[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]
Exhibit 10.11
FIRST AMENDMENT TO THE AGREEMENT ENTITLED
"ASSIGNMENT OF PATENT RIGHTS AND TECHNOLOGY"
ENTERED INTO AUGUST 1, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, AND ▇. ▇▇▇▇▇▇ AND COMPANY
(THE "AMENDMENT")
WHEREAS, under the August 1, 1991, agreement entitled "Assignment of
Patent Rights and Technology" (hereafter "Assignment"), and Exhibit A hereto,
the Board of Regents of the University of Texas System on behalf of The
University of Texas at Austin (hereafter collectively referred to as "Assignor")
assigned to ▇. ▇▇▇▇▇▇ and Company ("Assignee") its right, title, and interest
in, to, and under the Patent Rights and the Technology (as such terms are
defined in the Assignment); and
WHEREAS, under Paragraph 3.1 of the Assignment the parties agreed that
in return for its assignment of rights, Assignor would be compensated as noted
in the event Patent Rights, the Technology, and the Know-How are sold, licensed,
or otherwise disposed of for value to a third party or parties; and under
Paragraph 3.2 of the Assignment the parties also agreed that Assignor would be
compensated for a to-be-negotiated amount should Assignee elect to itself
manufacture, sell, or otherwise dispose of for value Licensed Products and
Licensed Processes (as such terms are defined in the Assignment) and which are
derived from the Patent Rights, the Technology, and the Know-How; and
WHEREAS, since the effective date of the Assignment, Assignee has
invested approximately *** in research and development of biosensors
within the scope of the Technology, Patent Rights, and Know-How, and estimates
that an additional investment of approximately *** will be necessary to
complete product development and enter into clinical trials, and Assignee, on
behalf of itself and its Affiliates (as defined below), has now elected to
manufacture, sell, or otherwise dispose of for value, including sublicensing,
the Patent Rights, Technology, Know-How, Licensed Products, and Licensed
Processes; and
WHEREAS, Assignor and Assignee now desire to amend Paragraphs 3.1 and
3.2 and certain other paragraphs of the Assignment and specifically set out
herein the mutually agreed compensation due Assignor for Assignee's disposition
for value of the Patent Rights, the Technology, the Know-How, Licensed Products
and Licensed Processes.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained the parties agree as follows:
1. All capitalized terms not defined in this Amendment shall have the
meaning given to them in the Assignment.
2. Section 1.2 is amended to read in its entirety as follows:
1.2 Patent Rights. The term "Patent Rights" as used herein shall mean
-------------
Assignor's rights in all inventions and intellectual property disclosed
in the patent applications patents and other invention disclosures
listed on Exhibit B and Exhibit C hereto, including all U.S. and
*** Confidential treatment requested
foreign patent applications including provisional applications, and all
divisions, continuations, continuations in-part, and substitutions
thereof; all foreign patent applications corresponding to the preceding
applications; and all U.S. and foreign patents issuing on any of the
preceding applications, including extensions, reissues, and re-
examinations.
3. Section 1.3 is amended to read in its entirety as follows:
1.3 Know-How. The term "Know How" as used herein shall mean
--------
Assignor's rights in all ideas, inventions, data, trade secrets,
instructions, processes, formulas, chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical, manufacturing
(including but not limited to processes, yields, reagants and
conditions relating to compound manufacture) data and information,
owned or controlled by Assignor existing as of the last signature date
of this Assignment which are generally not known, and which are
necessary or useful for the manufacture of Licensed Products. Excluded
from Know-How are any inventions included with Patent Rights.
4. Section 1.4 is amended to read in its entirety as follows:
1.4 Licensed Products. The term "Licensed Products" as used herein
-----------------
shall mean any product which (i) is covered by a Valid Claim in the
country such product is made or sold, or (ii) incorporates in material
part or is made using the Technology, Know-How, Licensed Processes or
Other Intellectual Property. For the avoidance of doubt, subject to the
foregoing, a Licensed Product unit shall mean any instrument or
associated disposable.
5. Article 1 is amended to add new Section 1.7 as follows:
1.7 Affiliate. The term "Affiliate" as used herein shall mean any
---------
corporation or other entity which is directly or indirectly
controlling, controlled by or under the common control with a party
hereto. For the purposes of this definition, "control" shall mean the
direct or indirect ownership of at least fifty percent (50%) of the
outstanding shares or other voting rights of the subject entity to
elect directors, or if not meeting the preceding, any entity owned or
controlled by or owning or controlling at the maximum control or
ownership right permitted in the country where such entity exists.
6. Article 1 is amended to add new Section 1.8 as follows:
1.8 Net Sales. The term "Net Sales" as used herein shall mean the
---------
gross revenues received by Assignee, its Affiliates or sublicensees
from sales of Licensed Products, less (i) normal and customary rebates,
and cash and trade discounts, actually taken, (ii) sales, value-added,
use and/or other excise taxes or duties actually paid, (iii) outbound
transportation charges prepaid or allowed, (iv) import and/or export
duties actually paid, and (v) amounts allowed or credited due to
returns.
7. Article 1 is amended to add new Section 1.9 as follows:
1.9 Valid Claim. The term "Valid Claim" as used herein shall mean (i)
-----------
a claim of an issued and unexpired patent included within the Patent
Rights which has not been disclaimed
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or admitted to be invalid or unenforceable through reissue or
otherwise, or (ii) a claim of a pending application within the Patent
Rights provided that not more than five (5) years have elapsed from the
date the claim takes priority for filing purposes.
8. Article 1 is amended to add new Section 1.10 as follows:
1.10 Dominating Patent. The term "Dominating Patent" as used herein
-----------------
shall mean an unexpired patent which is owned by a third party covering
Licensed Products made and sold by Assignee or its sublicensees under
circumstances such that Assignee or its sublicensee has no commercially
reasonable alternative but to obtain a license under such patent in
order to make, use or commercialize a Licensed Product.
9. Article 1 is amended to add new Section 1.11 as follows:
1.11 Other Intellectual Property. The term "Other Intellectual
---------------------------
Property" as used herein shall mean Board's rights in any biosensor
related inventions (whether or not patentable), improvements,
discoveries, developments, original works of authorship, software,
trade secrets, Know-How made, conceived, reduced to practice or
otherwise developed, by an employee of Assignor pursuant to either (i)
a consulting agreement entered into by such employee and EHC or its
sublicensee; or (ii) any similar agreement between an employee of the
University of Texas at Austin and Assignee, and all intellectual
property rights therein and thereto, shall be subject to the Assignment
in Section 2.1 below.
10. Section 2.1 is amended to read in its entirety as follows:
2.1 Assignment by Assignor. Assignor hereby transfers, assigns,
----------------------
sells, and conveys to Assignee, its successors and assigns, the entire
right, title and interest throughout the world in and to the Patent
Rights, Technology, Know-How, and Other Intellectual Property subject
only to: (a) any rights of the United States Government which may exist
now or in the future due to a research funding agreement to which the
United States Government may be a party; and (b) the terms and
conditions of this Agreement.
11. Article 3 is amended to read in its entirety as follows:
3.1 Royalties. In consideration for the Assignment herein, Assignee
---------
shall pay to Assignor the greater of (i) an annual minimum royalty of
twenty thousand dollars or (ii) royalties on Net Sales of Licensed
Products sold by Assignee, an Affiliate or its sublicensees which are
within the scope of a Valid Claim as follows:
Numbers of Licensed
Royalty Rate Products Sold Worldwide During the Term
------------ ---------------------------------------
*** of Net Sales 1-100,000
*** of Net Sales 100,001-200,000
*** of Net Sales 200,001-and above
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Any minimum annual royalty payable hereunder shall be fully creditable
against any running royalty payable to Assignor during such year.
3.2 Sublicense Payment. In addition to the royalties subject to
------------------
Section 3.1 above, Assignee shall pay to Assignor *** received by
Assignee and its Affiliates from licensees and sublicensees of the
Patent Rights, Know-How, Technology or Other Intellectual Property.
Notwithstanding the foregoing, it is understood and agreed that
Assignor shall not be entitled to any portion of amounts received from
licensees or sublicensees for equity in Assignee less than *** of
fair market value, debt financing, research and development funding,
the license or sublicense of any intellectual property other than the
Patent Rights, Know-how, Technology or Other Intellectual Property, or
reimbursement for patent or other expenses, and to be determined in a
manner consistent with generally accepted accounting principles (GAAP).
3.3 Royalties on Combination Products. In the event that a Licensed
---------------------------------
Product is sold by Assignee, an Affiliate or its sublicensee in
combination as a single product with another product whose sale and use
are not within the scope of a Valid Claim in the country for which the
combination product is sold, Net Sales from such sales for purposes of
calculating the amounts due under Section 3.1 above shall be calculated
by multiplying the Net Sales of that combination by the fraction A/(A +
B), where A is the gross selling price of the Licensed Product sold
separately and B is the gross selling price of the other product sold
separately. In the event that no such separate sales are made by
Assignee, an Affiliate or its sublicensee, Net Sales for royalty
determination shall be as reasonably allocated by Assignee, an
Affiliate or its sublicensee between such Licensed Product and such
other product, based upon their relative importance and proprietary
protection. Notwithstanding the above, in no event shall Assignor
receive a royalty of less *** of the running royalty amount per unit of
Licensed Product due under Section 3.1 above.
3.4 Third Party Royalty Offset. In the event Assignee, an Affiliate
--------------------------
or its sublicensee enters into a license agreement with any third party
with respect to a Dominating Patent or to settle a claim of
infringement or misappropriation of any intellectual property of a
third party relating to the practice or use of the Technology and or
Know-How, Assignee, an Affiliate or its sublicensee may offset any
payments made in accordance with such license agreements against any
amounts of running royalties owned by Assignee pursuant to Article 3
herein up to a maximum of *** of the amount otherwise due to such third
party; provided, however that in no event will the running royalties
due to Assignor be lower than the following:
Royalty Rate Number of Licensed Products Sold Worldwide
------------ ------------------------------------------
During the Term
---------------
*** of Net Sales 1-100,000
*** of Net Sales 100,001-200,000
*** of Net Sales 200,001 - and above
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In addition, in such event, the amounts due to Assignor under Section
3.2 above shall be reduced by an amount equal to *** the amount paid
to such third party.
3.5 One Royalty. No more than one royalty payment shall be due with
-----------
respect to a sale of a particular Licensed Product. No multiple
royalties shall be payable because any Licensed Product, or its
manufacture, use or sale is covered by more than one Valid Claim. No
royalty shall be payable under this Article 3 with respect to Licensed
Products distributed for use in research and/or development, in
clinical trials or as promotional samples.
3.6 Royalty Term. Royalties due under this Article 3 shall be payable
------------
on a country-by-country and Licensed Product-by-Licensed Product basis
until the expiration of the last-to-expire issued Valid Claim covering
such Licensed Product in such country, or if no such Valid Claim issued
in a country, until the fifth anniversary of the first commercial sale
of a Licensed Product in such country.
3.7 In the event Assignee engages in litigation and/or settlement
negotiations to advance a claim it makes that a third party is
infringing on Licensed Products and/or Licensed Processes, ***
on any litigation or settlement recovery by Assignee will be paid to
Assignor; provided, however, that Assignee shall be entitled to first
deduct reasonable and documented attorney's and other professional
fees, expert fees, court costs, and other reasonable expenses incurred
by Assignee in such litigation and/or settlement activities.
12. Section 4.2 is amended to read in its entirety as follows:
4.2 Payments and Reports. The first annual minimum royalty payment of
--------------------
*** shall be due and payable to Assignor within 30 days of the date of
the last signature on this Amendment. Thereafter, minimum annual
royalty payments, when due, shall be due and payable within thirty (30)
days after the end of the applicable year. All running royalties
payable hereunder by Assignee shall be due within thirty (30) days
following the end of each respective semi-annual reporting period,
which ending dates shall be June 30 and December 31 for each successive
year. Each report will accurately identify income and expenses in
sufficient form and detail so as to enable Assignor to determine the
royalties due for such semi-annual period, and shall be mailed to the
following: Office of the Executive Vice President and ▇▇▇▇▇▇▇, The
University of Texas at Austin, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-
1111, ATTN: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with a copy to the Office of
Technology Licensing and Intellectual Property at the address listed in
16.3 herein. Checks shall be made payable to The University of Texas at
Austin. Except as expressly provided herein, all amounts payable
hereunder shall be payable in United States dollars without deductions
for taxes, assessments, fees, or charges of any kind.
13. Article 15 is amended to read in its entirety as follows:
15.1 Assignment. Neither party may assign this Assignment without the
----------
prior consent of the other, which consent shall not be unreasonably
withheld; provided, however, Assignee may assign this Assignment in
connection with a transfer of all or substantially all of its
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assets relating to this Assignment, whether by sale, merger, operation of
law or otherwise. This Assignment shall be binding upon and inure to the
benefit of the parties and their successors and assigns.
14. New Article 16 is added as follows:
MISCELLANEOUS
-------------
16.1 Affiliate Rights/Obligations. Assignee shall have the right to extend
----------------------------
the provisions of the Assignment regarding the right to manufacture, sell,
or otherwise dispose of for value, including licensing and sublicensing,
the Patent Rights, Technology, Know-How, Other Intellectual Property,
Licensed Products, and Licensed Processes, to any Affiliate, provided such
Affiliate consents to be bound by the Assignment to the same extent as
Assignee. Further, Assignee shall have the right to extend the provisions
of this Amendment in their entirety to any Affiliate, provided such
Affiliate consents to be bound by the applicable provisions of this
Amendment to the same extent as Assignee.
16.2 Entire Agreement. The Assignment and this Amendment constitute the
----------------
entire and only agreement between the parties with respect to the Patent
Rights, Technology, Know-How, Other Intellectual Property, Licensed
Products, and Licensed Processes, and all other prior negotiations,
representations, agreements, and understandings are superseded hereby. No
agreement altering or supplementing the terms of the Assignment may be made
except by means of a written document signed by a duly authorized
representative of each party.
16.3. Notices. Any notices under this Assignment or shall be given by
-------
prepaid, first class, certified mail, return receipt requested, addressed
as follows (or such other address as may be given from time to time under
the terms of this provision):
in the case of Assignor - with a copy to -
BOARD OF REGENTS OFFICE OF THE EXECUTIVE
The University of Texas System VICE PRESIDENT & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ The University of Texas at Austin
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: System Intellectual Property Office ATTN: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to -
OFFICE OF TECHNOLOGY LICENSING AND
INTELLECTUAL PROPERTY
The University of Texas at Austin
MCC Building
Suite 1.9A
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
ATTN: Director
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or in the case of Assignee -
▇. ▇▇▇▇▇▇ AND COMPANY
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
16.4 LIMITATION OF LIABILITY. SUBJECT TO ARTICLE XIV OF THE
-----------------------
ASSIGNMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THIS
ASSIGNMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY
16.5 Right to Independently Develop. Nothing in this Assignment will
------------------------------
impair Assignee's right to independently acquire, license, develop for
itself, or have others develop for it, technology or intellectual
property performing the same or similar functions as the Know-How or
the Patent Rights, or the Other Intellectual Property, or to market and
distribute licensed products based on such other intellectual property
and technology.
16.6 Further Assurances. At any time or from time to time on and after
------------------
the date of this Assignment, Assignor shall at the request and sole
expense of Assignee (i) deliver to Assignee such records, data or other
documents consistent with the provisions of this Assignment, (ii)
execute, and deliver or cause to be delivered, all such consents,
documents or further instruments of transfer or license, and (iii) take
or cause to be taken all such actions, as Assignee may reasonably deem
necessary or desirable in order for Assignee to obtain the full
benefits of the Assignment and Amendment and the transactions
contemplated hereby.
16.7 Severability. In the event that any provisions of this Assignment
------------
are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Assignment shall remain in full
force and effect without said provision. The parties shall in good
faith negotiate a substitute clause for any provision declared invalid
or unenforceable which shall most nearly approximate the intent of the
parties in entering this Assignment.
16.8 Modification; Waiver. This Assignment may not be altered, amended
--------------------
or modified in any way except by a writing signed by both parties. The
failure of a party to enforce any provision of the Assignment shall not
be construed to be a waiver of the right of such party to thereafter
enforce that provision or any other provision or right.
15. Except as specifically modified or amended hereby, the Assignment shall
remain in full force and effect and, as so modified or amended, is
hereby ratified, confirmed and approved. No provision of this Amendment
may be modified or amended except expressly in a writing signed by both
parties nor shall any terms be waived except expressly in a writing
signed by the party charged therewith. This Amendment shall be governed
in accordance with the laws of the State of Texas, without regard to
principles of conflicts of laws.
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IN WITNESS WHEREOF, this Amendment effective as of March 19, 1998, is
hereby executed by the duly authorized representatives of the parties on the
date indicated below in duplicate, each of which shall be deemed an original and
together shall form one and the same instrument.
BOARD OF REGENTS OF THE
UNIVERSITY OF TEXAS SYSTEM ▇. ▇▇▇▇▇▇ AND COMPANY
/s/ ▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------- -------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice Chancellor and General Counsel President
Date: 4/7/98 Date: 3/19/98
---------------------------------- --------------------------
APPROVED AS TO CONTENT ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------- -------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Counsel to the President Date: 3/19/98
--------------------------
Vice ▇▇▇▇▇▇▇
Date: 3/27/98
----------------------------------
APPROVED AS TO FORM
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Office of General Counsel
Date: 4/7/98
----------------------------------
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EXHIBIT A
[See Exhibit 10.10]
EXHIBIT B
(See attached)
COLLEGE OF ENGINEERING
THE UNIVERSITY OF TEXAS AT AUSTIN
Department of Chemical Engineering, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ January 6, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. Chair
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇@▇▇▇.▇▇▇▇▇▇.▇▇▇
To: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Technology
Licensing Coordinator
From: ▇▇▇▇ ▇▇▇▇▇▇
Dear ▇▇▇▇▇▇▇▇:
This letter follows your discussion with Ephraim wherein you agreed to cover in
the current agreement between The University of Texas at Austin and ▇. ▇▇▇▇▇▇ &
Company all presently existing intellectual property relating to biosensors that
originated in my group. These include the following:
US Patents Issued:
-----------------
The already issued patents are:
US 5,543,326 - Biosensor including chemically modified enzymes.
US 5,356,786 - Interferant eliminating biosensor
US 5,320,725 - Electrode and Method for the detection of hydrogen peroxide.
US 5,264,105 - Enzyme electrodes.
US 5,264,104 - Enzyme electrodes.
US 5,262,305 - Interferant eliminating biosensor.
US 5,262,035 - Enzyme electrodes.
US Patents Currently Prosecuted:
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With my regards and best wishes for 1997.
▇▇▇▇ ▇▇▇▇▇▇
AH:n
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