Sample Business Contracts
Exclusive License and Bailment Agreement - University of California and Ambryx Inc.
Exclusive License and Bailment Agreement
between
The Regents of the University of California
and
Ambryx Inc.
for
"Nucleic Acids Encoding Proteins Used in Assays for
Identifying Taste Modulators"
UC Case Nos. 1998-122,1998-306,1999-0151
1999-029,11999-168, 1999-203, 1999-204, and 2000-045
Table of Contents
Article No. | Title | Page | ||
---|---|---|---|---|
Recitals | 1 | |||
1. | Definitions | 2 | ||
2. | Grant | 6 | ||
3. | Issue Fee | 8 | ||
4. | Royalties | 9 | ||
5. | Due Diligence | 11 | ||
6. | Progress and Royalty Reports | 12 | ||
7. | Books and Records | 13 | ||
8. | Life of the Agreement | 13 | ||
9. | Termination by the Regents | 13 | ||
10. | Termination by the Licensee | 14 | ||
11. | Disposition of Products and Biological Materials on Hand Upon Termination | 14 | ||
12. | Supply of the Biological Material | 14 | ||
13. | Maintenance of the Biological Material | 14 | ||
14. | Use of Names and Trademarks | 15 | ||
15. | Limited Warranty | 15 | ||
16. | Patent Prosecution and Maintenance | 16 | ||
17. | Patent Marking | 17 | ||
18. | Patent Infringement | 17 | ||
19. | Indemnification | 18 | ||
20. | Notices | 19 | ||
21. | Assignability | 19 | ||
22. | Late Payments | 19 | ||
23. | Waiver | 20 | ||
24. | Failure to Perform | 20 | ||
25. | Governing Laws | 20 | ||
26. | Government Approval or Registration | 20 | ||
27. | Export Control Laws | 20 | ||
28. | Force Majeure | 20 | ||
29. | Confidentiality | 20 | ||
30. | Miscellaneous | 21 | ||
APPENDIX APAGE 1A | 23 | |||
APPENDIX APAGE 2A | 24 | |||
APPENDIX APAGE 3A | 25 | |||
APPENDIX BPAGE 1B | 26 | |||
APPENDIX CPAGE 1C | 28 | |||
Exhibit A |
UC Case Nos. 1998-122, 1998-306, 1999-015, 1999-029, 1999-168, 1999-203, 1999-204, and 2000-045.
Print date: March 10, 2000
Exclusive License and Bailment Agreement
for
Nucleic Acids Encoding Proteins Used in Assays for Identifying Taste Modulators
This license agreement (Agreement) is effective this 10th day of March, 2000 by and between The Regents of the University of California (The Regents), a California corporation, having its statewide administrative offices at 1111 Franklin Street, 12th floor, Oakland, CA 94607-5200, and Ambryx Inc. (Licensee), a Delaware corporation, having a principal place of business at 11099 North Torrey Pines Road Suite 160, La Jolla, CA 92037, herein referred to collectively as the parties (Parties).
Recitals
Whereas, certain inventions generally characterized as "Nucleic Acids Encoding Proteins Used In Assays for Identifying Taste Modulators," that may be useful for detecting molecules or compounds that effect taste (Invention), were made at the University of California, San Diego by Drs. Charles S. Zuker, Juergen Lindemeier, and John E. Adler (Principal Investigators), and at the National Institutes of Health (NIH) by Drs. Mark Hoon and Nick Ryba and are claimed in Patent Rights defined below;
Whereas, the Licensee and The Regents entered into a Secrecy Agreement (Secrecy Agreement), having U.C. Agreement Control No 1999-20-0167, effective October 1, 1998, for the purpose of evaluating the Invention;
Whereas, the Licensee and The Regents entered into a letter agreement (Letter Agreement), having U.C. Agreement Control No. 1999-30-0464, effective April 9, 1999, for the purpose of entering into good-faith negotiations for a license to the Invention in accordance with the terms of the Letter Agreement;
Whereas, because the Invention was developed under funding provided in part by NIH and in part by the Howard Hughes Medical Institute (HHMI), this Agreement, and any licenses covering such Invention, are subject to overriding obligations to the federal government and HHMI;
Whereas, under 35 U.S.C. §§ 200-212, The Regents may elect to retain title to any invention made by it under U.S. government funding;
Whereas, if The Regents elects to retain title to such an invention, then The Regents is required by law to grant to the United States Government a nontransferable, paid up, nonexclusive, irrevocable license to use the invention by or on behalf of the United States Government throughout the world;
Whereas, in accordance with 35 U.S.C. §§ 200-212,'The Regents elected to retain title to the Invention and granted the required licenses to the United States Government on the following dates: November 13, 1998, (UC Case Nos. 1998-122, 1998-306, 1999-015 and 1999-029); February 5, 1999, (UC Case No. 1999-168); July 7, 1999, (UC Case No. 1999-203); September 13, 1999, (UC Case No. 1999-204) and December 28, 1999 (UC Case No. 2000-045);
Whereas, patent applications claiming the Invention have been filed by the Principal Investigators who, in accordance with their employment agreements, have assigned their rights in the patent applications to The Regents and HHMI;
Whereas, The Regents has acquired the right to grant this license from HHMI under the terms of the interinstitutional agreement (HHMI Interinstitutional Agreement), having UC Control No. 86-18-0017, which is incorporated herein by reference;
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Whereas, The Regents is required under the terms of the HHMI Interinstitutional Agreement to grant to the HHMI a paid-up, non-exclusive, irrevocable license to use the Invention for non-commercial purposes, without any right to sublicense others;
Whereas, Mark Hoon and Nick Ryba are employed at NIH, and in accordance with their patent agreement with NIH, have assigned to NIH their interest in any patent rights covering inventions made during the course of their employment with NIH;
Whereas, under the terms of an interinstitutional agreement (NIH Interinstitutional Agreement), having UC Control No. , between NIH and The Regents, The Regents is granted the exclusive right to negotiate, execute, and administer on behalf of both parties any resulting license agreements to patent applications and patents jointly owned by The Regents and NIH and contained in Patent Rights I, and Patent Rights II appended hereto as Exhibit "A" and incorporated herein;
Whereas, due to the Parties' inability to appropriately value the Biological Products and Covered Products with respect to the value of any product identified therewith, the Parties agree that for their convenience, a royalty should be paid to The Regents on Identified Products and Service Products;
Whereas, the Licensee is a "small entity" as defined in 37 CFR §1.9 and a "small-business concern" defined in 15 U.S.C. §632;
Whereas, both Parties recognize that the royalties due under this Agreement will be paid on pending patent applications and issued patents;
Whereas certain Biological Materials, defined below, relating to the Invention were made during the course of research by the Principal Investigator;
Whereas, it is the intent of the Parties to this Agreement to create a bailment, among other things, for the Biological Materials defined below;
Whereas, Licensee has requested rights to practice the Invention and use the Biological Materials in order to develop and commercialize products;
Whereas, The Regents has responded to Licensee's request by granting the following rights to the Licensee so that the products and other benefits derived from the Invention can be enjoyed by the general public.
The Parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the meaning set forth below:
1.1 "Property Rights" means all the personal proprietary rights of The Regents covering the tangible personal property in the Biological Materials;
1.2 "Biological material" means the following biological materials using nomenclature of the Principal Investigator:
[***]
1.3 "Biological Product" means: (a) any product containing a biological substance (e.g., nucleic acids, amino acids, carbohydrates, or lipids) that is comprised of or derived from the Biological Material, including, but not limited to, the following: a taste receptor, plasmid, CDNA clone, gene, promoter, protein, peptide, antibody, glycoprotein, hormone, or fragments and any sequences thereof, or (b) any product produced or encoded by the Biological Materials; or (c) any product substantially similar or identical to a compound in (a) or (b) that is produced by chemical synthesis or by any other
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method where such product could not have been produced but for the use of the Biological Materials. Biological Products may either be a Covered Product or Non-Patent Product.
1.4 "Patent Rights I" means all U.S. patents and patent applications and foreign patents and patent applications assigned to The Regents, and in the case of foreign patents and patent applications, those existing as of the effective date of this Agreement and those requested under Article 16.3 herein, including any reissues, extensions, substitutions, continuations, divisions, and continuations-in-part applications (only to the extent, however, that claims in the continuations-in-part applications are supported in the specification of the parent patent application) based on any subject matter claimed in the following:
(a) U.S. Patent Application Serial No. [***], entitled [***];
(b) U.S. Patent Application Serial No. [***], entitled [***]; and
(c) any U.S. Patent Application claiming a future invention relating to the subject matter of the [***].
1.5 "Patent Rights II" means all U.S. patents and patent applications and foreign patents and potent applications assigned to The Regents, and in the case of foreign patents and patent applications, those existing as of the effective date of this Agreement and those requested under Article 16.3 herein, including any reissues, extensions, substitutions, continuations, divisions, and continuations-in-part applications (only to the extent, however, that claims in the continuations-in-part applications are supported in the specification of the parent patent application) based on any subject matter claimed in the following:
(a) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(b) U.S. Patent Application Serial No. [***], entitled [***];
(c) Foreign PCT Application Serial No. [***], entitled [***];
(d) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(e) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(f) U.S. Patent Application Serial No. [***], entitled [***];
(g) Foreign PCT Application Serial No. [***], entitled [***]; and
(h) any U.S. patent applications claiming a future invention relating to the subject matter of the [***].
1.6 "Patent Rights III" means all U.S. patents and patent applications and foreign patents and patent applications assigned to The Regents, and in the case of foreign patents and patent applications, those existing as of the effective date of this Agreement and those requested under Article 16.3 herein, including any reissues, extensions, substitutions, continuations, divisions, and continuations-in-part applications (only to the extent, however, that claims in the continuations-in-part applications are supported in the specification of the parent patent application) based on any subject matter claimed in the following:
(a) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(b) U.S. Patent Application Serial No. [***] entitled [***];
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(c) Foreign PCT Application Serial No. [***], entitled [***];
(d) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(e) U.S. Patent Application Serial No. [***] entitled [***];
(f) Foreign PCT Application Serial No. [***], entitled [***];
(g) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(h) U.S. Patent Application Serial No. [***], entitled [***];
(i) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(j) U.S. Patent Application Serial No. [***], entitled [***];
(k) U.S. Provisional Patent Application Serial No. [***], entitled [***], which has been abandoned;
(l) U.S. Patent Application Serial No. [***], entitled [***]; and
(m) any U.S. Patent Application claiming future inventions relating to the subject matter of the [***].
1.7 "Patent Rights" means Patent Rights I, Patent Rights II, and Patent Rights III.
1.8 "Patent Method" means any process or method claimed in Patent Rights, the use of which, in a particular country, would infringe, but for the license granted to the Licensee, an unexpired claim of a patent or pending claim of a patent application were said claim issued in a patent under Patent Rights in that country.
1.9 "Covered Products" means:
(a) any kit, composition of matter, material, product, or Biological Product;
(b) any kit, composition of matter, material, product, or Biological Product to be used in a manner requiring the performance of the Patent Method; or
(c) any kit, composition of matter, material, product, or Biological Product produced by the Patent Method;
to the extent that the manufacture, use, or sale of such kit, composition of matter, material, product, or Biological Product, in a particular country, would be covered by or infringe, but for the license granted to Licensee, an unexpired claim of a patent or pending claim of a patent application were said claim issued in a patent under Patent Rights in that country.
1.10 "Services" means a service provided by the Licensee, its Affiliates, Joint Ventures, or sublicensees to a third party when such service requires the making or using of the Biological Product, Covered Product or the practicing of the Patent Rights.
1.11 "Non-Patent Products" means any kit, composition of matter, material, product, comprising a Biological Product to the extent that the manufacture, use, or sale of which, in a particular country, does not infringe an unexpired claim of a patent or pending claim of a patent application under Patent Rights.
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1.12 "Identified Product" means any kit, product, compound, biological agent, or other material the manufacture, use or sale of which is not covered by Patent Rights and does not comprise a Biological Product, but which is an agonist, an antagonist, or an inverse agonist that is identified through the use of the Biological Product, Covered Product or the practice of the Patent Rights and sold by Licensee, its Affiliates, Joint Ventures, or sublicensees.
1.13 "Service Product" means any kit, product, compound, biological agent or other material, made, used, or sold by a third party, which is not covered by Patent Rights and does not comprise a Biological Product, but which is an agonist, an antagonist, or an inverse agonist that is identified by the Licensee, its Affiliates, Joint Ventures, or sublicensees through the use of Services provided to the third party by Licensee, its Affiliates, Joint Ventures, or sublicensees.
1.14 "Products" means Covered Products, Non-Patent Products, Identified Products, and Services.
1.15 "Service Revenues" means the total amount of gross consideration collected from the sale of Services (1) less the cost of raw materials, labor, direct and indirect cost (where such indirect and direct costs do not exceed 125% of the cost for raw materials and labor) or (2) the standard cost of Services as calculated in accordance with generally acceptable accounting methods uniformly applied in all circumstances and approved in writing by The Regents, provided, however, that such costs specified under (1) or (2) above have not already been deducted from Research Funding. Service Revenues does not include any consideration that Licensee receives for Research Funding, reimbursement of patent filing, patent prosecution, patent maintenance, royalties on Identified Products, royalties on Covered Products, royalties on Profits, Sublicense Fees, or other expenses (as agreed upon in writing by the Parties). [***] Moreover, if a Service is provided that combines biologically or chemically active components provided by third parties, then Licensee will be entitled to reduce the Profits paid to The Regents by adjusting the Service Revenues on which the Profits are based. In such event, the Service Revenues will be adjusted by the fraction (A/A+B) where A is the number of biologically or chemically active components contained in Services covered by Patent Rights or the use of the Biological Products and B is the number of biologically or chemically active components provided by the third party or Licensee that are not either Biological Products or covered by Patent Rights.
1.16 "Affiliate" of the Licensee means any entity which, directly or indirectly, controls the License, is controlled by the Licensee, or is under common control with the Licensee. For these purposes, "control" is defined as one person or entity having: the ownership or control of at least fifty percent (50%) of the voting stock of the other person or entity, or a lesser percentage of the voting stock if such a percentage is the maximum allowed to be owned by a foreign entity in a particular jurisdiction.
1.17 "Joint Venture" means any separate entity established by an agreement between one or more third parties and Licensee, in which the separate entity manufactures, uses, purchases, sells, or acquires Products from the Licensee.
1.18 "Net Sales" means the gross invoice prices from the sale of Products by the Licensee, its sublicensee, Affiliate, or Joint Venture to one or more third parties for cash or other form of consideration in accordance with generally accepted accounting principles, less only the following deductions (if not already deducted from the gross invoice price and at rates customary within the industry): (a) allowances (actually paid and limited to rejections, returns, prompt payment discounts and volume discounts granted to customers of Products, whether in cash or Products in lieu of cash); (b) freight, transport packing, insurance charges and postage associated with transportation; and (c) taxes, tariff, or import/export duties based on sales when included in gross sales, but not value-added taxes or taxes assessed on income derived from such sales.
1.19 "Proprietary Information" will have the meaning set forth in Paragraph 29.1.
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1.20 "Research Funding" means the total payments received by Licensee, its Affiliates, Joint Ventures, or sublicensees from a third party for the conduct of scientific research, other than scientific research targeted to the identification of Products or Service Products or a third party, under which the Biological Product is used or the Patent Rights are practiced. Any consideration received by Licensee, its Affiliates, Joint Ventures, or sublicensees for the conduct of scientific research that does not use the Biological Product or is not covered by the Patent Rights is outside the scope of this Agreement, and The Regents is not entitled to share in such consideration.
1.21 "Profits" means the sum total of Service Revenue and royalties on Service Products.
2. Grant
2.1 Subject to the limitations set forth in this Agreement and subject to the licenses granted to the United States Government and HHMI as set forth in the Recitals above, The Regents hereby grants to Licensee exclusive licenses under Patent Rights in countries where Patent Rights exist for the following: (i) to make, have made, use, sell, offer for sale, have sold, export, and import the Covered Products; (ii) to provide Services to one or more third parties; and (iii) to identify Identified Products and Service Products. For the avoidance of doubt, for so long as The Regents has granted to Licensees the above rights and licenses set forth in this Paragraph 2.1, Licensee, its Affiliates, Joint Ventures, and sublicensees have the right to sell Identified Products, and their third-party customers of Services have the right to sell Service Products independent of The Regents.
2.2 Subject to the limitations set forth in this Agreement and subject to the licenses granted to the United States Government and HHMI as set forth in the Recitals above, The Regents hereby grants to Licensee exclusive licenses under Property Rights in countries where Property Rights may be lawfully granted for the following: (i) to possess, make (propagate), have made, and use the Biological Materials; (ii) to make, have made, use, sell, offer for sale, have sold, export, and import the Non-Patent Products; (iii) to provide Services to one or more third parties; and (iv) to identify Identified Products and Service Products. For the avoidance of doubt, for so long as The Regents has granted to Licensee the above rights and licenses set forth in this Paragraph 2.2, Licensee, its Affiliates, Joint Ventures, and sublicensees have the right to sell Identified Products, their third-party customers of Services have the right to sell Service Products independent of The Regents.
2.3 The rights granted to Licensee under Paragraphs 2.1 and 2.2 above are limited to the right to possess, make (propagate), have made, and use the Biological Materials only for the purposes stated in this Agreement and for no other purposes. Licensee acknowledges that title to the tangible material comprising the Biological Materials is owned by The Regents and is not transferred to Licensee under this Agreement except as necessary to permit the sale of Products that is comprised of the Biological Material (e.g. Biological Product). Licensee will not sell, donate, abandon, or otherwise transfer the Biological Materials to any third party other than an Affiliate, Joint Venture, or, sublicensee.
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2.4 For any licenses granted to Licensee under Paragraphs 2.1 and 2.2 above, The Regents also grants to Licensee the right to issue sublicenses to one or more third parties to make, have made, use, sell, offer for sale, have sold, export, and import Products and practice the Patent Method, provided that Licensee retains exclusive rights thereto under this Agreement. To the extent that rights are granted to sublicensees under specific terms and covenants, such terms and covenants will provide for the rights and obligations due The Regents, HHMI, and United States Government, including royalties sufficient to provide for payment to The Regents by Licensee at the rates and bases set forth in Article 4 (Royalties) and Sublicense Fees, if any, as set forth in Paragraph 3.2. For each sublicense granted by Licensee, the Licensee will:
(a) notify The Regents of the sublicense granted and provide the Regents with an unredacted copy of the sublicense agreement, which will be subject to the confidentiality provisions of this Agreement;
(b) [***] and
(c) [***] The Parties recognize that a sublicensee may request modifications or changes to these reports, and that such modifications or changes will be acceptable subject to receipt of The Regents' consent.
2.5 Licensee may, at its sole discretion, reduce the exclusive licenses granted under Paragraphs 2.1 and 2.2 to non-exclusive licenses, and subject to Paragraph 2.6, all sublicenses granted by Licensee must be assigned to The Regents.
2.6 Upon the earlier to occur, termination of this Agreement or when licenses granted to License under Paragraphs 2.1 and 2.2 are reduced from exclusive to nonexclusive licenses, Licensee will assign to The Regents any sublicenses issued by Licensee, except that The Regents will not assume any obligations of the sublicense that extend beyond the duties and obligations of The Regents that are contained in this Agreement. If this Agreement is terminated and Licensee has issued any contracts to a third party under which Licensee receives a royalty based on a Service Product, then the third party will pay directly to The Regents its share of the royalty based on Profits as set forth in Paragraph 4.1 below.
2.7 The licenses granted hereunder will be subject to the overriding obligations of the U.S. Government, including those set forth in 35 U.S.C. 200-212 and applicable governmental implementing regulations.
2.8 The manufacture of Covered Products and the practice of the Patent Method will be subject to applicable government importation laws and regulations of a particular country when Covered Products are made outside the particular country in which such Covered Products are used or sold.
2.9 Nothing in this Agreement will limit the right of The Regents, the U.S. government, and HHMI to do any of the following: (1) publish any and all technical data resulting from any search performed by The Regents, the U.S. government, and HHMI relating to the Invention, to the extent that such results do not contain Licensee's Proprietary Information; or (2) make and use the Invention, Biological Materials, Biological Products, Covered Products, Patent Method, and associated technology and allow other educational and non-profit institutions to do so only for educational and noncommercial research purposes.
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3. Issue Fee
3.1 As partial consideration for all the rights and licenses granted to the Licensee, the Licensee will pay to The Regents a license issue fee of [***] to be paid according to the following schedule:
(a) [***] to be paid to The Regents on or before [***] recited on page one of this Agreement. This payment includes [***]
[***];
(b) [***] to be paid to The Regents on or before [***] This payment includes [***];
(c) [***] to be paid to The Regents on or before [***] . This payment includes [***];
(d) [***] to be paid to The Regents on or before [***] . This payment includes [***];
(e) [***] to be paid to The Regents on or before [***] . This payment includes [***]; and
(f) [***] to be paid to The Regents on or before [***] . This payment includes [***].
3.2 Beginning [***] and for each year thereafter through the year [***], Licensee will pay to The Regents an annual maintenance fee of [***]. This license maintenance fee will be paid to The Regents on or before February 28 of each such year.
3.3 For each sublicense granted by Licensee to an Affiliate, Joint Venture, or sublicensee to make and use the Biological Materials, Biological Products, or Covered Products or the practice of Patent Rights, Licensee will pay to The Regents [***] of all consideration due under each sublicense agreement, which will include the Premium as defined below, (Sublicense Fee). The Sublicense Fee does not include any consideration received by Licensee for Research Funding, investments in equity or debt financing, excluding the Premium, royalties on Identified Products, royalties on Covered Products and Profits, minimum annual royalties, and reimbursement of patent costs, as specified in this Agreement. Licensee will pay each Sublicense Fee to The Regent quarterly on or before the dates set forth in Paragraph 4.3 below for Sublicense Fees received in the prior calendar quarter.
3.4 If Licensee desires to accept from a third party [***], then the Licensee and The Regents will cooperate with each other in determining the portion of the [***] and in determining the fair market value of that [***]. If the Licensee and The Regents are not able to agree upon the fair market value of the [***], then the Parties will choose a mutually acceptable third party to determine the fair market value of [***].
3.5 If a Sublicense Fee is collected that combines biologically or chemically active components comprising either Biological Products or that are covered by Patent Rights (The Regents' Products) and biologically or chemically active components provided by third parties, then Licensee will be entitled to reduce the portion of the Sublicense Fee paid to The Regents by adjusting the total amount of the Sublicense Fees on which The Regents' portion is based. In such event, the total amount of the Sublicense Fees will be adjusted by the fraction (A/A+B) where A comprises The Regents' Products and B is the number, of biologically or chemically active components provided by Licensee or third parties that do not either comprise the Biological Products or covered by Patent Rights.
3.6 The fees set forth in Paragraphs 3.1, 3.2 and 3.3 above will not be refunded, credited, or considered an advance against royalties, fees, or reimbursements for patent costs due and owing to The Regents under this Agreement.
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4. Royalties
4.1 As further consideration for all the rights and licenses granted to the Licensee, its Affiliates, Joint Ventures and sublicensees will pay to The Regents a royalty according to the following:
(a) A royalty rate of [***] received by Licensee, its Affiliates, Joint Ventures or sublicensees where Covered Products are used or Patent Rights are practiced;
(b) A royalty rate of [***] received by Licensee, its Affiliates, Joint Ventures, or sublicensees where a Biological Material or a Non-Patent Product is used. If a Product falls within the provisions of both 4.1a and 4.1b, then Licensee will pay only the royalty rate specified in Paragraph 4.1a above (i.e., a royalty rate of [***] received by Licensee, its Affiliates, Joint Ventures, and sublicenses);
(c) A royalty rate of [***] of each Identified Product sold by Licensee, its Affiliates, Joint Ventures, or sublicensees and identified through the use of Covered Products or the practice of the Patent Rights;
(d) A royalty rate of [***] of each Identified Product sold by Licensee, its Affiliates, Joint Ventures, or sublicensees and identified through the use of Non-Patent Products or the Biological Materials;
(e) A royalty rate of [***] of each Covered Product sold by Licensee, its Affiliates, Joint Ventures or sublicensees. In the event Licensee must pay to The Regents and one or more third parties a total royalty rate that exceeds [***] for royalties paid on Products covered by Patent Rights and the patent rights of one or more third parties, Licensee may reduce the royalty rate due The Regents by [***] the royalty rate paid to a third party, provided, however, that in no event will the royalty rate paid to The Regents be less than [***].
In the event that Licensee is unable to negotiate a royalty based on the sales of Service Products due to payments already received by Licensee for the sale of Services, then no royalty will be due to The Regents.
4.2 If a Product is combined and sold in the form of a multi-component product containing ingredients, which ingredients, themselves, are not Products, then Licensee will be entitled to reduce the royalties paid to The Regents by adjusting the Net Sales on which the royalties are based. In such event, the Net Sales base will be adjusted to be the greater of the amounts calculated using Methods A, B or C below, as follows:
(a) Method A: Net Sales equals ((cost of the Product used in the subject multi-component product) divided by (the total cost of such multi-component product)) and multiplied by (the sales price of such multi-component product);
(b) Method B: Net Sales equals (the sales price of the subject multi-component product containing the Product) minus (the sales price of a comparable multi-component product not containing the Product); provided that the components which are not the Product are similar and comparable in each case; or
(c) Method C: Net Sales equals the sales price for the Product (not combined with other components) as sold to independent third parties purchasing similar quantities of the Product.
4.3 Royalties will accrue in each country for the duration of Patent Rights in that country and will be payable to The Regents when: (1) the Profits are received by the Licensee on Service Products, and (2) Products are invoiced, or if not invoiced, when the Products are delivered to a third party or to the Licensee, Affiliate, Joint Venture, or sublicensee for end use.
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4.4 Royalties and Sublicense Fees accruing to The Regents will be paid to The Regents quarterly on or before the following dates for the royalties and Sublicensing Fees received in the prior calendar quarter:
-
- February 28 for the calendar quarter ending December 31;
-
- May 31 for the calendar quarter ending March 31;
-
- August 31 for the calendar quarter ending June 30; and
-
- November 30 for the calendar quarter ending September 30.
4.5 Each such payment will be for royalties and Sublicense Fees that have accrued up to Licensee's most recently completed quarter.
4.6 Beginning in the year 2014, the Licensee will pay to The Regents a minimum annual royalty in the amounts and at the times set forth below:
Year | Amount | |
---|---|---|
2014 | [***] | |
2015 | [***] | |
2016 | [***] | |
2017 | [***] | |
2018 | [***] |
4.7 In each succeeding calendar year after the year 2018, the Licensee will pay a minimum annual royalty of [***] and thereafter for the life of this Agreement. This minimum annual royalty will be paid to The Regents by February 28 of each year and will be credited against any royalties due and owing for the calendar year in which the minimum payment was made
4.8 If the licenses granted to Licensee under Paragraphs 2.1 and 2.2 are reduced from exclusive to non-exclusive licenses, and The Regents grants the same rights under a non-exclusive license to any third party at more favorable financial terms than specified in Articles 3 (issue Fees) and 4 (Royalties), then The Regents will notify the Licensee in writing of the financial terms contained in the other license agreement. Licensee will have [***] days from the effective date of The Regents' written notice to elect to amend this Agreement. Licensee may elect to amend this Agreement, upon written notice to The Regents, by replacing in whole, but not in part, the financial terms of this Agreement with the financial terms of the other license agreement.
4.9 In the event reproducible data shows that functional expression of human T1R1, T1R2 or an member of the T2R receptor family can be used in a format suitable for identifying taste modulators consisting of a sweet or salt antagonist, inverse agonist, or agonist, then the Parties will negotiate in good faith to raise the minimum annual royalties to account for additional amounts to be paid to The Regents for the increased value provided to Licensee for the use of receptors in identifying the additional taste modulators.
4.10 All consideration due The Regents will be payable in United States currency collectible at par in San Francisco, California. When Products are sold or Sublicense Fees are paid for consideration other than United States currency, the royalties and Sublicense Fees will first be determined in the foreign currency of the country in which such Products were sold and Sublicense Fees were received and then converted into equivalent United States currency. The exchange rate will be the rate that is quoted in the Wall Street Journal on the last business day of the reporting period.
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4.11 Royalties on sales of Products and Sublicense Fees received in any country outside the United States will not be reduced by any taxes, fees, or other charges imposed by the government of such country except those taxes, fees, and charges allowed under the provisions of Paragraph 1.18 (Net Sales). [***]
4.12 Notwithstanding the provisions of Article 28 (Force Majeure) below, if at any time Licensee is prevented from promptly paying part or all of the royalties or Sublicense Fees owed to The Regents because of legal restrictions encountered by Licensee in any country where a Product is sold or distributed, or a sublicense is issued, the Licensee will convert the amount owed to The Regents into United States currency and will pay The Regents directly from another source of funds for the amount impounded.
4.13 In the event any patent or claim under Patent Rights is held invalid in a final decision by a court of competent jurisdiction and last resort and from which no appeal has or can be taken, Licensee, its Affiliates, Joint Ventures, or sublicensees are not obligated to pay royalties based on such patent or claim, or any claim patentably indistinct therefrom as of the date of final decision. The Licensee, its Affiliates, Joint Ventures, or sublicensees will not, however, be relieved from paying: (1) royalties that accrued before the final decision; (2) royalties that are based on another unexpired patent or claim; (3) royalties that are not involved in the final decision; or (4) Profits due under Paragraph 4.1b, and royalties due on Identified Products under Paragraph 4.1d.
4.14 No royalties will be collected or paid to the Regents on Products and Service Products sold to the United States Government. The Licensee, its Affiliates, Joint Ventures or sublicensees will reduce the amount charged for Products and Service Products distributed to the United States Government by an amount equal to the royalty otherwise due The Regents for such Products and Service Products.
5. Due Diligence
5.1 The Licensee, upon execution of this Agreement, will diligently proceed to develop, manufacture, market, and sell Identified Products and to develop and to provide Services to its customers, in quantities sufficient to meet market demand therefor.
5.2 The Licensee will be entitled to exercise prudent and reasonable business judgment in the manner in which it meets its due diligence obligations. In no case, however, will the Licensee be relieved of its obligations to meet the due diligence provisions of this Article 5 (Due Diligence).
5.3 The Licensee will obtain all necessary governmental approvals in each country in which Licensee manufactures and sells Covered Products, Non-Patent Products, and Identified Products and provides Services to its customers.
5.4 Subject to Paragraph 5.6, The Regents will have the right to [***] if the Licensee is unable to perform any of the following:
[***]
5.5 In the event reproducible data shows that functional expression of human T1R1, T1R2, or any member of the T2R receptor family can be used in a format suitable for identifying taste modulators consisting of a sweet or salt antagonist, inverse agonist, or agonist, then additional due diligence provisions, such as milestone events and the corresponding dates in which such milestone events will be met, will be added to this Agreement upon the good-faith negotiations of the Parties.
5.6 To exercise the right to [***], The Regents will give Licensee written notice of the deficiency. If Licensee does not cure the deficiency within sixty (60) days after the written notice takes effect and does not demonstrate to the Regents' satisfaction, by written, tangible evidence, that such default has been cured, then The Regents may, at its option, [***]. The exercise of this right and option by The Regents supersedes the rights granted in Article 2 (Grant). Any notice given by either Party will be subject to Article 20 (Notices).
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6. Progress and Royalty Reports
6.1 Licensee will provide The Regents with a progress report every six months beginning on August 31, 2000, and continuing until the first commercial sale in the United States, Europe, and Japan for each of the following Product categories: Covered Product, Identified Product, and Services.
6.2 The progress reports submitted under Paragraph 6.1 will cover the development and testing of all Products, and the receipt of all governmental approvals necessary for the marketing of these Products. In particular, the progress reports will include, but not be limited to, the following topics directly related to Products so that The Regents may determine Licensee's progress in developing and testing Products and whether Licensee has met its diligence obligations set forth in Article 5 (Due Diligence) above:
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- summary of work completed
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- key scientific discoveries
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- summary of work in progress
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- current schedule of anticipates events or milestones
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- anticipated date of first commercial sale, which date shall not be required to be reported earlier than 6 months prior to such date, for Covered Products (if applicable), Identified Products, and Services (if applicable), in the United States, Europe and Japan
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- activities of Affiliates, Joint Ventures and sublicensees, if any.
6.3 The Licensee will report to The Regents the first date Licensee receives Profits and the date of first commercial sale of each Product in the United States, Europe and Japan by reporting these dates in its subsequent progress and royalty reports.
6.4 After the first commercial sale of a Product, the Licensee will provide The Regents with quarterly royalty reports on or before each February 28, May 31, August 31, and November 30 of each year. Each royalty report will cover the most recently completed quarter (October through December, January through March, April through June, and July through September) and will show:
(a) the Sublicense Fees, Service Revenues, gross sales and Net Sales of Products sold by the Licensee and its Affiliates, Joint Ventures, sublicensees, and the Profits based on Service Products sold by a third party during the most recently completed calendar quarter;
(b) the number of Products; sold or distributed and the Profits received by the Licensee, its Affiliates, Joint Ventures, sublicensees, and the number of Service Products; sold by a third party;
(c) the patent applications and patents contained in Patent Rights that either claim the Products or were used to identify the Identified Products and Service Products. If neither Patent Rights claim the Products nor were the Patent Rights used to identify Identified Products and Service Products, then the Biological Materials or Non-Patent Products used to make or use the Products or identify the Identified Products and Service Products;
(d) the royalties and Sublicense Fees paid in United States currency;
(e) the exchange rates used, if any; and
(f) the method used to calculate the royalty, including all deductions taken.
6.5 If no sales have been made on Products or no Profits have been received by Licensee during any reporting period after the first commercial sale of a Product or the first date Profit were received, then a statement to that fact is required.
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7. Books and Records
7.1 The Licensee will keep accurate books and records showing all Products manufactured, used, or sold and Profits received under the terms of this Agreement. Such books and records will be held in safe keeping for at least five years after the date of the royalty payment to which they pertain. The Regents and its representatives and agents may inspect such books and records at reasonable times, and not more than once per calendar year, as agreed to in advance by Licensee, to determine the accuracy of the books and records and to determine whether Licensee is in compliance with the terms of this Agreement.
7.2 The Regents will pay the fees and expenses of its representatives that perform the inspection as specified in Paragraph 7.1. If, however, an error in royalties or Sublicense Fees is discovered that amounts to more than five percent (5%) of the total royalties and Sublicense Fees due for the first three years after the effective date of this agreement, or an error in royalties or Sublicensee Fees that amounts to more than ten percent (10%) of the total royalties and Sublicense Fees for any year after the third year past the effective date of this Agreement, then the fees and expenses of these representatives will be borne by the Licensee.
8. Life of the Agreement
8.1 Unless otherwise terminated by operation of law or by acts of the Parties in accordance with the terms of this Agreement, this Agreement will be in force from the effective date recited on page one and will remain in effect until the later to occur of the following: (a) the expiration of the last-to-expire patent licensed under this Agreement; or (b) for ten (10) years from the date of the last Identified Product to be introduced to the market in the United States by Licensee, its Affiliates, Joint Ventures, or sublicensees.
8.2 Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles:
Article 7 | Books and Records | |
Article 11 | Disposition of Products and Biological Materials on Hand Upon Termination | |
Article 14 | Use of Names and Trademarks | |
Article 15 | Limited Warranty | |
Paragraph 16.5 | Patent Prosecution and Maintenance | |
Article 19 | Indemnification | |
Article 24 | Failure to Perform | |
Article 29 | Confidentiality |