
circumstances enumerated in paragraph 5.1 below.
5.1 Circumstances Licensor will have the right to terminate
-------------
this agreement if:
a) Licensee breaches any material term hereof and
does not cure such breach within 60 days after
being given written notice that the breach
exists.
b) Licensee files a petition in bankruptcy or is
adjudged a bankrupt.
c) Licensee makes a general assignment for the
benefit of creditors or a receiver is appointed
for the business of Licensee and is not
discharged within 60 days after appointment.
5.2 Right of Termination is Cumulative The parties agree
----------------------------------
that Licensor' right to terminate this agreement is cumulative
and in addition to all other legal rights and remedies that
Licensor may have against Licensee.
5.3 Termination Not Required to Bring Legal Action The
----------------------------------------------
parties agree that Licensor need not terminate this agreement
as a condition precedent to bringing any legal action
(including arbitration) against Licensee.
6
5.4 Obligations Incurred Before Termination The termination
---------------------------------------
of this agreement will not relieve Licensee of the obligation
to pay those financial obligations to Licensor that were
incurred before the date of termination.
5.5 Forbearance Licensor's exercise of forbearance, or
-----------
Licensor's delay in exercising any right to terminate this
agreement, will not prejudice Licensor's right to exercise any
legal right it may have against Licensee, including any right
it may have to terminate this agreement.
6. Marking Licensee agrees to ▇▇▇▇ all blood test results with
the following
35 U.S.C 8287 legend:
Produced under a patent license to U.S. Patent No. 4,933,844.
This paragraph 6 is a material term of this agreement.
7. Arbitration The parties agree to arbitrate any claim or
-----------
controversy arising out of or relating to this agreement or the breach thereof.
The parties agree that such arbitration will be conducted in New York County,
City of New York and State of New York in accordance with the rules then
obtaining of the American Arbitration Association. The parties agree that the
results of the arbitration will be binding upon them, and that judgement on the
arbital award may be entered in any court having jurisdiction thereof.
7.1 Exception The parties agree that in any arbitration of
---------
this agreement, the arbitrator may not hold any of the Patent
Rights invalid, and may not invalidate any claim therein.
7.2 No Incidental, Consequential, or Punitive Damages The
-------------------------------------------------
parties agree that in any arbitration of this agreement, the
arbitrator may not award incidental, consequential, or
punitive damages.
7.3 New Jersey Law The parties agree that in any arbitration
--------------
of this agreement, the arbitrator will apply the substantive
law of the State of New Jersey.
8. Assignability This agreement is personal to Licensee and may
-------------
not be assigned to any third party without Licensor's written consent. The
parties agree that any such assignment is void.
8.1 Licensor May Assign Licensor may assign the Patent
-------------------
Rights without consent of Licensee.
8.2 Representatives, Successors, Etc. This agreement, if
---------------------------------
lawfully assigned, binds the parties' assigns,
successors, and transferees. The parties agree that this
agreement also binds the parties' legal representatives.
7
9. Miscellaneous Provisions The following provisions apply to
------------------------
this agreement:
9.1 Invalidity or Unenforceability If any provision of this
------------------------------
agreement is invalid or unenforceable, or becomes
invalid or unenforceable under particular factual
circumstances, such invalidity or unenforceability will
not affect the validity or enforceability of any other
provision of this agreement.
9.2 Merger This agreement is the entire agreement between
------
the parties, and supercedes any and all prior or
contemporaneous agreements relating to the same subject
matter.
9.3 Amendments to be in Writing This agreement may not be
---------------------------
amended except in a writing signed by the parties.
9.4 No Partnership, Agency etc. This agreement does not
---------------------------
create a partnership, an agency, or a joint venture
between the parties.
9.5 Notices The parties agree that all notices required or
-------
permitted under this agreement will be sent to the
parties' above-stated addresses, with copies as follows:
To Licensor To Licensee
▇▇▇▇ ▇. ▇▇▇, Esq ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Siemens Corporation ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9.6 No Warranties Licensee acknowledges Licensor does not
-------------
extend any warranties of any kind, whether express or implied,
regarding the Patent Rights. Without in any way limiting the
full generality of the foregoing sentence, Licensor hereby
disclaims any and all warranties of merchantability, and
fitness for intended purpose.
9.7 Confidentiality The parties agree to keep the terms of
----------------
this agreement confidential.
8
10. Effective Date The Effective Date of this agreement is June
--------------
15, 1997.
Siemens Medical Systems, Inc.
Date: July 10, 1997 By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, its
Executive Vice-President
Duly Authorized
LipoMed, Inc.
Date: By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its President
Duly Authorized
9
Exclusive License Agreement Between
Siemens Medical Systems, Inc.
and
LipoMed, Inc.
Schedule A
----------
Canada Patent No. 1,327,933
Japan Patent Application No. 01-246216
Belgium Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ Patent No. 68916729.6
Spain Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ Patent ▇▇. ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Patent No. 0 361 214
10